Boston Beer subsidiary to launch cannabis beverages in Canada through partnerships

Dive Brief:

• Boston Beer subsidiary BBCCC Inc. is partnering with Ontario-based manufacturer Peak Processing Solutions and grower Entourage Health to debut nonalcoholic cannabis-infused beverages in Canada. Production will start in the fourth quarter. 
• Under the terms of the five-year agreement, Boston Beer and Peak will develop beverages containing cannabis biomass from Entourage Health. Entourage will also be the exclusive distributor of the beverages in Canada.
• Boston Beer is preparing its first cannabis beverage launch after establishing its BBCCC subsidiary and opening an R&D hub in Toronto this past May. The Massachusetts-based beer maker plans to use Canada as a development base for products that could eventually debut in the United States, where federal regulations are still in flux.

Dive Insight:

Boston Beer’s involvement in the cannabis beverage space is on track to go from talk to product launch in the space of just two years. It demonstrates the company’s focus on the emerging category, which is estimated to hit $2.8 billion by 2025, according to a report from Million Insights cited in Entourage’s press release. 

The release noted BBCCC is entering the market “while continuing to gauge the regulatory environment in the U.S. for future expansion opportunities.” Paul Weaver, director of cannabis for BBCCC and the former head of innovation for cannabis producer Canopy Growth and Molson Coors, highlighted the capabilities of the Boston Beer subsidiary’s Canadian partners ahead of the launch.

“Since the early days of medical access, Entourage has cultivated accessible, quality-produced cannabis that is considered a benchmark in a regulated market — and they truly exemplify what we look for in our suppliers,” said Weaver. “This partnership is further strengthened by Peak Processing Solutions, with the talent and systems in place to ensure every drink is prepared with the highest care and excellence.”

The licensing agreement with Entourage gives Boston Beer’s products a known national sales force to market, distribute and sell the products in Canada. Boston Beer can also use its brand-building expertise to establish the new beverages.

Boston Beer has shown an appetite for experimentation beyond beer, recently announcing a collaboration with PepsiCo on an alcoholic, no-sugar version of Mtn Dew, and forging a partnership with Beam Suntory to bring their respective brands into each others’ alcoholic beverage categories. In both cases, the new products are slated to hit retail shelves in 2022.

The debut of nonalcoholic cannabis-infused beverages also comes at a good time for Boston Beer, which is wrestling with the growing pains of another promising non-beer segment where it was a first mover: hard seltzer. The company recently admitted it had overestimated demand for its Truly hard seltzer brand in the second quarter, causing its stock to tumble about 25% in a single day.

Boston Beer CEO David Burwick has said his company’s success in hard seltzer encouraged it to pursue cannabis beverages. But unlike its Truly offering, which debuted in 2016 as the hard seltzer segment began, Boston Beer won’t be the first to enter the cannabis market. Several startups — including Major, Cann Social Tonics and Keef Cola — along with established cannabis product manufacturers such as Canopy Growth, are already competing for U.S. consumers’ attention in states that permit the consumption of cannabis, such as Colorado, California, Nevada and Washington.