Canopy Growth CEO says new data on cannabis beverages show t Canopy Growth CEO says new data on cannabis beverages show they can be bigger than hard seltzer
The world’s largest cannabis company Canopy Growth (CGC) saw shares fall another 5% Monday after cratering 20% following Friday’s fourth-quarter results, which disappointed against even its own revenue guidance.
Analysts at Stifel Nicolaus cut Canopy to a Sell rating while Morningstar maintained its “No moat” rating on the Ontario-based cannabis giant, indicating an unlikely differentiation from an already struggling cannabis sector, while conceding there remains long-term upside potential if the company can convert customers from the illegal black market.
Canopy Growth CEO David Klein focused on that opportunity in a recent Yahoo Finance Presents interview, noting that company’s recently launched cannabis beverages were off to a hot start. The company, which is backed by alcohol giant Constellation Brands, (STZ) is betting its new cannabis-infused beverages can grow to dwarf even the exploding hard seltzer industry by offering an even healthier alternative to beer.
“The drinks that we have in the marketplace are really good,” Klein said. “When we survey consumers who have tried them, over 75% of those consumers say that they would repurchase the product again, which is a very high repurchase rate.”
The beverages, Tweed Houndstooth & Soda and Tweed Bakerstreet & Ginger, shipped in March and April, respectively, to become the first cannabis-infused beverages on the market from a major cannabis producer. As Klein noted, they are quickly becoming a more important makeup of revenue for the company in its current quarter, but could stand to become a major revenue source if the company can recreate the brand magic that made Constellation Brands famous by turning its imported Modelo and Corona beer brands into international powerhouses.
Noting the shift in consumer tastes away from beer toward lower-calorie spirits and hard seltzers, Klein is optimistic its zero-calorie cannabis beverages can eventually be an even more attractive alternative.