Over the past few years, bottled water sales have remained robust, making it the top commercial beverage category in America. This ascent of water product popularity has coincided with a steady decline in other beverage categories like soda. Consumers are looking for better-for-you beverage options that help them reduce calories, contributing to a healthier lifestyle.
According to IRI, Chicago, the bottled water category generated dollar sales of $19.6 billion for the 52 weeks ending May 16, 2021, up a 7.2% increase over the previous year. The subset of sparkling waters generated a year-over-year increase of 18.2% to sales of $4.2 billion, per IRI.
This makes water products enhanced with hemp-derived cannabidiol (CBD) particularly inviting. CBD offers a range of potential health benefits, and is poised to invigorate enhanced water sales across the country as CBD builds a name for itself in the health-and-wellness product arena.
CBD is one of the hottest health-and-wellness ingredients in today’s CPG market. “As the soda market continues its decline, mainstream beverage conglomerates hunt for ways to recoup the losses,” says Arthur Jaffee, founder and CEO, ECS Brands, Boulder, CO. “Long ago, they turned to water, iced teas, energy drinks, and juices. Now, functional beverages, containing ingredients like turmeric, maca root, and ashwagandha are rising. As CBD gains increasingly more market acceptance and enthusiasm, beverage manufacturers are adding CBD drinks to their functional lines.”
People are buying CBD-infused waters for overall wellness, notes Jaffee. “Consumers encounter quite a lot of messaging about CBD. Nearly all of it revolves around CBD as a possible partner in achieving health goals, such as mitigated anxiety, better sleep, and reduced body inflammation.”
A recent—but significant—trend is the social adaptation of CBD waters as an alcohol alternative, notes Kirk Pearson, co-founder, Green Mountain Brands, Sacramento, CA, producers of Lei Back CBD sparkling water. “The calming/relaxation effect of CBD has been the need state up to this point, but we are seeing that as flavor profiles improve and functionality expands, consumers beyond the core CBD users are coming into the category.”
“Consumers are also using infused waters as the backbone for building mocktails,” says Donna Wamsley.
Consumers are also using infused waters as the backbone for building mocktails, says Donna Wamsley, vice president, research and analytics, SōRSE Technology, Seattle. “While many consumers enjoy a great beer, wine, or cocktail, they don’t always love how they feel the next day. For many people, the older they get, the harder it is for the body to process alcohol—not to mention all of the calories that pile up from the sugars in alcoholic drinks. As a result, consumers are looking for NA alternatives like mocktails, and an infused water can be a great baseline mixer to build a low-calorie, great-tasting beverage around.”
Infusing CBD into a popular product category like canned and bottled water is a natural fit. CBD waters have a strong alignment with health, notes Jaffee. “Waters appeal to nearly everybody,” he says.
“Consumers are purchasing CBD-infused water, because they are looking for familiar formats,” says Tara Rozalowsky, vice president, beverages and edibles, Canopy Growth Corp., Chicago. “For example, with beverages, consumers are seeking fast-acting product formats that fit seamlessly into their busy day and replace less-healthy options such as sodas, coffees, and energy drinks.” She notes the North American market potential for CBD-infused beverages is extremely promising and has the potential to disrupt other traditional beverage formats, including sparkling water, soda, beer, wine, and spirits.
“CBD use has become much more mainstream over the past two years, and particularly since the onset of COVID-19, which has driven consumers to prioritize both physical and mental health like never before,” says Rozalowsky. “People who already used CBD have increased their intake, and new consumers are entering the category every day—especially through the beverage category, as it’s a familiar product format that consumers can easily integrate into their daily routine.”
From a regulatory standpoint, notes Rozalowsky, Canopy Growth has made strategic investments in the U.S., building a robust infrastructure ahead of federal regulation. “This infrastructure will provide Canopy with a strong competitive advantage,” she says.
Southern Glazer’s Wine and Spirits is the distributor for Canopy Growth’s full portfolio of CBD beverages, beginning with its new Quatreau line. “Canopy Growth is one of the first U.S. CBD beverage producers to leverage the nationwide network of a large-scale wine and spirits distributors to reach consumers across the U.S.,” says Rozalowsky. “Canopy partnered with Southern Glazer’s, as they share our future-forward view of the category, and by working with them, we have an immediate advantage of route-to-market for our CBD beverages.”
The market for CBD beverages continues to grow increasingly heated. “From an industry perspective, the theme is the entrance of large players,” says Ian Monat, CEO and co-founder, Rhythm CBD Seltzers, San Francisco. This includes distributors and retailers. “Three of the largest beverage alcohol distributors, Southern Glazer’s, RDNC, and Breakthru Beverage, have all announced they have started distributing CBD beverage brands, or will start soon. On the retail side, you’re seeing natural grocery chains like Sprouts test out CBD beverage sets, whereas previously only independent retail accounts would stock CBD beverages.”
“CBD is all about functionality, and the range of CBD-infused waters on the market reflects the broad level of opportunity it offers,” says Leila Khoury.
This translates to increased consumer availability, as CBD beverages show up in more retail locations, and in new channels like restaurants and bars, says Monat. “The entrance of new brands, and the growth of the leading brands, is putting downward price pressure on the category, so consumers are benefiting from a lower shelf price. We are starting to see the CBD beverages themselves improving as well, including more functional ingredients, better packaging, and more unique flavors.”
People are consuming CBD for a variety of reasons, notes Monat: “The top reasons in any consumer survey are usually anxiety, pain, sleep, and focus. CBD water is an easy, familiar format for all consumers. Every car has multiple beverage holders in it. New CBD users may not understand tinctures, the dosing can be confusing, and no one likes the bitter taste. Not everyone wants a sugar-coated gummy, either. Water works for any time of the day, whereas a CBD wine is probably only going to be consumed in the evening. CBD waters are typically low- to no-calorie, too, which is a huge benefit and gives CBD beverages an advantage over CBD formats like edibles, and other beverage categories like alcoholic beverages that are naturally caloric.”
CBD is all about functionality, and the range of CBD-infused waters on the market reflects the broad level of opportunity it offers. Beverage add CBD for its recovery benefits, says Leila Khoury, director of marketing, MAD TASTY, Newport Beach, CA. “Functional beverages are adding CBD as another superfood ingredient.”
Sean McDonald, COO, CBD Living, Corona, CA, suggests CBD waters should diminish or eliminate the notable “hempy” flavor notes characteristic of cannabis. CBD Living products are sold in over 5,000 stores across the country, including convenience stores, health food stores, chiropractic offices, and dispensaries, says McDonald. All products are also sold online and shipped worldwide.
“CBD beverages provide the same great benefits as other CBD products—anxiety reduction, pain relief, reduction in internal inflammation, and post-workout recovery—but with the added convenience of being portable and easy to throw in a purse or gym bag. Plus, everyone needs to drink water and other beverages throughout the day. It’s easy to replace one or two of those beverages with a CBD drink.”
“A primary point of differentiation in CBD waters comes from ingredient selection—whether isolate, full-spectrum, or broad-spectrum,” notes Brett Wiley.
“Today’s consumers are hyper-focused on their health and wellness and are doing their homework on ingredients that ease anxiety and stress, boost immunity, and improve gut health,” says Wamsley. “As a result, product developers are creating infused sparkling, still, and seltzer water where cannabinoids are paired with other functional, high-quality ingredients and adaptogens like ginger, elderberry, ashwaganda, rosemary, cinnamon, ginseng, and/or turmeric, to name a few. Consumers are also more aware of their sugar intake and are looking for waters with little to no added sugar, or that use natural flavor enhancers like berries and other fruits for a hint of sweetness.”
Consumers today associate CBD with health and wellness, and CBD-infused waters provide a great way to stay hydrated while reaping the benefits that CBD and other cannabinoids have to offer, notes Wamsley. “Cannabinoids interact with the endocannabinoid system (ECS) in the human body. This system is responsible for regulating body functions, including immune response, communication between cells, appetite, and metabolism. When consumed, CBD and other cannabinoids attach to receptors, which help maintain or re-establish that balance. Most consumers report that they buy CBD water to manage anxiety, stress, sleep issues, inflammation, pain, and arthritis, as well as for their general health and wellbeing.”
A primary point of differentiation in CBD waters comes from ingredient selection, notes Brett Wiley, CMO, Aprch Beverage Co., Portland, OR—whether isolate, full-spectrum, or broad-spectrum. “We believe that the difference and science behind each type will greatly impact the success of the products, especially as consumers become more educated on the differences between each option.”
Aprch utilizes broad-spectrum hemp extract, because the company believes it has the most benefits for consumers, notes Wiley. “With broad spectrum, other cannabinoids are present, which enables the ‘entourage effect,’” he says. “We also add ascorbic acid (vitamin C) to enhance the flavor and give our beverage a vitamin boost, as well as organic L-theanine, a key amino acid derived from tea that can help with mental focus, stress relief, sleep, and relaxation. When creating our first round of products, we worked closely with the team at SōRSE Technology to ensure that we created a stable proprietary blend of broad-spectrum CBD that works well with our formulations, disperses in liquid, and always tests correctly.”
CBD Living uses only organic hemp grown on state-licensed farms, notes McDonald. “All of our ingredients and final products are triple-tested by independent third-party labs for CBD content and presence of heavy metals and contaminants.”
Emulsions eventually fail and come apart in regular clear water, making the beverage colored, cloudy, and more viscous, notes McDonald. “Since our original CBD Living Water product launched in 2014, CBD Living in-house scientists have worked to constantly improve upon the product and perfect this issue. They developed our proprietary water-soluble technology, which uses a nano-emulsion process that homogenizes nano-CBD particles into water. Not only does this make for a clear, flavorless water, but it also has the benefit of being highly bioavailable.”
Khoury notes MAD TASTY sources broad-spectrum hemp for its waters. “On a product development level, our team believes that the whole hemp plant—minus the THC—delivers the ‘entourage effect’ and is more beneficial than CBD isolate.”
Finding the right ingredient technology partner was key in working with hemp, notes Khoury, a traditionally challenging ingredient to work with in foods and beverages. “Our partner, SōRSE Technology, takes our broad-spectrum hemp extract and converts it into a water-soluble emulsion that makes equal dosing from first sip to last possible and allows for greater absorption in the intestinal tract.”
Pearson notes that his company uses broad-spectrum hemp in its Lei Back CBD waters, as it has added functional benefits due to the inclusion of minor cannabinoids and terpenes, as opposed to isolate that does not provide the same benefits.
“As a beverage company, it is imperative that our final product is homogeneous, and all our ingredients stay in suspension,” says Pearson. “We needed to find a partner that had the technology to provide us with a liquid emulsion that would incorporate seamlessly into our final product. We found that partner in SōRSE Technology.
Rhythm CBD Seltzers also opts for broad-spectrum CBD from hemp, says Monat. “We source the hemp through our advanced infusion technology partner, Vertosa. Vertosa nano-emulsifies our hemp extract, resulting in an effective and reliable infused beverage with rapid onset and maximum absorption.”
Product development partners also help with mitigating any potential interactions with other ingredients in the formulation, and the packaging format itself. “Given our product is a functional sparkling water brand in a can, our biggest challenges are ensuring our emulsion plays well with our ingredient deck and our can liner,” says Monat. “And that’s what makes this cannabis beverage category uniquely challenging—all the compatibility checkpoints, the root cause of which being the fundamental principle that oil and water don’t mix. Our infusion partner, Vertosa, has done the heavy lifting, creating a library of patented emulsions for beverages that we choose from to make the best beverage we can.”
As a lipophilic ingredient, CBD presents is share of challenges to product developers. “Delivery technologies are a huge consideration for beverage-makers in the U.S. cannabis beverage market wanting to solve the lipophilic challenges posed by hemp-derived products,” says David Durkee, vice president of new ventures, Quicksilver Delivery Systems, Louisville, CO. “In the past—and you’ll still find this today—CBD emulsions were made from crude, cheap, macro emulsions, meaning bigger droplets that didn’t dissolve well and a milky or cloudy look that was really off-putting to consumers.”
Durkee notes nanoemulsions technology is the name of the game today. “Beverage makers who want to be market leaders today need to invest in a nanoemulsion delivery technology that is both impeccably water-soluble and that offers top-of-the line bioavailability,” he says.
“We also have the ability to tailor our technology to maximize the different compounds we want to deliver in a given product,” says Durkee. This includes CBD, but also different terpenes and nutraceuticals.
“Some functional CBD waters target athletes, and add complementary ingredients like B12, for energy and electrolytes,” says Jaffee. Other products go all-in for plant compounds derived from hemp. “So in addition to cannabinoids like CBD, they also contain terpenes extracted from hemp plants. The market for anti-anxiety products is robust—COVID, among other things, upped demand for the products. From the beginning with CBD, brands championed the cannabinoid’s potential for managing anxiety. And now we are encountering water products, such as a line from Recess that promotes its CBD-infused waters to ‘reset’ and ‘rebalance.’”
The CBD-enhanced water product category has seen a robust level of innovation within the past couple of years.
“With the launch of our first CBD-infused sparkling water, Quatreau, we combined 20 mg of premium hemp CBD isolate, carbonated water, and natural flavors into a refreshing and effervescent zero-sugar drink with a consistently potent effect that consumers are looking for,” says Rozalowsky. “Quatreau aims to redefine consumers’ relationship with energy and productivity by replacing the stimulants, sugar, and artificial ingredients found in most sodas, coffees, and energy drinks with a clean, balanced, and ‘sessionable’ alternative.” Available flavors include four natural fruit and herb-based options: Cucumber + Mint, Passion Fruit + Guava, Blueberry + Acai, and Ginger + Lime.
In 2020, Canopy Growth launched Quatreau in Canada, where it has captured the No. 1 CBD ready-to-drink beverage slot, notes Rozalowsky. “We’re now focused on executing that same strategy in the U.S.” She cites data from Brightfield Group, Chicago, predicting the U.S. CBD beverage market will grow to a $1.5 billion industry by 2025.
There’s also mounting consumer interest in additional cannabinoids beyond CBD, including minor hemp-derived cannabinoids like cannabigerol (CBG), cannabichromene (CBC), and cannabinol (CBN) that seek to deliver to specific consumer need states.
Pearson notes his Lei Back Sparkling Water is available in three flavors: Guava, Pomelo, and Pineapple, with distribution in California, Washington, Arizona, Colorado, and Tennessee. “As Lei Back is THC-free and designed to be a refreshing functional alternative to traditional sparkling water, we’ve gained success where sold for direct consumption. So the premium hospitality segment is important to us, as well as specialty/natural retailers,” he says. “We plan to expand our retail footprint into more states next year, as well as expand our e-commerce business.”
MAD TASTY, reports Khoury, is currently available in Watermelon Kiwi, Yuzu Citrus, Unicorn Tears (“an exotic and mysterious blend of natural fruit flavors”), and Grapefruit, each with 20 mg hemp extract, as well as 50-mg Wellness Boost products in Mango Ginger and Citrus Elderberry. MAD TASTY products are available at retailers from coast to coast, and online.
MAD TASTY also brings a mission-based perspective to the market. “In addition to having a unique formula that tastes great and provides an equal dose of hemp extract in every sip, MAD TASTY sets itself apart through its ongoing partnership with Drop4Drop,” says Khoury. “For every ounce of MAD TASTY sold, MAD TASTY donates the equivalent amount of clean drinking water to people and places in need.”
Rhythm CBD Seltzers sells direct to consumers online and has quickly expanded into over 100 wholesale points of distribution in 15 states, notes Monat. The Rhythm product lineup includes:
- Rhythm Awake Energizing Seltzer, with 15 mg of broad-spectrum hemp extract, natural grapefruit and rosemary flavors, 50 mg of natural caffeine from organic green tea extract, and sweetened with monk fruit
- Rhythm Dream Sleepy Time Seltzer (12 oz.), with 15 mg of broad-spectrum hemp extract, 5 mg of melatonin, and natural blackberry and lavender flavors, or a smaller serving size (8.5 oz.) with 10 mg CBD and 3 mg of melatonin
- Rhythm Recover Soothing Seltzer, with 15 mg of broad-spectrum CBD, all-natural lemon flavor with a hint of ginger spice, and a highly bioavailable dose of organic turmeric root extract
Durkee notes that Quicksilver Scientific works with Truss CBD USA to develop its line of Verywell CBD waters.
“Veryvell is the first product launched by Truss CBD USA, a joint venture majority owned by Molson Coors Beverage Co. and operated in partnership with HEXO Corp, a Canadian consumer packaged goods cannabis company,” says Jane Armstrong Hockman, general manager, Truss CBD USA. “Veryvell is now available both online and at select retailers in Colorado.”
Veryvell Sparkling Waters are hemp-derived, adaptogenic, sparkling CBD waters with zero calories, zero carbs and zero sugar, notes Armstrong Hockman. “There are three favors in the portfolio. Each drink features its own unique blend of adaptogens and natural flavoring. The Focus flavor allows you to boost your clarity with ginseng and guarana, Mind & Body lets you restore your balance with ashwagandha and elderberry, and Unwind helps you let go of your day with ashwagandha and L-theanine. Focus features a cool, crisp and lightly carbonated mix of grapefruit and tarragon. Mind & Body highlights the delightful tropical notes of strawberry and hibiscus. And Unwind presents the fresh and soothing flavors of blueberry and lavender.”
The market for CBD products saw some nice progress when California passed Assembly Bill No. 45, which opens the door to legal CBD food and beverage product development and sale in the state. This will put pressure on other states to step into the federal regulatory gap left by FDA inaction.
We’re currently in the early stages of the CBD beverage market, and regulatory approval is the impending catalyst that will drive profound growth. “As states and the FDA move in the right direction, we are seeing more money allocated to the research around all of the cannabinoids in the hemp and cannabis space and different dosing protocols—especially micro-dosing,” says Khoury. “With more data comes more consumer awareness. Once consumers are more aware of the benefits of the plant in general and the individual cannabinoids, they will look to brands that they trust in the CBD space for new innovation.”