The popular Brewery Company Boston Beer Company is laughing its way to the bank after the success it has tasted in the hard seltzer business. The success has made them look for other avenues of entry and has made them look at Cannabis market for entry. The CEO of the company David Burwick admits that the Cannabis market has existing players in it, but they intend to research well before making any entry in it. The Cannabis space has been continually inundated with players who want to take their share of the pie.
Cannabis comes from Cannabis Sativa plant which has about 500 compounds including CBD and THC. Cannabis also known as marijuana has been stigmatised by the society for a long time but CBD on the other hand has made a mark in the market by providing medicinal benefits. Many studies have been made in this regard which have supported the medical claims CBD makes.
CBD is derived from the Hemp plant which has anti-inflammatory properties compared to marijuana which has enhanced psychoactive compound that affects the mind. The THC compound when activated in the body causes a lot of physical issues apart from psychosomatic problems in the long run. CBD does not suffer from such consequences because the THC level is less than .001 %. The boom in the CBD market has pushed companies to enter the Cannabis market and explore different versions of it.
CBD has gained popularity in the treatment of several disorders like insomnia, seizures, depression, stress, anxiety, serious cases of cancer, arthritis etc. Consumers too are researching at their end about the benefits of CBD and companies indeed have a golden opportunity in front of them. Till date studies have been made on rodents but human based studies are also on the anvil.
The market is new and a developing one which presents numerous opportunities for companies to grow. In 2017 another beer company called Constellations Brands bought a 10% stake in Canopy Growth Corporation. Very recently Heineken owned Lagunitas Brewing had launched a cannabis permeated sparkling water that was sold in a handful of stores in California. The Companies are making bigger decisions now with Cannabis and are also expecting to double their rate of growth with the inclusion of Cannabis. Even the hard seltzer business is seeing a jump. Research has pointed out to a sharp growth in alcohol sales which is a proof of growing opportunities.
For Boston Beer, hard seltzer is their cash cow because their brand occupies 29% of market share. Seeing the tripling growth figures year on year, the company is inclined to continue investing in this segment. The investment will boost their sales further and will keep their triple growth rate in the momentum. The CEO in his interview has confirmed that more money and resources will be pouring in to increase their profit share in the market. Sam Adams which is Boston Beer Company’s flagship brand had witnessed losses and decline in its market share for straight two years. The rude shock that the company got after this downfall made them think harder. They strategized and launched the hard seltzer business in a bid to provide something new to the market. With the successful launch of hard seltzer, Boston Beer Company got a chance to revamp its company. The business looked good and the stocks took an upward plunge.
The new launch went a long way in balancing and compensating for the losses incurred by Sam Adams in 2018 April. By June Boston Beer’s stock increased $100 per share taking the total value of the stock to $300. The company’s latest stock figure as on August this year stands at $440 which shows the overwhelming growth rate of 80% as against the previous figures.
The CEO of the company in his interesting interview compares the success of hard seltzer to the craft beer that launched in the 80’s. The overall beer business took a hit when the hard seltzer was launched and the same thing happened with craft beer when it overtook the general beer market. Looking at the success of the brand and product many companies have launched their own version of the drink. They have been vying to make their own success following the achievement by Boston Beer Company.