Molson Coors Canada creates JV for cannabis-infused beverages

By Rachel Arthur

- Last updated on GMT


Related tags Molson coors Canada Cannabis

Molson Coors Canada and Canadian cannabis producer The Hydropothecary Corporation are to form a joint venture focusing on non-alcoholic, cannabis-infused beverages for the Canadian market following legalization.

Molson Coors Canada will have a 57.5% controlling interest in the JV, with Hydropothecary having the remaining ownership interest. The venture will be structured as a standalone start-up company with its own board of directors and an independent management team. 

“The new company will combine the proven beverage experience of Canada's leading brewer with a recognized innovator in the fast-growing cannabis sector to explore the highly anticipated consumable cannabis market, which is expected to be legally permissible in Canada in 2019,”​ says a joint statement from the companies this morning.

Evolving drinking preferences

Molson Coors Canada is the Canadian business unit of Molson Coors Brewing Company, with a portfolio including Belgian Moon, Coors Light and Molson Canadian. The Hydropothecary Corporation works in the medical cannabis space in Canada, and while it currently operates with 300,000 sq ft of production capacity a 1,000,000 sq ft expansion is set to be complete by the end of the year.  

"Canada is breaking new ground in the cannabis sector and, as one of the country's leading beverage companies, Molson Coors Canada has a unique opportunity to participate in this exciting and rapidly expanding consumer segment,”​ said Frederic Landtmeters, President and CEO of Molson Coors Canada.

“This new venture is consistent with our growth strategy and our commitment to being ‘First Choice for Consumers and Customers’ by ensuring that Canadians have access to high-quality products that meet their evolving drinking preferences.

"While we remain a beer business at our core, we are excited to create a separate new venture with a trusted partner that will be a market leader in offering Canadian consumers new experiences with quality, reliable and consistent non-alcoholic, cannabis-infused beverages.”

The transaction is expected to close before September 30, 2018, subject to the satisfaction of certain conditions.

Euromonitor: 'Legal cannabis will be a huge disruptor in the alcoholic drinks industry'

Last year Constellation Brands acquired a minority stake in Canadian cannabis company Canopy Growth Corp,​ saying the two companies would 'collaborate to develop and market cannabis-based beverages that can be marketed as adult-use products in markets where and when such products are federally legal'. 

Meanwhile, Heineken-owned Lagunitas recently launched Hi-Fi Hops,​ an IPA-inspired sparkling water infused with cannabis, in California. 

Euromonitor estimates the total global value for the cannabis market is around $150bn, with the legal cannabis market only a fraction of the total at around $10-20bn.   

Spiros Malandrakis, head of alcoholic drinks at Euromonitor International, said: "There is a paradigm shift underway and cannabis has the potential to provide answers to the alcoholic drinks industry’s existential questions.

"A transition towards a holistic responsible intoxication model will be the end game as key players are reluctantly yet steadily embracing the rising green tide. The taboo is now broken, a symbiotic alternative to big alcohol’s traditionalist conservatism and knee-jerk antagonistic positioning is now available, and hybrid products can be seen on the horizon once obfuscated by the green haze wafting over North America.”

Shane MacGuill, head of tobacco research at Euromonitor, added: "Legal cannabis will be a huge disruptor in both the alcoholic drinks and tobacco industries – initially at least, probably have a greater impact in the former than the latter.

"In fact, the transformational effect of cannabis within alcoholic drinks is already being seen with some categories beginning to emerge and major drinks companies investing in or planning to launch cannabis products.

"Legalization is the clear immediate driver of growth in the global cannabis industry. In a broader sense, legalization is inexorably interconnected with (i.e both caused by and a cause of) the normalization of attitudes to cannabis use in societies worldwide. This dual trend will continue to be the key driver of growth in the coming years.

"By extension, as attitudes to cannabis change, it will increasingly be seen by consumers as a substance or ingredient which reflects their desire for enhanced authenticity and services their need for natural and healthy products.”

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