Fluent Beverages has been Labatt’s non-alcoholic CBD beverage unit in Canada since 2018. The company has just recently announced that it will cease operations of this business in Canada, adding even more uncertainty to the overall CBD industry in Canada.
Fluent was originally formed from a partnership between cannabis producer Tilray and the world’s larger beer brewer, AB InBev. Fluent was created in 2018 but three months ago AB InBev left Fluent under the supervision of Labatt, which is a subsidiary of AB InBev.
Originally, it appeared that Labatt had intended to continue operating Fluent and allowing the company to focus on CBD-infused beverages. In just a short period of time that thinking has changed and they have decided to shut down the operation altogether.
“Fluent has decided to stop operations in Canada,” Jorn Socquet, CEO of Fluent Beverages, said in a statement provided by Labatt.
“We want to thank our employees, partners, and customers for their support over the past three years in helping us build one of the top CBD beverage portfolios in Canada.”
The move by Labatt to pull out of the cannabis sector doesn’t necessarily mean that they won’t re-enter at some point in time. Tamar Nersesian, Labatt’s communications director, noted that Labatt has made significant progress in the past few years.
“The learnings from Fluent will be used to evaluate future opportunities within the category, and we will continue to monitor the cannabis sector closely.”
“When Labatt announced the creation of Fluent in 2018, Fluent set out to research non-alcohol cannabis beverages in Canada.
“Over the past three years through Fluent, we have gained deep category insights into the cannabis sector and consumer preferences, expanded our research and development capabilities and worked with some exceptional talent.”
While Labatt does seem to have a leg up when it comes to market research and insight for non-alcoholic cannabis drinks in cannabis, it really does come down to policy and laws in Canada.
Could Canadian Laws Change
As of now, any beverages that contain cannabinoids can only be sold by places with specific licenses. This holds true even if there is just CBD in the drinks because of Canadian law. This means that huge retailers such as Walmart can not sell these CBD-infused drinks.
Something else that is holding back the industry is that single purchases of cannabis-infused drinks are limited to 71 ounces at a time. That means that you could only purchase a 5-pack of 12-ounce cans. Canadian law won’t even let you buy a 6-pack.
There are some proposals floating around in the Canadian legislature that would up the limit from 2.1 liters all the way to 17.1 liters. But at this point, it’s unclear if that would actually help kick start the industry.
According to Health Canada, “This change may result in changes in consumer preferences, leading to cannabis beverages becoming a more popular cannabis product; however, there is no evidence to support that this change to equivalency and the corresponding impact on consumer preferences would occur.”
Maybe even more important is the infused-beverage sales numbers in Canada. Through the first 3 quarters of 2021 sales totaled under 40 million Canadian dollars. It may seem like a decent amount but the accounting firm Deloitte had predicted sales of around 500 million Canadian dollars. So the 40 million number is obviously far short of that prediction.
When you look at the restrictions for CBD-infused drinks and the hurdles for both producers and consumers you start to see why Labatt decided to get out of the business, at least for the time being.