Coca-Cola to develop cannabis drinks
Soda giant the Coca-Cola Company (KO) is now looking for growth opportunities in the legal marijuana market. According to BNN Bloomberg, Coca-Cola is in talks with Aurora Cannabis (ACBFF) to develop functional beverages infused with nonpsychoactive CBD (or cannabidiol), which could address inflammation, pain, and cramping.
Coca-Cola stock was up 0.4% as of 1:57 PM EDT on September 17, while the stock price of Aurora Cannabis surged over 19% on the day. The news of a global brand such as Coca-Cola showing interest in cannabis has favorably affected other cannabis stocks as well. Canopy Growth (CGC) has risen 1.4%, while Tilray (TLRY) has surged 8.2%.
Legal marijuana is a key growth market that is being monitored by many beverage companies for innovation and expansion. In August, leading alcoholic beverage maker Constellation Brands (STZ) announced a $4 billion investment in Canopy Growth, increasing its stake to ~38% from 9.9%.
In August, Molson Coors Brewing Company’s (TAP) Canadian business arm entered into a deal with the Hydropothecary Corporation to develop nonalcoholic cannabis-infused beverages in Canada.
Coca-Cola is eyeing growth categories
Given consumers’ rising aversion to sugary soda beverages, Coca-Cola is looking for growth in beverage categories such as ready-to-drink coffee, bottled water, and functional beverages. Coca-Cola is relying on organic innovation and strategic acquisitions to enhance its presence in these growth categories.
On August 31, Coca-Cola announced an agreement to acquire coffee company Costa in a $5.1 billion deal. The acquisition will help Coca-Cola strengthen its presence in the hot beverages space.
Coca-Cola’s other acquisitions include that of the AdeS plant-based beverage business, Topo Chico premium sparkling mineral water, and a stake in Bodyarmor sports drinks.