Featured Story - Mapping Success in the Cannabis Beverage Industry: A Guide for CPG Professionals

Building Loyalty and Authenticity in the Cannabis Beverage Segment

What are the top challenges consumer packaged goods professionals face when transitioning into the cannabis beverage industry?

The cannabis industry's nascent and heavily regulated status, combined with fragmented sales channels and the cannabis beverage category itself, makes accurate market data scarce. This scarcity hampers consumer packaged goods professionals' decision-making abilities. However, massive growth looms on the horizon as more consumers gain access to tasty beverages that are potentially healthier alternatives and offer novel effects. The market's untapped potential remains vast as it continues to expand.

To these professionals, I say: Columbus didn't have a map or GPS. His failure meant death. What does your failure mean? If you can't make peace with that outcome, you should quit now.

How do you navigate a landscape lacking data or established success? Through ground-level discussions with industry insiders and consumer interviews. This process is time-consuming—one of the reasons you must be fully committed to this category.

How is the Cannabev Category Defined Today?

Whenever a new player enters the beverage world, you can bet both startups and established brands will quickly follow with their own offerings. Cannabis beverages intrigue me because the category lacks a dominant brand like Coca-Cola, Red Bull, or Starbucks. Defining this segment will require creativity and significant hustle. More likely, we'll see cannabis ingredients become part of recipes supporting various beverage segments.

Cannabis is a complex plant with numerous compounds. Two of the most well-known, THC and CBD, frequently appear in cannabis beverages.

CBD was my primary focus in 2019. The USDA farm bill legalizing CBD cultivation had been drafted the previous year, and CBD was being added to everything—from toothpicks and candles to pillows and, in one of my early projects, sexual lubricant. People primarily use CBD for pain relief, anxiety reduction, and sleep aid. Unsurprisingly, most CBD beverages on the market promoted relaxation and tranquility. Entrepreneurs found CBD attractive because it was seen as legal in traditional channels and wouldn't intoxicate cannabis-wary consumers.

THC, conversely, is known for its euphoric effects. Unlike CBD, even small amounts of THC can be felt, often inducing happiness. While I was mainly advising on CBD beverages, high-THC products were dominating the California cannabis market.

Define Who Your Cannabev is For

I'm not discussing persona archetypes here, but rather exploring why someone seeks these compounds in liquid form.

I categorize consumers looking for effects from their cannabis beverage into three groups:

1. The heavy cannabis consumer who wants a quick, cost-effective way to get high.

2. The "healthy hedonist" consumer seeking a better alternative to alcohol.

3. The functional consumer looking for a specific effect to aid with a task.

The first category still dominates dispensaries today. If you're selling beverages in this channel, you're essentially offering a liquid supplement.

The second category emerged in 2019. I credit Cann Social Tonics for investing significant marketing resources to inspire a new wave of consumers to seek out cannabis. Cann developed a thoughtful formulation of THC and CBD, with CBD intended to balance the anxiety induced by THC, allowing users to experience euphoria without getting stuck in their heads. Cann targeted the "healthy hedonist" rather than the typical dispensary customer looking for liquid THC. Thus, the social tonic was born. However, it was expensive and they encountered a lot of resistance educating dispensaries on the opportunity they couldn’t see past the sea of customers looking for high potency items at a low price.

The third category is starting to gain momentum, but largely doesn’t exist yet. If you are going to build in this space, it will take a significant targeted marketing effort to find consumers already aware of the performance enhancing effects of cannabis. This effort can be fruitful, as many others will compete in the other two categories listed above.

What Does the Future Look Like?

Just as caffeine isn't confined to one retail segment, I foresee cannabinoids occupying various store sections, depending on their purpose and other ingredients in the can.

This potential is challenging to quantify. Cannabis beverages are poised to benefit greatly from near-term growth as new consumers gain access to products from reputable manufacturers and retailers. Almost daily, another institution expresses interest in this category. While they move cautiously, it strengthens my belief that cannabis drinks will soon become the top product category as legal access expands to a mainstream consumer base. The destigmatization of cannabis cannot be overstated—this rising tide will lift all boats.

Of course, while the potential is staggering, capitalizing on it demands flawless execution and laser focus on your target consumer. We must deliver on product quality, consumer education, and smart distribution—the keys to winning over new customers. There's still much work ahead.

Yet the early numbers are promising. In traditional beverage retail settings, hemp products are already accounting for 10–25% of overall beverage revenue.

The future growth is immense. It's thrilling to imagine cannabis beverages being incorporated into diverse lifestyles for various purposes. I'm eager to witness the cannabis beverage category soar to new heights in the coming years as legalization expands.

About Paulo:

I started my beverage career at PepsiCo, where I was promoted 3 times in 5 years in various sales and operations management roles. Fuelled by a passion for innovation and entrepreneurship, I ventured into the burgeoning medical marijuana industry in California in 2016. As the inaugural sales hire for Bloom Farms, we grew our monthly revenue from $300k to $2m my last month at the role. It was at Vertosa, I played a pivotal role in the nascent cannabis beverage category. We served water-miscible cannabinoid solutions for consumer packaged goods companies eager to enter the cannabis space. Despite regulatory challenges, my journey led me to establish a consultancy, guiding startups on commercialization and market entry strategies while fulfilling key fractional roles.

My path eventually converged with Cann Social Tonics, where I spearheaded the launch of two new brands. From there, I steered California sales and partnerships to new heights while the company focused on resource management instead of growth. My tenure at Cann lead to a strategic partnership with the Grossman family owners of Sierra Nevada Brewing, in their exploration into the cannabis beverage market. 

Today, I am committed to elevating high-growth brands by infusing our hallmark standards of quality into their narratives. I still own shares in four cannabis companies and remain friends with the industry. 

From large multi-national companies to two person startups in various industries, I cherish the diverse experiences that have shaped my perspective. I enjoy collaborating with beverage brands to enhance the lives of their consumers.