A Look Inside the Emerging Market for Alcohol-Free Cannabis Beverages
The alcohol alternative
The market for cannabis edibles and beverages has significant potential for growth. As reported by BDS Analytics, consumer spending on cannabis-based foods and beverages reached an estimated $1 billion in 2017 in the U.S. and Canada—and is projected to grow to more than $4.1 billion in those countries by 2022.
Beverages in Focus
This great market outlook is catalyzing partnerships to fuel research, development and manufacturing—both in the U.S. and Canada. In March, Nielsen, Headset and Deloitte announced a strategic three-way alliance to provide market insights in the federally regulated Canadian industry. The alliance will bring various data-driven offerings to the market—and that market increasingly includes cannabis-infused beverages.
As reported in BNP Media sister publication Beverage Industry, cannabis-infused beverages could serve as a viable alternative to alcohol. Danny Brager, senior vice president, U.S. beverage alcohol practice, Nielsen, Los Angeles, notes consumer research suggests cannabis-interested consumers are more likely to drink beer (53 percent) and spirits (50 percent) than wine (37 percent). “Only 35 percent of current wine drinkers are interested in legally consuming cannabis for recreational purposes, versus 41 percent for beer drinkers and 44 percent for spirits drinkers,” he says.
“CBD- and THC-infused beverages provide consumers with another choice in satisfying certain needs that parallel similar needs also met by alcoholic beverages, particularly those associated with social enablement and experience enhancement,” says Brager. He notes that he has seen cannabis beverage manufacturers tout that their products are “headache or hangover-free,” as well as benefits related to liver health. (For more information, see “Cannabis-infusions open new opportunities for beverage-makers,” Beverage Industry, May 2019.)
In its “Top 10 Trends in Cannabis for 2019” list released in January, BDS Analytics placed “The Emergence of Social Consumption” as the No. 1 trend, noting that 71 percent of cannabis consumers say they engage with the plant for social and/or recreational purposes. The No. 2 item on the list was “The Rise of Beverages.”
And while a wide variety of cannabis beverages have been hitting the market, when specifically considering the burgeoning appeal of potential alternatives to products that contain alcohol, dealcoholized beers are at the top of the list.
Beer, Meet Cannabis
Some of the top players in the alcohol-alternative beverage segment of legal cannabis predictably come from the brewing industry. Brewers use cannabis extracts and terpenes to deliver signature flavors and aromas in beverage products—but without any alcohol in the finished product.
Alcohol is a primary source of calories in traditional beer, so dealcoholized beers often offer lower calorie counts, an aspect that factors into marketing.
Manufacturers of dealcoholized beers have a few different options when removing alcohol from their products. One is to create a traditionally brewed beer and then heat the beer to the boiling point and hold it at that temperature (173°F at sea level) until the alcohol by volume (ABV) level drops below 0.5 percent. However, this approach can compromise flavor notes. A better—but more-expensive—option is to use a vacuum distiller to reduce the boiling temperature, thereby helping preserve volatile flavor notes in the beverage. Reverse osmosis techniques can also remove the alcohol from a liquid.
The product are then transferred to a facility licensed to legally add cannabis extracts to the brew. The final step is adding carbonation and bottling. A touted hallmark of many of these THC-infused beverages is quick and reliable onset of effects—an aspect of quality control and assurance largely dictated by the expertise of the cannabis extract provider.
A Brewing Business
Due to the federally legal status of cannabis in Canada, that country is seeing significant investment from alcohol-focused beverage companies. Canada will serve as a test market for the industry as full-scale legalization sees global expansion.
- Constellation Brands—owner of the Corona, Modelo Especial, Negra Modelo, Pacífico, Ballast Point and Funky Buddha beer brands—has invested over $4 billion into Canada’s Canopy Growth. The two companies are working together to develop new cannabis beverages for the Canadian market.
- Molson Coors Canada is working with The Hydropothecary Corp., a Canadian cannabis producer, in a joint partnership to develop non-alcoholic, cannabis-infused beverages for Canadian consumers.
- Tilray, Inc., based in British Columbia, has announced a partnership with Anheuser-Busch InBev to research cannabis-infused nonalcoholic beverages for potential introduction into the Canadian market.
Not all dealcoholized cannabis beer innovation is taking place up north. Former Molson Coors brewer Keith Villa, the originator of Blue Moon, started Ceria Beverages in March 2018 to manufacture THC-infused, alcohol-free beers, initially available in the Colorado market. In December 2018, Ceria’s first beer, Grainwave, a dealcoholized Belgian-style white ale, was released to Colorado dispensaries. Ceria works with Keef Brands to infuse the beers with cannabis and then bottle the products (Keef offers legal cannabis products across multiple medical and/or recreational legalized markets, currently including Arizona, California, Colorado, Michigan, Nevada, Puerto Rico and Jamaica).
Villa told Cannabis Products that Ceria is planning to launch light, medium and heavier-style beers with varying levels of THC.
Last year, Lagunitas Brewing Co., based in Petaluma, CA—a division of Heineken USA—launched Hi-Fi Hops, an alcohol-free beverage it calls an IPA-inspired sparking cannabis water, available in two forms: a 10 mg THC version, as well as an option with 5 mg THC and 5 mg CBD. Lagunitas works with California-based CannaCraft to infuse cannabis into its products.
In January, High Style Brewing Co., San Diego, CA, released Coastal Haze, a dealcoholized cannabis-infused craft beer inspired by the pale ale style of beer. It’s brewed using Cascade and Amarillo hops. The company describes the beer as “crisp and refreshing,” with notes of citrus and tropical fruit. It was launched in two forms: a 10 mg THC version, as well as a 5 mg THC and 5 mg CBD option. The brewery has also added a Blood Orange Haze beer. High Style claims that most consumers should feel the onset of effects within 20 to 30 minutes.
In East Coast activity, Flying Dog Brewery, Frederick, MD, has partnered with Green Leaf Medical Cannabis to release an IPA-inspired, THC-infused, dealcoholized beer named Hop Chronic for the Maryland medical cannabis market. The beer will reportedly include CBD and THC, as well as the non-psychoactive, health-focused cannabinoid cannabigerol (CBG).
Many brewers see a natural fit between beer and cannabis from a flavor standpoint. Ben Savage, chief marketing officer, Flying Dog, has noted, “There are definitely similarities between the natural flavor profiles we extract from hops and the terpenes and cannabinoids found in cannabis.”
Cannabiniers, based in San Diego, released the Two Roots line of CBD- and THC-infused non-alcoholic craft beers in 2018. Cannabiniers makes five styles of beer using traditional methods, then removes the alcohol from the product using European-manufactured dealcoholization equipment. The product is then infused with cannabis at secondary facilities in California and Nevada. The company uses nanoemulsion technology to evenly distribute the cannabis in the products for effective dosing. Two Roots product line currently consists of Enough Said (refreshing), New West (hoppy), Tropical Infamy (fruit-infused) and RCG (dark).
Cannabiniers has reportedly placed orders for additional dealcoholization equipment, and it plans to build three more processing facilities in San Diego, the Midwest and on the East Coast. This is a strong indication of this market’s potential.
But not all cannabis beers are nonalcoholic. In February, Cannabiniers purchased Dad & Dudes Breweria, Aurora, CO, which offers George Washington’s Secret Stash, an English-style IPA that has 4.2 mg of hemp-derived CBD in each bottle—and it has a 6.5 ABV.
Dad & Dudes Breweria tested its CBD beer for about a year, and the brewery was awarded federal approval from the Alcohol and Tobacco Tax and Trade Bureau in July 2016. But federal interference still prevented the company from brewing and distributing the beer—until recently. The CBD beer is now on the market, and co-founder and owner Mason Hembree notes that they haven’t had any problems with federal interference.