REPORT: Diageo explores entering cannabis drinks market

REPORT: Diageo explores entering cannabis drinks market

Marijuana stock prices have jumped in Toronto following reports Diageo is in discussions with at least three Canadian cannabis producers about a possible joint venture.

Aphria Inc, Aurora Cannabis and BI Canada Cannabis Competitive Peers have all gained percentage points as a result.

Aphria’s chief commercial officer, Jakob Ripshtein, was formerly chief financial officer of Diageo North America and former president of Diageo Canada Inc.

Aurora, the second-largest cannabis company by market value after Constellation Brands' Canopy, said it intends to enter the infused-beverage market.

“There is so much happening in this area right now and we think it has incredible potential,” Aurora spokeswoman Heather MacGregor said in an email. “As a rule, we do not discuss business development initiatives until they are finalised, however we have a responsibility to our shareholders to give proper consideration to all relevant opportunities that are presented.”

The Bloomberg TV report said Diageo met the companies in the past month as it considers a possible investment or alliance to make cannabis-infused beverages.

“We never comment on speculation,” a Diageo spokeswoman said in an email to Bloomberg. “As we’ve said before, we are monitoring this space closely."

Corona maker Constellation raises its bet on cannabis

Canada's legalisation of recreational pot, which begins in October, has attracted broad interest from the drinks industry.

Corona owner Constellation Brands recently upped its stake in cannabis company Canopy Growth from 9.9% to 38%.

The move follows Heineken's launch of Hi-Fi Hops, the company's first brew made with marijuana instead of alcohol. Hi-Fi Hops also marks the first time a major brewery had successfully and legally been represented in the THC-infused beverage space. 

Constellation acquired a stake in Canopy in October 2017 and has just tipped an additional $4 billion into Canopy Growth.

"Over the past year, we've come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy's market-leading capabilities in this space," Constellation Brands CEO Rob Sands said in a statement.

Constellation is not be planning to sell a drinkable cannabis product in the US before legalisation happens across the nation, but it may begin doing so in Canada next year.

Independent research firm Euromonitor International estimates that legal marijuana sales in 2018 will total $US7.5 billion in Canada and $US10.2 billion in the US, where it is allowed for recreational use in nine states and Washington, D.C.

This is “potentially one of the most significant global growth opportunities of this decade,” Sands said.

Heineken's first marijuana-infused brew

Heineken's Hi-Fi Hops is an IPA-inspired sparkling water is free of alcohol, calories and carbs. The drink has been released under California beer label Lagunitas, which Heineken fully acquired last year.

"Hi-Fi Hops is not the first chapter in the love affair between cannabis and Lagunitas, but it is one of the most exciting," said Maria Stipp, CEO of Lagunitas Brewing Company. "The idea of being a part of a no calorie beverage infused with cannabis seemed like a perfect next step in our product innovation and a natural way to marry our past with our future."

Hi-Fi Hops is available from California marijuana dispensaries for $US8 per can. It comes in two dosages, one with 10 mg of THC and one with 5 mg of THC and 5mg of CBD, catering to both casual cannabis dabblers to long-time users.

THC is the ingredient in marijuana that causes a high, while CBD is the non-psychoactive cannabis component that’s thought to be responsible for many of its therapeutic effects.

"We have come to realize that our passion for hops is a big part of our passion for beer," said Jeremy Marshall, Lagunitas Brewmaster. "We often dream of hops and their cannabis cousin partying together at their family reunion and wanted to bring this party to life in a drink. We believe it's high-time that good beer inspired a provocative yet refreshing tasting non-alcoholic alternative – bubbly, aromatic, bitter, fruity and herbaceous with no gluten, no carbohydrates and a smidge of California sun-grown cannabis in every sip."

 


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