Bloomberg reports CBD drinks are proving to be a tough sell. Hifyre, a Canadian cannabis data analytics firm, found that CBD beverages in Canada generated only $28 million in sales in 2020, or slightly more than 1% of the total $2.6 billion in legal marijuana revenue.
While these drinks are selling a bit more in Canada this year (they're up to $24 million almost halfway through the year), they're nonetheless falling woefully short of the $529 million analysts were forecasting just a couple of years ago.
The companies have faced a few hurdles, such as CBD drinks not being allowed to be sold at restaurants and bars in Canada (in the U.S., it's hit or miss), but only at licensed stores, which makes it more difficult to reach consumers.
Still, the Agri-food Analytics Lab of Dalhousie University in Nova Scotia surveyed 1,000 Canadians and found they weren't all that excited about CBD drinks anyway. Only 4% preferred drinking their CBD compared to ingesting it by other means, such as with edibles, suggesting CBD drinks might be a segment that never really takes off.
It's not much better in the U.S., where Seattle-based cannabis analytics firm Headset found sales of adult-use and medical edibles were taking off -- up 60% in 2020 from the prior year. Meanwhile, in one market (Michigan), beverages barely even register on the radar with a 0.2% market share (edibles had over 16%).
An expensive experiment
Constellation continues to take losses on its investment in Canopy Growth as the pot company has laid off workers, shut down two greenhouses, and announced an $800 million writedown. Tobacco giant Altria (NYSE:MO), which invested $1.8 billion in Cronos Group (NASDAQ:CRON), also is losing money on its investment and says it is monitoring the situation.
The beverage giants put a lot of money into marijuana, but the bet is not paying off, and CBD drinks could cause further expensive writedowns in the future.