Coke drinks market

(Reuters) – Coca Cola Co (KO.NMonday said he was looking closely at the growing market for marijuana-infused beverages, in response to a press report that the largest beverage company in the world was in talks with Aurora Cannabis Inc. (ACB.TO).

The potential stowage of the product, reported by the Canadian financial channel BNN Bloomberg, could help Coke overcome the weak demand for its sugar-rich sodas by diversifying into coffee and health-focused beverages.

Large companies have embarked on the marijuana industry since Canada approved recreational use, considering the country as a production base and a testing ground up to that point. that the US federal law changes.

"While there are opportunities in some US states for Coke to develop and sell a product, this would jeopardize their banking relationships," said Bruce Campbell, portfolio manager at Stonecastle Investment Management, who has invested in marijuana growers.

"Entering a legalized Canadian market allows them to develop and build a brand without breaking any laws."

Coke and Aurora, in separate statements, stated that they were interested in cannabidiol-infused beverages but that they could not comment on any market speculation.

Coke and Aurora would likely develop drinks that would relieve inflammation, pain and cramps, reports the BNN report here.

This decision would make Coke the first major manufacturer of non-alcoholic beverages to enter the cannabis-related product market, following announcements by manufacturer Corona Constellation Brands (STZ.N) and Molson Coors Brewing Co (TAP.N).

The largest spirits manufacturer in the world, Diageo (DGE.L) is also in talks with at least three Canadian cannabis producers as it is considering a possible investment. bit.ly/2PBJbL0

According to market research firm Euromonitor International, sales in the US legal markets are expected to almost triple in 2020, from $ 5.4 billion in 2015 to $ 16 billion by 2020, and across the board. worldwide, cannabis could represent $ 200 billion.

IN GOOD HEALTH

Following a $ 5.1 billion deal last month for the purchase of Costa Coffee, analysts said the move to marijuana consumption went hand in hand with Coke's decision to turn to a portfolio of healthier products. Cannabidiol or CBD is one of hundreds of molecules found in marijuana plants and contains less than 0.1% of tetrahydrocannabinol (THC), the psychoactive component that makes people bred. This does not cause intoxication.

"With many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness drinks around the world," Coke said in its statement on Monday. .

Aurora shares rose 14%, while Canopy Growth Corp.CGC.N) and Tilray Inc (TLRY.O) gained 3% and 7% respectively. Coca-Cola's shares were slightly higher in a US market facing the expectations of a new series of Chinese commercial rates.

Vivien Azer, an analyst at broker Cowen, said she would not be surprised to see Pepsi PEP.N request a similar reconciliation.

"We continue to expect to see more business between Canadian cannabis companies and major players in the global alcohol market who have not yet been exposed to this category," she said.