Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Part of cannabis and investing

Employees at Hydropothecary, a Quebec-based licensed medical cannabis producer, tend to rows of marijuana plants. Beer maker Molson Coors Canada announced a joint venture with the company earlier this summer.

Hydropothecary Corp./The Globe and Mail

Some global beverage makers are taking a close look at Canada’s legal marijuana industry as they weigh the possibility of getting into the business.

Officials from Anheuser-Busch InBev SA/NV, Pernod Ricard SA, Heineken Holding NV, Coca-Cola Co. and Diageo PLC are among companies that have been making the rounds with legal cannabis producers, meeting executives and touring their facilities, according to sources familiar with the matter.

The rise of a legal cannabis market has stoked fears among brewers and soft-drink makers that marijuana will dent already declining or stagnating sales. On the eve of legalization in Canada, some of these companies are trying to understand the potential shift in consumer behaviour and avoid being left behind.

Story continues below advertisement

While the meetings began months ago, the beverage industry’s interest in marijuana has been in the spotlight since Constellation Brands Inc. announced earlier this month plans to take a big position in Canopy Growth Corp., saying it would invest $5-billion in Canada’s most valuable cannabis producer. That deal came on the heels of Molson Coors Canada announcing a joint venture with Quebec cannabis producer Hydropothecary Corp.

The Constellation deal raises the stakes for rivals that have been circling the cannabis industry for months as a band of major players in the food, consumer goods, pharmaceutical, tobacco and asset-management sectors join them on the touring circuit.

Pot stocks have been on fire since the Constellation announcement two weeks ago, making it even harder for them to justify their lofty valuations. Since mid-August, shares of Cronos Group Inc. have soared 87 per cent, while Tilray Inc. is up 77 per cent, Aurora Cannabis Inc. is up 45 per cent, Aphria Inc. is up 42 per cent and CannTrust Holdings Inc. is up 30 per cent.

Sources familiar with the discussions between marijuana companies and beverage makers cautioned that another major deal with any of the beverage firms is not imminent.

Nevertheless, various beverage companies are considering their options. “I can assure you that we’re watching developments very closely and assessing what actions, if any, will be right for our business,” Patrick O’Driscoll, chief executive officer of Corby, a Canadian division of French spirits giant Pernod, told a conference call last week.

With the Oct. 17 legalization of recreational cannabis in Canada approaching, many beverage companies are looking for new ways to bolster their slow-growing business. Big brewers are looking to stem falling sales and not miss out on the next big thing, like many did with female drinkers, craft brews, cider and seltzer, said Vivien Azer, an analyst at Cowen Inc. As well, alcoholic drink companies struggle with the spectre of possibly losing market share to cannabis firms. And the beverage companies don’t want to be beat by rivals on a potentially new lucrative stream of revenue.

In North America, sales of mid-priced beers dropped 12.5 per cent to US$37.3-billion last year from five years earlier, and are forecast to tumble another 14.3 per cent to 2022, according to market researcher Euromonitor. North American soft drink sales were relatively flat between 2012 and 2017, at US$76.4 billion last year, and expected to slip 3.8 per cent to 2022, Euromonitor found.

Story continues below advertisement

“For the alcoholic sector, the stakes are pretty high and they know it,” said Sylvain Charlebois, dean of the University of Dalhousie’s management faculty. “That’s why they’re moving first.”

But one of the chief questions for beverage firms is whether they even need to invest in or acquire an unproven Canadian marijuana startup to get into the space and what their risks – legal, reputational, financial – would be if they did. The sources said a small equity investment in a company was a more likely entry option than a full takeover.

Workers produce medical marijuana at Canopy Growth's Tweed facility in Smiths Falls, Ont., on Monday, Feb. 12, 2018.

Sean Kilpatrick/The Canadian Press

Meanwhile, product innovation that would pique the interests of big beverage, food and consumer goods companies has been limited in Canada by regulation. The rules for edibles and beverages have yet to be written in Canada and the drug is still illegal at the federal level in the U.S.

The continued focus on deal-making in the nascent cannabis sector is coming at a time when growers cannot afford any operational missteps. Internally, producers are working to fulfill the initial purchase orders they have received and gearing up to deploy their sales teams to promote their products at the retail level and be gunning for the next orders to keep the cash flows moving.

“There are still a lot of questions about the state of these companies that we’ve put a lot of value into,” said John Kaden, chief investment officer at New York’s Navy Capital LLC, an investment firm that specializes in cannabis.. “We’ve never had a meaningful quarter yet.”

Beverage companies have been reserved about commenting on their interests in cannabis. Corby’s Mr. O’Driscoll said “at this moment I think it’s difficult to say what the impact will be” of the legalization of recreational cannabis on the beverage alcohol industry and consumer consumption behaviour. But he said the company is closely watching developments in the cannabis world. Pernod didn’t return an e-mailed request for comment.

Story continues below advertisement

Coca-Cola spokeswoman Shannon Denny said the soft-drinks maker is not working on any initiatives in the cannabis space. Heineken offers cannabis-infused sparkling water in its Lagunitas brand. The product is a joint venture with CannaCraft, a producer of cannabis-based products in California, and “the latest result of Lagunitas’ off-the-beaten-path experimentation,” said a spokeswoman, who did not address Heineken’s broader marijuana strategy.

A spokesperson for Diageo said the company doesn’t comment on speculation and that it is “monitoring this space closely.”

AB InBev spokeswoman Aimee Baxter said it is “closely following the legalization trends in the cannabis industry. There are still many unknowns regarding the long-term commercial and societal impacts of marijuana legalization. It is our hope that the public health community and policy makers are examining this issue carefully so that marijuana is regulated appropriately where it’s legal."

With a file from Andrew Willis

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies