Liquid Gold

CBD beverage sales boom, as producers focus on taste and packaging to fuel consumer demand

By Kristen Nichols

As CBD transitions from dispensaries to health-food outlets, smoothie bars and convenience stores, the supplement is moving out of the dropper bottle and into full-sized beverages.

Producers are placing a new emphasis on taste and marketing to win over consumers looking for healthful drinks, not a product that feels like taking medicine.

“People are not used to reaching for a tincture and a dropper. But people are used to reaching for a beverage,” said Jonathan Eppers, founder of Vybes L.A., which makes CBD drinks sold in about 250 grocery stores, coffee shops and hotels.

Eppers started his beverage company in 2017, after traveling in Europe, where he discovered CBD oils to treat anxiety.

“I just couldn’t believe this was sold in natural foods stores, because I’d never heard of it,” he said. “I couldn’t believe this thing sold over the counter could make me feel so great.”

Eppers was amazed by the benefits but disgusted by the taste, which gave him a business idea.

When he returned home to California, Eppers decided to try making a CBD-infused drink.

“I wanted a beverage, something I could grab on the go,” Eppers said. “It’s not awkward to pull out a beverage in front of friends, but no one wants to pull out a tincture.”

He found a maker of CBD isolate and then another company to make the isolate water soluble. The next step was finding flavors and packaging that could take his beverage out of the dispensary and into mainstream beverage outlets.

“Beverage could be one of the most successful formats to provide CBD to consumers,” Eppers said. “I think there’s a ton of growth here.” (See the May-June issue of Marijuana Business Magazine for an article about the use of CBD in alcoholic beverages.)

 Technology Makes It Happen

The CBD beverage boom has science and technology to thank. Cannabinoids are fat soluble, not water soluble, which is why CBD and THC are added to fats and oils before being eaten or dropped under the tongue.

Even carried in oils, most CBD doesn’t make it into the brain. It’s like the vinegar in a vinaigrette salad dressing: impossible to fully combine in the water-based bloodstream.

“CBD is hydrophobic – it won’t dissolve in water,” explains Pulak Sharma, co-CEO of Kazmira, a Colorado company that produces CBD isolate.

But as cannabis has come out of the black market, research into better production techniques has boomed. Cannabis entrepreneurs now can find capital to invest in better ways to extract and isolate cannabinoids from the plant.

“We’ve got the technology perfected to make (CBD) water soluble, and now it can go into anything,” said Sharma, whose company claims to get a whopping 2,000 milligrams of CBD into a 20-ounce bottle of water. “The bioavailability is much higher because our bodies are mostly water.”

Prices are coming down, too. CBD isolate can now be bought for about $20 per gram, depending on quality and size of the order. And turnaround is quicker, with suppliers promising to have isolate by the kilogram shipped within two business days.

Next Stop: Flavor

There’s more to crafting a winning CBD beverage than figuring out how to get the cannabinoid into liquid, though. The bigger challenge is making a beverage people want to drink.

Consumers want a tasty beverage that competes against fruit juices or heavily sweetened energy drinks, not something that tastes like medicine.

“We have to make a great-tasting product first and foremost,” said CBD producer Scott Leshman. His company, Detroit-based Cannabinoid Creations, has long made cannabidiol nutritional supplements such as tinctures, vapes and topicals.

“Most people are used to hay-tasting or grass-tasting products when it comes to edible hemp,” Leshman said. “It took us 2.5 years to perfect the flavors, to come up with a formulation people really want to drink. It’s a slow process, but one that really pays off.”

The company’s five flavors of CBD Hemp Sodas now sell in about 2,000 convenience stores nationwide, priced at $6-$7 for 6.3 ounces containing 25 milligrams of CBD.

Final Steps

Even the most delicious drinks packed with dissolved CBD won’t help a beverage company if consumers don’t pick up a bottle.

That’s why packaging, marketing and education are just as important as the beverage itself.

For Eric Pike, co-founder of San Diego’s CBD Natural Solutions, the bottle of his company’s new Root Origins brand of CBD water was a big consideration.

“You’ve got to take the time and deliver great packaging,” said Pike, whose waters are going into specialty grocery stores in Southern California. “If you’ve got the packaging and your product has the efficacy, you’ve gotten over the pain points for retailers, and that’s going to lead you to the pathway of least resistance.”

Pike has a background in alcohol marketing and knows that CBD producers must be skilled at talking with grocers and other mainstream retailers, not dispensary owners or people with a background in cannabis.

Mainstream retailers, he said, need education in how CBD works. But they’ll also want liability insurance on any new product, and they’ll want to see detailed plans in case it is recalled. CBD producers also need reputable legal advice assuring potential retailers that they’re not taking a risk by carrying the beverages.

It’s a steep climb, Pike said, but one that offers cannabis entrepreneurs a tantalizing opportunity: to get out of dispensaries and into bigger stores, before enormous beverage companies with established retail relationships have CBD products of their own.

The CBD isolate industry is getting bigger every day, but it’s still too tiny to accommodate beverage makers needing to supply roughly 38,000 grocery stores and 115,000 convenience stores in the United States.

“The big companies are talking about CBD, but there’s only so many licensed grows out there that actually sell CBD,” Pike said. “So even if you wanted to go big right now, you can’t, because you’d run out of supply.”


CBD Buzz

 Caffeinated relaxation? Sounds like an oxymoron, but some CBD producers are finding surprising opportunities combining coffee and CBD.

For Andrew Aamot, president of Denver-based Strava Craft Coffee, the combination started as a way to make his craft coffee brand stand out.

“We simply wanted to differentiate our product from the thousands of other roasters out there,” Aamot said.

When CBD came up during a brainstorming session, Aamot’s team at first considered it unworkable. Coffee roasts at about 500 degrees – so hot that any CBD on the bean would burn off.

“We looked at the idea and shook our heads and thought, ‘No way.’”

But Aamot contacted a food scientist to explore the idea. What they settled on was a full-spectrum CBD oil that could be applied to roasted coffee beans and then ground and made into coffee.

The result was just what he wanted for Strava Coffee – a distinct flavor and a product that would stand out in an ocean of craft coffee options. Cannabis terpenes are removed to allow the coffee’s chocolatey, nutty flavors to shine.

“We chose the amount of (CBD) oil to add so that we’re not inundating the beans with hemp flavor,” Aamot said.

The company now makes four kinds of CBD coffee: three options for regular coffee infused with CBD oil (30, 60 or 240 milligrams of CBD per 12 ounces of roasted coffee) along with a decaffeinated option, which includes 30 milligrams of CBD per 12 ounces.

The CBD coffees command a premium price. Strava Coffee retails from $19.95 to a whopping $54.95 for a 12-ounce bag of beans. A single cup of CBD coffee sells for almost $7 at some Denver coffee shops.

And the taste? It can be a touch oily, but most folks don’t notice, said Kevin Piaskowski, manager of Denver’s Blue Sparrow Coffee, which has served cold-brew Strava Coffee for more than a year.

“When we first started carrying it, we didn’t even have it as a menu option. It was all word of mouth,” Piaskowski said. “Now, it’s a menu staple, and we probably sell one CBD cold brew for every three regular cold brews. It’s gained a lot of traction.”

Strava coffee beans are sold online to consumers nationwide, but you can buy a brewed cup only in Denver coffee shops. Coffee isn’t immune from CBD’s legal complications: A cafe in Seattle recently was ordered by health inspectors to stop serving CBD lattes, even though recreational marijuana is legal there.

Still, Aamot sees more coffee brands exploring CBD infusions.

“After drinking CBD coffee, people are feeling calm. They aren’t as jittery as they can be with some coffees,” Aamot said. “It’s a coffee with a calming and focusing effect.”

– Kristen Nichols