Zenith Global North American CBD Drinks Market Report 2020

Zenith Global Report 2020

North American CBD Drinks Market Report

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Contents Section 1. Introduction and scope 2. Executive summary 3. CBD oil 4. CBD industry developments 5. Regulatory environment - US - Canada 6. Market trends in CBD drinks 7. Market trends in other CBD oil-infused products 8. CBD drinks brand profiles

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Introduction and scope

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1. Introduction and scope Introduction

Scope

The development of CBD (cannabidiol) infused beverages has been the latest wellness trend to hit the North American market primarily in the US despite the consumer watchdog, the Food and Drug Administration (FDA), maintaining regulatory authority over CBD additions in food and drink items.

North American coverage of the CBD market, including the current and future outlook of the market such as market size and growth, as well as key developments, new product launches and brand profiles.

Consumers’ demand for better-for-you products has been instrumental in raising awareness of cannabidiol as an ingredient for wellness beverages.

Functionality has become a key selling point globally and is travelling along a healthy growth track as customers are becoming more ingredientsavvy while seeking healthier alternatives to sugary drinks.

Regions covered in this report •

North America

•

USA

•

Canada

Instability in the regulatory environment is dampening overall market growth of CBD-infused beverages. At this time, cannabis-derived CBD (cCBD) is regulated as a cannabis product, while hemp-derived CBD (hCBD) is more widely available, as allowed by state law. The FDA, state and local agencies lack a clear set of regulations and, at the time of writing, hCBD-infused beverages remain illegal to sell.

Beyond the US, the nascent category has been receiving traction in Canada after challenges with packaging were resolved. CBD drinks are regulated as a legal marijuana product, but growth prospects remain positive.

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Amy Lathrop Category Research Director

1. Introduction and scope Definitions Cannabis •

Cannabis is a plant which belongs to the family Cannabaceae and includes three species: Cannabis sativa, Cannabis indica and Cannabis ruderalis.

Hemp and marijuana are the most popular plants coming from the cannabis family.

Hemp •

Hemp is a variety of the Cannabis sativa plant species that is grown specifically for the industrial uses of its derived products. The plant only contains a maximum tetrahydrocannabinol (THC) level of 0.3% compared to marijuana but, depending on which parts of the plant are used to create oil, the product can feature zero to higher percentages of hCBD.

•

The applications of industrial hemp are varied and it is used in a wide range of industries: A. Textiles: Hemp can be transformed into fibers which are more resistant to weather and ultraviolet rays than cotton and silk.

B. Food: Hemp leaves include high amounts of fiber, iron, potassium and zinc and a great quantity of protein. The seeds - where most of the nutrients are - can be pressed to retrieve oil or consumed raw, cooked or roasted.

C. Cosmetics: Cosmetic manufacturers add hCBD oil for its high concentration of fatty acids.

Marijuana •

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Different strains of the cannabis plants are grown and processed to maximize the THC over the Cannabidiol (CBD) levels for use in pharmaceutical applications, as well as medicinal and recreational enjoyment of the psychoactive properties of THC.

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1. Introduction and scope Definitions CBD vs THC •

Claims Produces a ‘high’ Claim 1 Claim 2 Claim 3

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CBD

THC

✘

✔

Commentary

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1. Introduction and scope Definitions cCBD and hCBD •

Cannabidiol (CBD) derived from the species of cannabis grown and processed to harvest potent THC levels is referred to in this report as cCBD.

•

CBD derived from the hemp plant is described as hCBD.

CBD drinks •

For the purpose of this report, Zenith has limited its research scope using the following definition: o CBD drinks should be considered any non-alcoholic beverage infused with CBD in ready-to-drink (RTD) format. This could include still or sparkling functional waters and still or carbonated soft drinks including sodas, energy drinks, juice drinks and iced coffees and teas.

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Executive summary

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2. Executive summary Key findings •

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Commentary

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CBD oil

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3. CBD oil Overview •

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Commentary

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3. CBD oil Extraction processes •

Commentary

Extraction process CO2 supercritical

Solvents

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Description

Pros

Cons

3. CBD oil US production overview •

Commentary

Domestic hCBD oil capacity •

Commentary

Buying and selling hCBD oil •

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Commentary

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3. CBD oil North American producers •

Commentary

Name

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Website

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Overview

Stock

Notes

3. CBD oil Global producers Name, Country, Website

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Overview

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Stock

Notes

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CBD industry developments

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4. CBD industry developments Trading platforms •

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Commentary

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4. CBD industry developments Specialized hemp and cannabis-focused supportive industries •

Commentary

Manufacturing

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Law firms/regulatory consulting

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Specialized cannabis manufacturing solutions

Marketing

CBD-specific ingredients

Start-up financing

4. CBD industry developments M&A activity - Key acquisitions Buyer

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Target

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Type

Date

4. CBD industry developments Joint venture activity Partners

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Deal details

Date

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Regulatory environment

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Regulatory environment - US

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5. Regulatory environment US: Hemp-derived CBD (hCBD) - mostly legal •

Commentary

Shaded states are where hemp-derived CBD is legal according to the federal guidelines, though individual state-level regulations for sales and consumption vary widely.

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5. Regulatory environment US: Cannabis-derived CBD (cCBD) - legislated as a marijuana •

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Commentary

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5. Regulatory environment US: State-level marijuana

Medical & recreational use is LEGAL Medical use is LEGAL & recreational use is DECRIMINALIZED Medical use is LEGAL, recreational use is ILLEGAL Medical & recreational use is ILLEGAL but DECRIMINALIZED Medical & recreational use is ILLEGAL Medical use is limited to CBD

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5. Regulatory environment US: Future cannabis market changes •

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Commentary

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5. Regulatory environment US: Summary of tax rates: 10 states with the highest cannabis revenue States

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Tax rates

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2019 cannabis revenue

5. Regulatory environment US: Sales channels - hCBD and cCBD hCBD •

Medical = LEGAL Recreation = LEGAL

Commentary

Medical = LEGAL Recreation = ILLEGAL

* hCBD product sales allowed through dispensaries †

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Not allowed through dispensaries

5. Regulatory environment US: Mainstream retail adoption of hCBD products •

Commentary

CBD Consumer Products

State law expressly gives permission for CBD-infused products (including foods) to be sold State law allows CBD-infused products under certain conditions or regulations

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Regulatory environment - Canada

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5. Regulatory environment Canada: An overview •

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Commentary

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5. Regulatory environment Canada: Canadian products •

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Commentary

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Market trends in CBD drinks

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6. Market trends in CBD drinks 2020 changed everything •

Commentary

Where are they now? Market leaders from 2018 •

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Commentary

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6. Market trends in CBD drinks Market players: local distribution and start-ups •

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Commentary

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National distribution Regional distribution Online only Local distribution and start-ups

6. Market trends in CBD drinks Market players: online only •

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Commentary

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National distribution Regional distribution Online only Local distribution and start-ups

6. Market trends in CBD drinks Market players: regional distribution •

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Commentary

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National distribution Regional distribution Online only Local distribution and start-ups

6. Market trends in CBD drinks Market players: national distribution •

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Commentary

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National distribution Regional distribution Online only Local distribution and start-ups

6. Market trends in CBD drinks Brands and total volume sold by retail network size •

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Commentary

Number of brands by retail network, 2020e

Volume (million liters) by retail network, 2020e

Local

Local

Online only

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Regional

National

Online only

Regional

National

6. Market trends in CBD drinks Price per liter by retail network •

Commentary

Price per liter by retail network (US$), 2020

National

Regional

Online only

Local

$0.00

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$5.00

$10.00

$15.00

$20.00

6. Market trends in CBD drinks Product sizing and price per liter •

Commentary

Product size available in market, 2020

Price per liter by product size (US$), 2020 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 500ml

500ml

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473ml (16 fl. oz.)

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355ml (12 fl. oz.)

250ml or smaller

473ml

355ml

250ml or smaller

6. Market trends in CBD drinks Legal games: Amazon and Walmart - “hemp extract” vs “CBD-infused” •

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Commentary

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6. Market trends in CBD drinks Consumer sentiment •

Commentary

Awareness of non-psychoactive properties of cannabis in Canada and US, 2020

Yes, aware

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No, not aware

6. Market trends in CBD drinks Consumer personas • Abstainer • “Quote”

Wellness enthusiast • “Quote”

Aging athlete • “Quote”

True believer • “Quote”

Sugar avoider • “Quote”

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Commentary

6. Market trends in CBD drinks Future expansion trends •

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Commentary

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6. Market trends in CBD drinks North American CBD drinks market evolution •

Commentary

North American CBD drinks market evolution, 2018-2023f 7

120

6

100

5

4 60 3 40 2 20

1

0

0 2018

2019

2020e Volume

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2021f

2022f Value

2023f

US$ million

Million liters

80

6. Market trends in CBD drinks North American CBD drinks market forecast: The future of CBD drinks •

Commentary

North American CBD drinks market forecast, 2023-26f 140 10 120

100

80

6

60 4

40 2 20

0

0 2023f

2024f Volume

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2025f Value

2026f

US$ million

Million liters

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Market trends in other CBD oil-infused products

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7. Market trends in other CBD oil-infused products CBD and THC infused into ready-to-drink beverages •

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Commentary

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7. Market trends in other CBD oil-infused products CBD in edibles •

Commentary

cCBD •

Commentary

hCBD •

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Commentary

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CBD drinks brand profiles

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8. CBD drinks brand profiles US/Canada + national/regional/local/online brand

Brand Name

Company Name, Company Location www.companywebsite.com

Product information: Product information CBD content: Xmg CBD per can Positioning: Positioning Launch date: Launch date Variants: Flavor variants Distribution channels: Distribution channel(s)

Pack size & type: 12oz. (355ml) aluminium can Price: US$ Price

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