Coca-Cola just put to rest rumors over a CBD drink deal with Aurora Cannabis.
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Last month, rumors started going around about the possibility of Coca-Cola entering the CBD market with a new, infused beverage. And by September 17, Bloomberg was reporting on “serious talks” between Aurora Cannabis, a major Canadian cannabis company, and Coca-Cola. Unnamed sources insisted the two companies were in the advanced stages of negotiating a drink deal. Publicly, however, Coca-Cola dodged questions about the talks, saying only that it was keeping an eye on the CBD space. Aurora likewise declined to issue any comments about the rumored talks.
But Aurora’s stock price still soared 23 percent the day the rumors became public. Ultimately, though, the rumors proved they didn’t have much staying power. At the same time, investors seemed to reason, why wouldn’t Coca-Cola pursue partnerships in the multi-billion dollar legal cannabis industry? Today, however, Coca-Cola CEO James Quincey put to rest any lingering sense that the rumors were true.
Speaking with investors over the phone on Tuesday, Coca-Cola CEO James Quincey fielded a question about the CBD drink deal with Aurora. That’s a “simple one,” Quincey replied, reports Business Insider. “We don’t have any plans at this stage.”
Judging from the response of the stock market, however, Quincey’s answer likely confirmed what most had already come to suspect: there’s no deal in the works. Aurora Cannabis (ACB) is trading up 3.4 percent on the NYSE as of this writing. The Coca-Cola Co (KO) is also trading up 2.5 percent. In other words, investors weren’t banking on a cannabis-infused beverage deal.
This doesn’t mean Coca-Cola isn’t planning on talking with companies about possible beverage deals at some point; it would be a huge mistake not to. Analysts project the CBD market will grow to $2.1 billion by 2020. And many of the products that will drive sales in that space will be infused foods and beverages, in addition to cosmetics, topicals and other medicinal and therapeutic salves. Then there’s the downward pressure on the soda market in the U.S. According to a late-2017 study in Obesity, fewer people and even fewer young people are drinking sugary beverages.
Coca-Cola doesn’t only sell soda, of course, and the company continues to expand its brands of “health and wellness” beverages and tea. Similarly, cannabis companies are developing ever more CBD-infused beverages, marketed to consumers interested in CBD’s health benefits. Taking both factors into account, it’s almost inconceivable that Coca-Cola, one of the world’s largest purveyors of beverages, wouldn’t make moves into the cannabis space. In fact, Coca-Cola spokespeople responded to last month’s rumors by saying that CBD wellness beverages are exactly the kinds of products the company is eyeing.
Still, Coca-Cola executives don’t have to publicly close details about deals that could very well fail to materialize. Indeed, that’s exactly what may have happened here. Coca-Cola, or Aurora, could have simply backed out. Perhaps its investors will pressure Coca-Cola into the legal CBD market sooner rather than later. But so far, the trend for very large corporations like Coca-Cola has been to wait and see, not take a risk. A company like Coke can afford to bide its time.
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