Karma debuts CBD water distributed by Constellation Brands

Dive Brief:

• Enhanced water maker Karma Culture LLC is launching Karma CBD Water, created in partnership with cannabis and hemp supplier Canopy Growth Corp. Each beverage contains 25 milligrams of Canopy Growth’s broad-spectrum CBD distillate sourced from hemp biomass, as well as adaptogens and essential vitamins. The bottle has a patented push cap said to preserve the ingredients’ potency.
• Karma’s CBD line includes five naturally sweetened, preservative-free flavors: Cranberry Lime, Blueberry Yuzu, Blood Orange Papaya, Lavender Orange, and Watermelon Dragonfruit. Alcohol giant Constellation Beverages, which acquired a minority stake in Karma Wellness Water in 2019, will be distributing the drink nationwide through its beer distribution network. Constellation also has a financial stake in Canopy Growth.
• As people consume less beer, manufacturers in the space including Constellation, Molson Coors and Boston Beer have eyed CBD-infused drinks as a growth opportunity. With Constellation’s expansive distribution arm and Canopy’s prominence in hemp and cannabis, Karma will have an advantage in a segment quickly becoming crowded by traditional and startup beverage players.

Dive Insight:

Constellation has planned to launch cannabis-infused drinks for several years, and its investments in Karma and Canopy Growth are proving helpful here. Karma said in a press release that its collaboration with the maker of Modelo and Corona beer brands will give it access to “an established and highly successful distribution network” to get its new hemp-based CBD water on retail shelves.

Constellation first acquired a 9.9% minority stake in Canopy Growth in 2017, eventually boosting its stake to 39% in 2020. Last year, Canopy Growth launched its own line of cannabis-infused beverages in Canada, where the ingredient is widely legal, and captured 75% of the market within months. Last fall, the company said it planned to launch a “sessionable infused beverage offering” in partnership with Acreage Holdings in the U.S. in 2021, with a former executive adding that it was “bullish” about the category.

Canopy Growth CEO David Klein said that beverages are “continuing to fuel the growth in the CBD category as consumers seek out familiar, fast-acting product formats that fit seamlessly into their busy lives.”

While Constellation’s investment in Karma and Canopy Growth gives it an edge on CBD and cannabis-infused beverages, other alcohol veterans have made a play for the space. Early this year, Molson Coors launched a sparkling hemp-based CBD drink called Veryvell with Canadian grower Hexo, exclusively in Colorado. In late 2020, Pabst Labs, a licensed cannabis company founded by former Pabst Brewing Company employees and cannabis experts, launched PBR Cannabis Infused Seltzer, made with five milligrams of THC, exclusively in California.

Last month, Boston Beer subsidiary BBCCC partnered with cannabis grower Entourage Health to develop nonalcoholic cannabis-infused drinks in Canada, with production on the beverages slated to begin this quarter. The beer manufacturer said that its success in the seltzer market with Truly made it more eager to enter the still-fledgling cannabis-infused drinks segment.

Anheuser-Busch InBev invested heavily in cannabis in 2019, partnering with Tilray, a producer and distributor of cannabis, to research nonalcoholic beverages containing THC and CBD. Later that year, they launched Fluent Beverage Company, a joint venture to sell CBD infused beverages, and debuted a tea and seltzer brand called Everie in Canada.