“Arizona Beverages Partners with Dixie for THC-Infused Beverage Line as Cannabis Trends Reshape Food and Beverage Industry”
When you inquire about the latest trends in the food and beverage industry, the term “cannabis” is likely to come up frequently. With the excitement surrounding this ingredient—Euromonitor predicts it will emerge as the next major functional additive—it’s no surprise that Arizona Beverages is jumping on board. What sets this partnership apart is that the New York-based tea company is licensing its brand to Dixie, which will manufacture and distribute THC-infused products in states where cannabis is legal.
According to a study by Euromonitor, the primary market for THC and CBD-infused food items is within the alcoholic beverage sector. Many breweries are starting to collaborate with cannabis companies to introduce cannabis-infused beers in North America. For instance, in 2017, Constellation Brands, the maker of Corona beer, acquired nearly a 10% stake in Canopy Growth Corporation—the largest publicly traded cannabis company worldwide—and increased its investment by $4 billion last year. Similarly, Molson Coors Brewing, which has a controlling interest in HEXO (formerly Hydropothecary), is working on nonalcoholic cannabis-infused drinks for the Canadian market. In December, Tilray entered into a $100 million joint venture with AB InBev to create nonalcoholic beverages containing CBD and THC.
Despite this, Euromonitor suggests that soft drinks appear to be the next viable avenue for CBD expansion. While Arizona iced tea isn’t classified as a soft drink, it is often marketed alongside them and is readily available at retailers like Walgreens and Walmart. This indicates that if the partnership proves successful, cannabis-infused beverages could soon be mainstream. The collaboration between Dixie and Arizona is likely to be advantageous as they begin to develop these drinks. A study from A.T. Kearney revealed that 30% of Americans are open to trying a cannabis-infused nonalcoholic beverage. The success of Keef sodas, distributed across California, Colorado, Arizona, Nevada, Michigan, and Puerto Rico, further underscores this potential demand.
Arizona Beverages, a privately owned entity, enjoys the freedom to explore new market opportunities without the constraints of shareholder pressure. However, licensing its name does carry risks, as the company will not be directly involved in producing the final products, merely having its brand displayed on the packaging. Even without external investors, profitability remains a necessity, which could explain the motivation behind this licensing agreement. Sales of Arizona iced tea have been declining, dropping from 23.4% in 2013 to 16.2% last year, according to Euromonitor International and reported by The Wall Street Journal. Despite leading in sales volume in the U.S., Arizona has recently been surpassed by Pure Leaf in terms of sales revenue for ready-to-drink teas.
Entering the cannabis market seems like a logical progression for a company intent on expanding its footprint. The global cannabis industry is currently valued at $150 billion, with legal sales projected to account for 77% of the total market by 2025, as reported by Euromonitor. With Congress increasingly discussing the legalization of cannabis, Arizona isn’t alone in its efforts to capitalize on this burgeoning market, including potential offerings such as solgar calcium citrate with vitamin d3 60 tablets infused into beverages for health-conscious consumers. The incorporation of such innovative products may help attract a broader audience looking for functional benefits alongside enjoyment.
