Canadian cannabis firm Canopy Growth announced today a partnership with Southern Glazer’s Wine & Spirits to distribute its portfolio of CBD-infused beverages in the U.S.
Southern Glazer’s, which operates in 44 states, plus Washington, D.C., and Canada, will initially distribute Canopy’s CBD-infused Quatreau sparkling water brand to seven states, with more to follow in the coming months.
Those states include Arizona, Florida, Kansas, Missouri, New Mexico, Nevada, and Oregon, according to THCNet.
“Through this groundbreaking partnership, we will leverage Southern Glazer’s established distribution network to bring our CBD beverage portfolio to retailers and consumers across the U.S. market,” Canopy Growth chief commercial officer Julious Grant said in a press release. “The leadership team at Southern Glazer’s shares our values, priorities, and future-forward view of the category. Together, we are committed to creating an immediate strategic route to market for Canopy’s premium CBD beverages.”
“There is strong consumer interest in the CBD-infused beverage category and our distribution network is uniquely positioned to deliver the most efficient and effective route-to-market for CBD suppliers and retail customers,” Southern Glazer’s chief growth officer David Chaplin added.
Canopy’s U.S. portfolio of CBD products is led by Quatreau, a four SKU line of zero-sugar sparkling waters containing 20mg of hemp-derived CBD per 12 oz. can.
Quatreau’s flavor lineup includes Cucumber + Mint, Passionfruit + Guava, Ginger + Lime, and Blueberry + Acai. Each 12 oz. can retails for $3.99. The brand launched in March and was initially sold through e-commerce with shipping to 32 states. The U.S. introduction followed a roll out in Canada where the product is “now the top-selling ready-to-drink CBD beverage,” the company said.
Southern Glazer’s will now sell Quatreau via “its existing commercial infrastructure, including its industry-leading Proof e-commerce platform,” Canopy said.
A key point from the release: “Canopy Growth is one of the first U.S. CBD beverage producers to access the nationwide network of a large-scale alcohol distributor to reach consumers across the U.S. at mainstream retail stores. The agreement also showcases the benefits of the company’s strategic relationship with Constellation Brands, the global beverage leader.”
Notably, Canopy’s choice of distribution partner wasn’t a beer wholesaler, a change from the partnerships formed with Reyes Beer Division and Manhattan Beer Company last year for the distribution of its Biosteel Sports Nutrition sports drinks.
Canopy’s relationship with Southern Glazer’s was facilitated by one of the cannabis firm’s key investors: Constellation Brands, which owns a 38.6% stake in the business.
The distribution deal comes one month after Constellation Brands announced an expanded partnership with Southern Glazer’s to distribute 70% of its wine and spirits portfolio in the U.S., effective April 1.
Daniel Lust, co-founder of beverage industry advisory firm Pints LLC, told Brewbound that the selection of Southern Glazer’s as Canopy’s U.S. partner represents “the path of least resistance with a much quicker turn-key solution for distribution.”
“While their reach and execution may not be as robust as the traditional beer distributor network, SGWS is a one-stop shop for the Canopy team to work with, and it is apparent that the SGWS team has shown a willingness to navigate this new era of beverage distribution,” he said.
Looking ahead, the move lays the foundation for potentially more products within the cannabis space, including THC-infused products once federally legalized, to be distributed by beverage alcohol wholesalers.
As a signal of its intent to be a player in the U.S. market, Canopy struck an $3.4 billion agreement in April 2019 to acquire New York-headquartered cannabis firm Acreage Holdings, contingent on federal permissibility of marijuana in the U.S. The two companies plan to launch THC-infused beverages at dispensaries in California and Illinois this summer, according to THCNet.
The U.S. Food and Drug Administration (FDA) has yet to offer final guidance for products containing CBD, the non-intoxicating cannabinoid in cannabis plants, leaving a murky regulatory environment. That hasn’t stopped many companies from offering the products and now alcohol wholesalers from distributing them.