When Canada finally introduced the regulations that would allow edible and drinkable cannabis products in 2019, the industry was abuzz with excitement. A year after legalization, it seemed consumers would finally have access to infused snacks and beverages comparable to products found in legal states south of the border.
The hype attracted major players like Anheuser-Busch, which partnered with Tilray, Molson Coors, which teamed up with Hexo Corp., and Constellation Brands, which joined forces with Canopy Growth. In the U.S., cannabis drinks are considered the fastest-growing segment and licensed producers rushed to be first to market in hopes that the trend would follow in Canada.
Unfortunately, issues with scale, product execution and unreasonable consumer buying limits have tempered excitement about cannabis drinks. More than a year has passed since cannabis drinks have become available and product selection has slowly increased, but a standout player in Canada’s cannabis beverage market has yet to emerge.
A New Player In The Infused Beverage Market
A newly licensed company hopes to change that, with a business structure that is in stark contrast to the partnership model many big producers have chosen. With a manufacturing and bottling facility with the capacity for 210 million bottles a year and its own aquifer, Bevcanna has the ability to produce drinks independently—for its in-house brands and white-label clients.
“We are craft enough that we can cater to our smaller white-label partners, yet also have significant infrastructure and production capacity in place to scale and work with the largest of clients,” says Bevcanna CEO Marcello Leone and founder of the Naturo Group.
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Bevcanna received its standard processing license from Health Canada last week, and while delays in license approval are common and can be challenging, Leone says not being first to market provided the company with an opportunity to strengthen its own vertical.
“As we have watched the cannabis beverage industry evolve, it allowed us to hone our business model to ensure we could adapt and create significant value for consumers,” he says.
While there are a few other players offering white-labeling services for beverages, Leone says what separates the company is its ability to offer not just one but multiple beverage formats in aluminum, glass, or plastic.
“There literally won’t be a format we won’t be able to make,” he says.
Being an independent player in the space has enabled the company to align with companies like Keef Brands, a beverage brand that ranks first in the U.S. in both units and dollars sold. That partnership will allow Bevcanna to produce Keef beverages and sell them in Canada, and give the company’s in-house brands access to Keef’s robust U.S. distribution and manufacturing network.
More Than Just Cannabis Beverages
It might seem obvious that a company with a name like Bevcanna’s has a focus on cannabis beverages, but its recent acquisition of Naturo Group, an established private beverage company valued at USD$33 million takes it out of the cannabis drinks pond and into the sea of health and wellness companies.
Bevcanna’s acquisition includes Naturo’s existing Trace Wellness brand, a line of plant-based mineral drinks and supplements, as well as its Okanagan bottling facility and onsite alkaline spring water aquifer.
Founded by Leone in 2013, Naturo Group acquired approval from Health Canada for its products in 2016. They are currently sold in more than 3,000 stores across the country.
“For us, this is a major leap in diversifying our business from just cannabis,” Leone says of the acquisition, which is set to close by the end of the month. “With this acquisition, we migrate from simply being a cannabis beverage company, which is obviously the large part of what shareholders know of us.”
And thanks to its existing line of products, he points out that Bevcanna’s white-labeling services will not only be brand-agnostic, but emulsion, infusion, and ingredient-agnostic, potentially increasing the number of health and wellness partners it can work with.
Updates To Regulations Could Lead To Growth
As Bevcanna prepares to bring Keef and its in-house and white-label brands to Canadian consumers over the next few months, there’s palpable hope among industry players that Health Canada will update regulations that limit the amount of beverages a consumer can buy at one time.
“It’s a positive indication that Health Canada is evaluating the nuance of the beverage industry, as we have seen them do before,” says Leone. He’s confident that regulations will evolve in certain areas as it becomes clear that Canadians don’t require certain purchasing prohibitions to enjoy themselves responsibly.
With its cannabis processing license now in place, Leone looks forward to working with emerging and established players alike to bring a new round of infused drinks to the table. Of course, with more than just cannabis beverages in its product portfolio, the idea is that Bevcanna won’t have to rely on updates to cannabis regulations in Canada to be successful.