The cannabis industry is no stranger to evolution, but perhaps no segment is experiencing as rapid and dynamic a transformation as cannabis-infused beverages. Once a niche offering just a few years ago, these drinkables have quickly lost their novelty status to become a significant force in the market. With sales skyrocketing and consumer preferences shifting, the stage is set for a liquid revolution, presenting an opening for innovative producers to make their mark and take advantage of the growth in the new cannabis beverage market.
Sipping versus smoking: understanding the surge in sales
The numbers around cannabis beverage consumption tell a compelling story. According to Grand View Research, “The global cannabis beverages market was valued at USD 1.16 billion in 2023 and is projected to reach USD 3.86 billion in 2030, growing at a CAGR of 19.2% from last year, 2024, to 2030.” Aside from more states legalizing cannabis, what is driving this meteoric rise?
1. The mindful drinking movement
A significant driver is the growing consumer preference for healthier alternatives to alcohol. In 2024, beer, wine, and spirits sales declined, while sales of non-alcoholic (NA) beverages rose. Sales of NA beverages “neared $1 billion, demonstrating a growing consumer preference for moderation,” according to NielsonIQ.
Members of Gen Z in particular are increasingly focused on well-being, seeking options that offer relaxation and enjoyment without the downsides of hangovers, extra calories in the form of sugar, or the long-term health risks associated with alcohol consumption. Cannabis beverages, in the form of sparkling water, seltzers, tonics, iced teas, or aperitifs, are often lower in calories and sugar, and they fit perfectly into this lifestyle, offering a more mindful, controlled experience.
2. Faster onset and predictable effects
In the early iterations of cannabis edibles, the products often suffered from unpredictable onset times and inconsistent potency, leading to an uncomfortable “wait-and-see” experience for the consumer. That said, advancements in emulsion technology over the last ten years have revolutionized cannabis beverages. This technology breaks down cannabinoids into tiny, water-soluble particles, allowing for significantly faster absorption into the bloodstream. Consumers can typically feel the effects within 10 to 20 minutes, a much more predictable and manageable experience that better enables users to control their experience.
3. Product innovation and diversity
The market is no longer limited to just a few standard flavors like lemon or lime. Producers are experimenting with a vast array of formulations and flavor profiles, including sparkling waters, iced teas, coffee, seltzers, and mocktails, as well as alcohol-free beer and wine alternatives. This diversification, coupled with the inclusion of minor cannabinoids like CBD and CBN, as well as functional ingredients like adaptogens and vitamins, is catering to a wider range of tastes and desired effects. And that helps to expand the market.
4. The evolving and expanding legal landscape
The progressive legalization of cannabis for recreational and medical use across various states in the US and countries is likely the bedrock of this growth. As more regions open their markets, the accessibility and legitimacy of cannabis beverages increase. Increased accessibility helps fuel consumer demand and helps attract significant investment. The recent surge in hemp-derived THC beverages, which can be sold more widely due thanks to the 2018 Farm Bill, further shows the expanding reach of these products beyond traditional dispensaries.
The marketplace is wide open for innovative beverage producers
Despite the impressive growth, the cannabis beverage market is still relatively nascent compared to other segments of the industry. This presents an opportunity for beverage producers to carve out a share of the market.
- Opportunities for market growth: While established brands exist, the market is far from saturated. There’s immense potential for producers to identify and cater to specific consumer niches. Consider the category of functional beverages, which can be tailored to the health benefits consumers seek, like sleep, energy, focus, or even post-workout recovery. Drinks can also be formulated for consumers’ dietary needs; organic, all natural and sugar-free products are increasingly in demand. Consumers are also seeking out unique flavor profiles, particularly those that can replicate the experience one would have enjoying a cocktail. Finally, while low dose beverages (2.5-5mg THC) are quite popular, there’s room for products with slightly higher doses for more experienced consumers.
- Brand building and storytelling: Consumers are looking for authenticity, quality, and a connection to the products they consume. Beverage producers can differentiate themselves through compelling branding, transparent messaging about their sources, and a commitment to consumer education.
- Innovation in formulation and ingredients: The science behind infused beverages is constantly evolving. Beverage producers can leverage the latest advancements in bioavailability, flavor masking, and cannabinoid isolation to create superior products. Exploring novel cannabinoid combinations and integrating them with other beneficial ingredients offers solid opportunities for innovation.
- Advantage of working with hemp-derived THC: In the U.S., the current regulatory landscape allows hemp-derived THC beverages to be distributed more widely and broadly, often alongside traditional alcoholic and non-alcoholic beverages in liquor stores, convenience stores, and supermarkets. This wider distribution network offers a huge advantage for beverage brands, allowing them to reach a much larger consumer base than traditional cannabis brands. This helps cannabis beverage brands move beyond the dispensary and into the grocery store.
The future of cannabis consumption is fluid
The cannabis beverage market is at a pivotal moment, poised for substantial growth. The convergence of shifting consumer preferences, advancements in emulsion technology and production, and evolving legal frameworks has created an exciting space for innovation and entrepreneurship. For beverage producers with a clear vision, a commitment to quality, and the ability to navigate a dynamic regulatory environment, the infused beverage revolution offers an amazing opportunity to become a leader in the beverage space. For entrepreneurs and innovators, the infused beverage market presents an unique opportunity to shape the future of cannabis consumption.