4th March 2020

Is Coca-Cola Looking to Get Into Cannabis?

A recent video suggested that the company will sell CBD-infused products in Canada.

 

 

 

Cannabis beverages could soon become a lot more mainstream, at least in Canada, where the products are now legal. As of Oct. 17, edible and ingestible cannabis products are legal — in some retail shops, they hit store shelves by December. Big beverage companies like Constellation Brands and Molson Coors have gotten involved in producing cannabis-infused beverages, with the former teaming up with Canopy Growth while HEXO has a joint venture with the Canadian arm of the latter. 

Another big name that’s also been rumored to be interested in cannabis: Coca-Cola (NYSE:KO).

YouTube video sparks rumors about company’s interest

A recent and since-deleted YouTube video showed a Coca-Cola can with a childproof lid on it. In the video, the author claimed that his father works in bottling and that Coca-Cola was interested in developing drinks that contain cannabidiol (CBD). Edible products, including beverages, can be harmful to children and having a childproof lid is one way that a company could help prevent accidental consumption by minors.

It may sound convincing, but the company has denied any interest in CBD. There are also a couple of important reasons why it doesn’t make a lot of sense for the company and why investors shouldn’t read too much into these claims. 

The opportunity just isn’t there

Coca-Cola was previously linked to the cannabis industry when in 2018 it was rumored to be looking at partnering with marijuana giant Aurora Cannabis (NYSE:ACB). Nothing came of that and it was never clear how close the two companies were to a deal, or if the soft drink giant was just kicking tires on the possibility.

Aurora hasn’t partnered with a beverage company and, at this point, it’s unlikely that will change, with the company previously stating that it didn’t believe the market for cannabis beverages was large enough. 

Fortune Business Insights estimates that by 2026 the global market for beverages will be just over $2 billion. While that’s a significant increase from the $174 million the research company estimated the segment of the industry to be worth in 2018, it’s still about the size of a rounding error for Coca-Cola, a company that in the past 12 months generated $33.6 billion in revenue.