Investing early has a significant upside, but also increases the risk that the bubble will burst if market demand doesn’t materialize or further research in this space doesn’t back some of the health claims. Investments in CBD beverages, whether that’s through in-house R&D or an acquisition, can be risky. Heineken is in the process of developing their own CBD-infused beer and already has THC-infused sparkling water available in California. Constellation has a $4 billion stake 7 in Canopy Growth, and has already taken two successive write-downs in its investment value. However, given the market potential, beverage companies are scrambling to get in the game as Constellation Brands, Diageo, Ab InBev, and Molson Coors Brewing have all invested in the space. CBD-infused beverages, food, and beauty products claim many health benefits, but not all are backed by science. This is particularly true for CBD products, which are seeing rapid growth in North America. This gives companies the opportunity to continue to evolve your offerings.Īs beverages are becoming an element of disease prevention and management, the credibility of the claims they make related to health benefits will be increasingly important. All beverage companies need to consider the benefits of this approach.īeverage companies are no longer constrained by category definitions or by price. Molson Coor’s investment in LA Libations underscores how traditional brewers can accelerate their product development pipeline through collaboration outside of beer. Strong M&A interest continues for small-batch bourbons, whiskey, and gins, with innovative flavors and unique barrel aging processes.Īdditionally, we’re seeing category lines blur as beverage companies combine traditional beverages to create premium options such as sparkling coffee and sparkling tea. AB InBev acquired Cutwater Spirits 6 to expand their presence in the craft spirit and ready-to-drink (RTD) cocktail space. Premiumization is a key driver of M&A as businesses buy new, premium products, and no longer rely solely on in-house new product development. This has led to the growth of super-premium craft tequila and mezcal, and nonalcoholic mixers across the globe. We’ve seen demand drive the growth of products like craft beer, first in the U.S. The opportunity to innovate within the premium beverage space is virtually limitless. Campari and Pernod Ricard have both reshaped their portfolios to offer more premium selections and divested of noncore brands. In 2019, Constellation 5 began the divestiture of 30 wine and spirit brands to E&J Gallo for $1.7 billion. Large alcohol businesses have divested more mainstream products recognizing that volume is not the path to profitability in today’s marketplace. This growth has been driven by wine costing more than $20 per bottle, which has increased by three million cases in the past three years. Globally, premium wine has grown faster than any other category since 2009 4. Those who do so today can differentiate themselves from the competition given the growing consumer demand for eco-friendly options. While there isn’t a one-size-fits-all packaging option, packaging manufacturers should create innovative solutions by assessing the characteristics of the beverage, current profit margins, client demographics, and how it is consumed, in an effort to find the right solution for their products. In each situation, the company has created a more sustainable offering by improving specific elements of their packaging. Through partnerships with global brands like Walgreens and Tesco, TerraCycle 3 is increasing the production of sustainable products and making it easier for companies to access these products. Coca Cola European Partners is shifting to 100 percent recycled polyethylene terephthalate (rPET) plastic. Saltwater Brewery 1 developed six-pack rings that are 100 percent biodegradable, and manufacturers are taking this one step further the creation of edible packaging made of seaweed. Packaging innovation is changing the way consumers engage with products.
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