The convenience industry is ground zero for cannabis-infused product innovation

"Greenfield" refers to a virgin market yet to be commercially exploited. From a business perspective, it’s elusive and appealing because of how infrequently it occurs, as well as the potential for windfall results.

"Greenfield" refers to a virgin market yet to be commercially exploited. From a business perspective, it’s elusive and appealing because of how infrequently it occurs, as well as the potential for windfall results.

Greenfield opportunities are generally not for lack of foresight, but rather a function of structural, technical, regulatory or other barriers. When circumstances change, competing parties typically scramble for prime positioning. 

The passing of Bill C-45, The Cannabis Act, in 2018 ushered in a new age of cannabis legalization in Canada. Legal sales of cannabis via retail outlets, as well as limited personal production, opened up for the first time, setting the stage for future cannabis-related innovation. 

On Oct. 17, 2019, the commercial sale of cannabis-infused edibles (baked goods, drinks etc.) became legal, however there was already much work ongoing to define a framework for what many see as the next greenfield opportunity. For instance, CBD-infused products will start hitting store shelves before the end of of the year.

This is no doubt of interest to the convenience industry and c-store operators, who may be uniquely positioned to grab a piece of this greenfield market.

It’s also welcome news to consumers. According to a study out of Dalhousie University in Halifax, of the 68% of participants who were in favour of legalizing cannabis in 2017, 93% were also very likely to try at least one edible product, while 46% of all Canadians would try cannabis-infused food products if they were available. 
 

  • On the Menu

    Baked Goods: Traditional carrier of edible cannabis via pot muffin or brownie

    Beverages: Cannabis infused drinks, such as been and non-alcoholic beverages, are poised and ready. In addition, with legalization, consumers may choose cannabis and related products more often than a drink or two, thus disrupting the alcohol industry. For c-sores that carry beer and wine, this is worth watching.

    Candy: Candies are the number one food product containing cannabis in the United States. They take the form of animal or shaped gummies, suckers and chocolates.

    Sauces: We could see some consumers substituting their usual pasta sauce or foregoing wine in favour of cannabis-infused spaghetti sauces or cannabis oil.

    Supplements/Nutraceuticals: The cannabis plant is full of nutritional value. It contains protein, carbohydrates, insoluble fibre, potassium, magnesium, sulfur, calcium, iron, zinc, vitamins E and C and many other elements considered beneficial for good health. For food manufacturers looking for a new value-added feature, cannabis could be the next omega-3 or probiotic. 

    Source: Sylvain Charlebois, Dalhousie University

Consumers have a taste for cannabis

In 2019, Deloitte surveyed 2,000 adult Canadians regarding cannabis and edibles consumption, concluding that edibles and cannabis-infused beverages represent a multi-billion dollar opportunity. 

The Arcview, a cannabis investment and market research company, projects the cannabis edibles market will be worth more than $4 billion in Canada and the United States by 2022, with Canada representing nearly 40% of the opportunity.

 As a means of projecting the potential of cannabis for the Canadian food industry, Sylvain Charlebois, professor of food distribution and policy at Dalhousie University, examined data from U.S. states that have already implemented legalization. The data pointed to rapid market penetration in Canada, with edibles sales expected to account for more than 10% of total cannabis sales within two years of opening the market.

CBD: The first wave

The first wave of change will be food and beverage products that reference cannabis, but include non-hallucinogenic cannabidiol (CBD) derivatives and/or hemp-based products.

Hemp and CBD products became legal in the U.S. with the signing of the Farm Bill at the end of 2018. In its annual Chef Survey, The National Restaurant Association and the American Culinary Federation found that 75% of the 650 chefs surveyed said CBD and cannabis-infused food would be a hot trend in 2019.

In the U.S., legalization has sparked innovation and, ultimately, consumer demand.

Though, it is still early in the adoption process for CBD-infused foods and beverages, there are many examples of both emerging and global drink companies aligning to prepare for the coming market gap. 

For instance, L.A.-based Kickback Cold Brew offers coffee and tea-based CBD-infused beverages made with organic ingredients, 100% single origin and shade grown coffee beans, and high-grade hemp.

In the QSR segment, Carl’s Jr., a burger chain with 1,500 locations, including more than 20 in British Columbia, Alberta and Saskatchewan, recently tested a CBD Burger in Colorado. The limited edition $4.20 Rocky Mountain High: CheeseBurger Delight featured a Santa Fe sauce infused with CBD, a non-psychoactive hemp derivative. It was a nod to consumers’ pent up desire for cannabis innovation and may yet find a place on Carl’s Jr. permanent menu.

 “(It) ties back to our core strategy of being the first to bring bold and unexpected flavours, that are at the forefront of hot restaurant trends, to a quick service menu,” says Patty Trevino, Carl's Jr. senior vice-president of brand marketing.

Cannabis express

Convenience operator Kohanoff Affiliated recently partnered with Swissx Oil & Confectionary to distribute its Swissx CBD products in more than 500 convenience stores and gas stations across Southern California. 

in 2019, Canada’s Alimentation Couche-Tard Inc. entered into a multi-year agreement with Canopy Growth Corp. to open a Tweed-branded cannabis store in London, Ont. “Alimentation Couche-Tard is excited about taking a leadership role in the development of cannabis retailing excellence,” says Brian Hannasch, president and CEO of Couche-Tard, adding Couche-Tard is looking at this venture as a vital entry opportunity to a new market.

Then, in July, the convenience giant announced a partnership with cannabis retailer Fire & Flower. “Couche-Tard is excited to make this strategic investment in one of the fastest growing cannabis 'pure-play' retailers,” said Hannasch. “This investment in Fire & Flower, with a path to a controlling stake, will enable us to leverage their leadership, network and advanced digital platform to accelerate our journey in this new and flourishing sector.”

With the legalization of cannabis, we are in the midst of a revolutionary paradigm shift. Having lived in The Netherlands during the 1990s, I was first exposed to a tolerant attitude towards cannabis: Legalization blows open the door to normalization, commercialization and potentially explosive growth. It promises to be one of the largest “land rushes” in modern memory and the time to get your claim flag in the ground is now.

BOTTOMS UP: 7 Beverage Companies Vying for a Share of the CBD Market

 

Youngevity International Inc.: Partnered with CLR Roasters and HempFX brands for a CBD-infused coffee and a CBD water is in the works.

The Alkaline Water Company Inc.: Distributed through more than 150,000 stores, including nine of America's top-10 retailers, the company is waiting on FDA approval to launch its CBD water.

New Age Beverages Corporation: Introduced CBD-infused beverages, including a range of organic cold coffees and teas, under its Marley brand.

Heineken: In partnership with its craft brewer, Lagunitas, the company sells Hi-Fi Hops, in to versions—one with 10 mg of THC and one with 5 mg of TCH and 5 mg of CBD.

Constellation Brands Inc.: Invested $4 billion in Canopy Growth Corporation, one of Canada's largest cannabis producers, and the two are working to produce cannabis drinks.

Molson Coors Brewing: Announced a joint venture with a pot grower HEXO to release cannabis-infused non-alcoholic beverages by fall 2019.

Tilray: One of Canada's leading cannabis producers is angling to be a leader of teh CBD-infused beverage market, partnering with Anheuser-Busch InBev SA to research cannabis-infused non-alcoholic drinks.

Source: CannabisNewsWire.com

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