Coca-Cola and Aurora are in talks which may result in a deal, and the beverage giant entering the cannabis market in Canada.
First, there was Diet Coke, then Cherry Coke and Vanilla Coke — but are you ready for Weed Coke? Ready or not, its coming Canada’s way!
Even though the federal government in Canada said that the market for edibles and cannabis-infused beverages won’t open for at least a year, beverage companies are kicking things into higher gear.
Just a couple weeks ago we saw the biggest deal in the history of the cannabis market, when Constellation Brands increased their position on Canopy Growth to 38% ownership, with options to go up to 51%.
We also saw the deal between Molson Coors and Hydropothecary Corp. go through as they announced a joint venture which will be owned by Molson (57%) but ran by Hydropothecary.
We even guessed that something like this will happen just 4 days ago, and Aurora didn’t disappoint — they went for possibly the biggest fish in the ocean.
Is a joint venture, or perhaps a takeover on the table? What are Coca-Cola’s intentions for the cannabis market, and how big will their presence be?
Weed-Cola is likely to happen
Coca-Cola got its name from the ingredient that made it unique way back in the days when cocaine was an essential part of the drink. That ingredient was in fact cocaine.
The company became totally cocaine-free only in 1929, even though they were ordered to remove all of it way back in 1993.
Not even that was the end of Coca-Cola’s coca troubles as the company continued to import coca leaves from Peru and Bolivia until at least the late 1980s.
Even after that, Coca-Cola never stopped putting the most addicting drug of them all in its drinks – sugar.
In fact, it turns out that sweetness takes precedence over cocaine, so they didn’t need to keep coke in their drinks to have people addicted to them.
According to a BNN Bloomberg report, these drinks would be marketed as “wellness drinks,” aimed to reduce inflammation and joint pain.
Both companies confirmed that the report was legit and that they were in fact in talks, which made the cannabis stock market go wild once again.
The whole market bounced back from the recent downturn when the US federal government announced they will ban everyone closely tied to the industry, or even engaged in the activities such as cannabis consumption and promotion.
The specific partners in this deal are surprising, as nobody expected a behemoth such as Coca-Cola to get involved just yet, however, the type of deal is something we already expected as I mentioned before.
The next on the list for a strategic partnership with a beverage company is Tilray, which has been blowing up lately as its stock just hit $120 this morning.
Aphria is another potential partner for big beverage companies, in fact, it was even indicated by Vivien Azer of Cowen that Pepsi might be looking into a partnership deal as well, following the success of Gatorade.
Troubles in paradise?
Fizzy drinks such as Coca-Cola, Pepsi, Fanta and such have been dropping in sales for more than a decade. On the other hand, bottled water has been rising in sales.
Most beverage companies have bottled water brands as their subsidiaries, but not even that stopped them from having smaller profits year after year.
Coca-Cola’s 2017. revenue was down almost 16% from the year before, even though the company accounts for 40% of the US, and 65% of the global soft drink market.
A move to expand their offer and introduce CBD and THC infused drinks would be a good one for the company as the cannabis market isn’t looking like it’s about to slow down.
By the time these big beverage companies have everything figured out in Canada, they can start lobbying US senators and other politicians to legalize cannabis in the US.
Looking at the trend of cannabis legalization over time on the image above, that doesn’t seem too far fetched, at least in my eyes.
If there is anyone that can influence the US politicians and their position on cannabis legalization that’s the big alcohol and beverage companies such as Coca-Cola and Pepsi.
So many states already legalized recreational and/or medical marijuana, and the midterm elections are coming up in just a few weeks in the US.
This seems like the perfect opportunity for the federal government to stop burning bridges and start making decisions that are already being made for it.
Hopefully, this deal with Aurora will go through and become the foundation of one of the best drinks we are about to try in our lives.
After almost a day a half of speculating and guessing what type of deal will be made between Coca-Cola and Aurora, the beverage giant made it clear that nothing has been signed yet.
In fact, Coca-Cola spokesman Kent Landers said in a statement that the beverage company will not be pursuing cannabis or marijuana, but the outlook of CBD-infused drinks is a good one in their case.
“We are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world, this space is evolving quickly. No decisions have been made at this time.”
Aurora’s stock has been on the rise ever since the initial rumor was leaked by BNN Bloomberg, and hasn’t gone down even with the announcement from Coca-Cola.