Canadian CANNAINVESTOR Magazine April 2017 - Page 124

Dissecting the edibles market further for illustrative purposes, the functional drink market alone is a great example of what branded infused products market potential is, within Canada and abroad. A functional beverage is a drink product that is non-alcoholic and includes in its formulation ingredients such as herbs, vitamins, minerals, amino acids or additional raw fruit or vegetables. It often claims to provide specific health benefits. Examples include sports and performance drinks, energy drinks, ready to drink (RTD) teas, enhanced fruit drinks, soy beverages and enhanced water. (http://www.mynewsdesk.com) Esther Renfrew, market intelligence director of Zenith International, speaking at Zenith’s 12th InnoBev Global Soft Drinks Congress in Verona, Italy, suggests that the definition of a functional beverage is “set upon drinks with added functionality, such as added ingredients and associated health benefits, and functional positioning” (Beverage Daily, Rachel Arthur – “What to watch in functional beverages”

http://www.beveragedaily.com/Markets/) In the cannabis sector, this could include THC, CBD or hemp based infused beverages, for example.

From an investment perspective in Canada, there are only a handful of Canadian publicly traded companies currently with products in this subset of the edibles market, including but not exclusively: The Tinley Beverage Company Inc.(CSE: TNY, OTC:QRSRF), Laguna Blends Inc. (CSE:LAG, OTC:LAGBF) and Lexaria Bioscience Corp.(CSE:LXX, OTC:LXRP). These companies all currently sell their products within the US market (either online or through retail channels). Tinley’s “Hemplify” functional drink product, for example, is currently selling at various retailers in the state of California (and online throughout the US), which has a medical marijuana market size that is expected to hit $2.6 billion in 2016, and that equates to about nine times the size of Canada and twice the size of Colorado’s entire marijuana industry. (Forbes, Debra Borchardt – “Florida Medical Marijuana Sales Could Rival Colorado By 2020” https://www.forbes.com). The functional drink market, by comparison, is expected to reach $89.7 billion this year. (http://www.mynewsdesk.com)

Brand recognition and awareness is key part of success, but a good tasting product will ensure that consumers keep coming back for more. Taste, in the edible market segment, is an important element to retaining consumers, growing sales, and ensuring long term success. In his article entitled ‘Consumers willing to pay 75% more for known ingredients: Survey’, Louis Gore-Langton determined based on global survey results run conjointly by PR group Ingredient Communications and Surveygoo that consumers would be willing to pay 75% more for a product containing ingredients they knew and trusted. Of which, 73% would accept higher retail prices for the knowledge of consistency and quality in an ingredient. Over a fifth of those surveyed would pay 75% extra or more.

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