US – American beverage giant Molson Coors is set to exit the US CBD beverage market, where it was in business under Truss CBD USA, claiming no near-term pathway to federal legalization and “uncertainty in the market” for cannabis products.
The Chicago-based brewer through its JV with Hexo Corp., a Canadian marijuana producer, brought sparkling water infused with CBD, a non-psychoactive component of cannabis, to market early last year.
A recent report by Grand View Research said the global cannabis beverages market size is projected to reach US$2.8 Billion by 2025 at a CAGR of 17.8%.
However, Molson Coors argued that while more states are legalizing cannabis, the absence of federal regulations allowing the substance has deterred companies from investing more money into a category whose future is far from certain and where having the ability to scale is difficult.
The company added that as a result, some retailers and distributors have “been hesitant to accept CBD beverage brands, complicating distribution and making the path to profitability a challenge.”
Molson Coors has decided to “unwind” effective Dec. 31 but noted that if the regulations change throughout the country, Molson Coors would be prepared to re-enter the CBD space.
Molson Coors president of emerging growth Pete Marino said in the blog post: “Not every project or innovation will meet our ambitions. What’s important is that we learn from each and build capabilities that will serve us well into the future.
“The key for us is to go big behind what’s working and smartly pivot out of what isn’t working from a scale standpoint, like CBD beverages.”
Molson Coors has also decided to end ties with Philadelphia-based La Colombe, as the company continues to find its competitive strengths in its emerging growth division.
Molson Coors and La Colombe partnered together previously in the ready-to-drink (RTD) coffee market, where Molson Coors was the distributor of such products.
La Colombe decided to combine this RTD business with its bagged coffee and cold brew coffee multi-serves.
The brewer began distributing the RTD coffee products in January 2021 and they have mutually agreed to terminate the partnership on March 31, 2023.
Marino commenting on the reason for the pathway with the coffee processor, said the decision of La Colombe to consolidate its distribution business creates significant logistical challenges for Molson Coor’s distributor partners while still requiring similar levels of investment on their part.
This isn’t the only time the company has gotten out of an agreement with its partners. In August, Molson Coors returned the commercial operations of Superbird, a 100% blue agave tequila-based cocktail, to Casa Komos Brands, which will continue the product’s expansion. The two companies first entered into a distribution deal in 2021.
Marino underscored that the company remains “really excited” about its above-premium energy drink ZOA, Five Trail in the full-strength spirits space, and Topo Chico Spirited.
The company also continues to test and trial other non-alcoholic beverages through its partnership with L.A. Libations.
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