Big Food Brands Eye The CBD Edibles Market
CBD-infused Oreos and Cadbury Eggs?
Mondelez International, the maker of beloved brands such as Oreo, Chips Ahoy and Cadbury, is reportedly “getting ready” to produce cannabis-infused edibles once “the FDA – bring(s) some clarity”.
The company is specifically interested in potentially formulating items infused with cannabidiol, known as CBD, a non-intoxicating chemical derived from cannabis or hemp plants.
CEO Dirk Van de Put made the announcement last week to CNBC. When asked if the company would consider creating CBD-infused snacks, Van de Put told the network’s “Squawk on the Street”: “Yes, we're getting ready, but we obviously want to stay within what is legal and play it the right way.”
Van de Put explained that consumers should not expect cannabis-infused versions of their signature food items. Instead, Mondelez plans to introduce new product lines to ensure the family-friendly reputation of their current brands remains intact.
For now, the company has no immediate plans to create or release any cannabis edibles. This is largely because the FDA has yet to officially clear CBD as a safe food additive. Any excitement may be premature, since in March 2019 then-FDA Commissioner Scott Gottlieb said it would possibly take years to develop regulations for food and CBD.
"The space is not clear," Van de Put said. "It's a bit clearer in non-food products. In food products, I'm hoping that the FDA will bring some clarity in the coming months."
The Advantage of MNCs like Mondelez
Even without leveraging existing brand awareness and loyalty, large multinational corporations like Mondelez still have many advantages over cannabis companies and Licensed Producers when it comes to producing edible products.
MNCs have built and refined complicated production and distribution processes over decades of doing business. They already have valuable relationships with retailers and wholesalers. They have access to more resources, more marketing dollars, and more experienced and skilled staff. These companies can simply add cannabis-derived distillate or oils to their existing products and just like that, they are now in the edibles business.
For these reasons, it will be hard for American cannabis companies and Canadian Licensed Producers to compete with established CPG companies like Mondelez International when it comes to edibles and drinkables. Cannabis flower will essentially become an ingredient for these derivative products. CPG companies will have a large selection of producers to choose from when they are looking to form partnerships or supply agreements, so cannabis companies current value proposition of growing cannabis flower will likely become commoditized over time.
American cannabis brands and Licensed Producers in Canada that plan on creating edibles for the recreational market will need to hone their competitive advantages as soon as possible. Otherwise, they are likely to be out-resourced by CPG companies and multinational corporations.
Many Large Companies Are CBD Curious
Mondelez is not the only mainstream food and beverage maker that has expressed an interest in entering the CBD market.
In September of 2018, it was reported that Coca-Cola was in “serious talks” with Aurora Cannabis, a Canadian Licensed Producer, to develop CBD-infused beverages. Coca-Cola ranks as the fourth most valuable brand in the world, behind Apple Inc., Google Inc., and Microsoft Corp. A company of that magnitude entering the cannabis space would cause a huge disruption.
American fast food restaurant Carl's Jr. recently released a limited edition cannabis burger to “stay at the forefront of the CBD trend”. The chain sold the burger featuring a CBD-infused sauce at one location in Denver, Colorado for just one day this past April 20th. The burger chain reportedly used the promotion as a test to determine whether a CBD-infused burger warrants a spot on its permanent menu, said Patty Trevino, senior vice president of brand marketing for Carl's Jr.
Brands of all sizes are getting in on the action. Canadian spring water brand Flow is launching a CBD line of products in early 2019. The product will be called Flow Glow, a functional beverage line infused with CBD and botanical and other antioxidant ingredients including grape seed and grape skin extracts.
These are only a few examples of many. Other giant brands considering or currently in the cannabis space are Anheuser Busch, Neal Brothers, Molson, Sandoz Canada, and Constellation Brands.
CBD-pendent on Regulation
It will be incredibly interesting to see how the cannabis-infused edible and drinkable market plays out in the U.S. and Canada. If brands that already have deep and meaningful connections with consumers (like Oreo and Cadbury) enter the market, it may spell trouble for cannabis companies trying to create new brands from scratch.