National Brands Vie for CBD Dominance

NEW YORK, Dec. 8, 2020 /PRNewswire/ -- On election day this year, four more states voted to legalize the recreational use of cannabis, bringing the total of states that now allow recreational cannabis use to 15. This growing acceptance of cannabis, and more specifically CBD, which is now legal in all 50 states, has sparked an explosion of new CBD-infused products and brands within the consumer packaged goods (CPG) space. Estimates about how large the legalized cannabis market may grow vary widely, but a Lido Consulting report notes that the total addressable cannabis market (TAM) could potentially hit $1 trillion in global economic impact by 2027. Seeing almost unlimited potential, companies are rushing to take advantage of the massive opportunity. Continuing its aggressive growth strategy, The Alkaline Water Company Inc. (NASDAQ: WTER)(CSE: WTER) (Profile) entered the CBD space with the launch of its A88CBD(TM) brand. Already nationally recognized for its premium bottled water and flavor-infused water,  Alkaline Water now features a full line of CBD-infused and topical products. After posting record sales earlier this year, this strategic push into the lucrative CBD market could propel the company to new records. Also quick to see the opportunity, Constellation Brands Inc. (NYSE: STZ) recently exercised warrants to purchase additional shares of Canopy Growth Corporation (NASDAQ: CGC) (TSX: WEED), increasing its stake in the Ontario cannabis producer to more than 38%. In a nod to the value of having CPG expertise, Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB) has appointed Miguel Martin, an international CPG executive, as its chief commercial officer. And Charlotte's Web Holdings Inc. (OTC: CWBHF) (TSX: CWEB) has announced a collaboration between its CW Labs science division and the University at Buffalo's  Center for Integrated Global Biomedical Sciences to advance hemp cannabinoid science through a research program that provides a better understanding of the therapeutic uses and safety of cannabinoids. 

• Growing acceptance of cannabis, specifically CBD, has sparked explosion of new CBD-infused products, brands within the consumer packaged goods (CPG) space.
• WTER's A88CBD product line meets stringent requirements as CBD becomes more mainstream.
• Well-financed suitors may well be interested in The Alkaline Water Company given its unique niche strength, appeal.

Click here to view the custom infographic of The Alkaline Water Company Inc. editorial.

A Massive Consumer Base

"Pause to consider," the Lido Consulting article observed, "a $1 trillion market in eight years while currently there is not a single company in the space that generates anywhere close to $500 million in revenue. That fragmentation, and the wholly unique phenomenon that a black market with an existing — and massive — consumer and patient base is transitioning to a regulated market, is what makes cannabis such a compelling opportunity."

That demand has only increased in the past year, with the COVID-19 epidemic fueling online sales. In fact, one study reported that every dollar spent on email marketing in the CBD industry resulted in almost $40 in revenue. And research by the Brightfield Group shows that roughly one-third of the CBD consumers surveyed indicated they are planning to buy from online retailers rather than in-store during the pandemic, while nearly 50 percent say they will stock up on supplies if they believe there is going to be a shortage.

The industry seems primed for a leading company to offer a comprehensive line of CBD-infused and topical products — and emerge as a trusted brand. Who better to step into the spotlight than an innovative company that has already firmly established its ability to quickly identify and deliver on consumer needs and market opportunities?

CBD Attracts New Wave of Entrants

Already a well-respected national beverage brand, The Alkaline Water Company Inc. (NASDAQ: WTER) (CSE: WTER) is committed to building a similar reputation in the CBD sector. With those high standards in mind, WTER ensures all its A88CBD products are formulated in GFM facilities; use the highest-quality, lab-tested CBD from a trusted source; and follow rigorous quality control measures to establish consistency.

These stringent requirements are essential as CBD becomes more mainstream, attracting a new wave of entrants. Large national retailers are actively looking to add quality CBD products to their shelves, but these distributors have stringent requirements. Smaller cannabis producers and new brands with limited resources lack the resources to provide such high-quality products. However, their weakness is The Alkaline Water Company's strength.

As a trusted brand, WTER and its best-in-class A88CBD brand offer precisely what retailers are looking for: superior quality topicals, oils, capsules, tinctures and gummies. 

Capturing Share in Large, Growing Markets

The Alkaline Water Company is deeply committed to its A88CBD line, launching five category-leading items during Q2 FY 2021. "These products, which include our delicious lemon-lime CBD water, vegan gummies, zero-calorie powder packs, all-natural bath bombs and cruelty-free deep relief cream, complement our existing product lineup," said WTER president and CEO Richard A. Wright. "Our robust product lineup effectively positions us to capture share in the estimated $20 billion-plus, hemp-derived consumer products market."

Intent on capturing as much of the growing market as possible, WTER is strengthening both its online and in-store presence. A88CBD products are currently available on the company's direct-to-consumer e-commerce site at www.A88CBD.com and in approximately 400 retail locations, including Elevated Wellness CBD, CBD Emporium, Alchemist Kitchen, Pure CBD, and select Vitamin Plus locations; the products are also available online at Amazon, CBD.co, healwithnature.com and DirectCBDOnline.com. Having both a vibrant online presence and robust retail locations is essential for companies committed to increasing sales in the CBD space. With that in mind, Wright also noted that the company is looking to continue to expand its online presence through unique digital marketing strategies and leverage its existing brick-and-mortar footprint for its A88CBD portfolio of products. 

"We are in active discussions with over 9,000 retail locations to take on our products over the coming 90 days," he said during the Q2 financial webcast. "With an in-demand portfolio of offerings, a strong partner network, and an established retail base, we are taking aggressive actions to capture share in the large and growing retail trades we currently serve and greenfield opportunities in the CBD and hospitality and foodservice arena. Additionally, our e-commerce sites continue to exceed our expectations and provide another growth area driven by shifting consumer behaviors. We also expect the multi-year health and wellness trend to accelerate coming out of the COVID pandemic and anticipate our lifestyle brands to benefit due to our sales and marketing efforts made this year."

A Strong Candidate Fills Unique Niche

A88CBD is only a piece of The Alkaline Water Company's strategic business approach. The company's flagship product, Alkaline88(R), continues its strong performance in the beverage world, contributing to the company's record sales reported in October. "Our family of brands — Alkaline88, A88 Infused and A88CBD Infused — include a growing portfolio of products that are in demand and resonate with consumers," Wright said.

A recent "Proactive Investor" article noted that "well-financed suitors may well be interested in the Alkaline Water Company given its unique niche. After all, a Neilson report ranked Alkaline88 as 'one of the fastest growing' value-added waters in 2019. It also noted that [the company] has built a 'national retail footprint' and extended its lifestyle brands into other consumer packaged goods categories."

WTER's consistency and commitment to quality, along with its unique variable-cost business model and growing portfolio, certainly bode well for the company, making it a strong candidate for a savvy beverage or cannabis brand looking to strengthen its position in the growing sectors.

Evaluating, Seizing the Opportunities

With a trillion-dollar industry projection providing incentive, WTER isn't the only CBD company to strategically evaluate — and seize — the opportunities.

Back in 2017, Constellation Brands Inc. (NYSE: STZ), a leading beverage alcohol company, signed an agreement to acquire a 9.9% minority stake in Canada-based Canopy Growth Corporation (NASDAQ: CGC) (TSX: WEED). The investment was consistent with Constellation Brands' long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics, while maintaining focus on its core total beverage alcohol business. Constellation's move earlier this year to significant increase that interest signifies the company's recognition of possibilities within the industry.

"While global legalization of cannabis is still in its infancy, we continue to believe the long-term opportunity in this evolving market is substantial," said Constellation Brands president and CEO Bill Newlands. "Canopy is best positioned to win in the emerging cannabis space."

Aurora Cannabis Inc.'s (NYSE: ACB) (TSX: ACB) new chief commercial officer has deep, diverse experience in consumer packaged goods, highly regulated industries and the U.S. cannabinoid industry. "Miguel is a highly experienced executive with an exceptional track record of performance in a number of consumer products categories," said Aurora executive chairman Michael Singer. "The Aurora Board and I firmly believe that under Miguel's leadership, Aurora's strategic direction going forward will be characterized by leading market performance, sustainable growth, profitability and value creation for shareholders."

Charlotte's Web Holdings Inc.'s (OTC: CWBHF) (TSX: CWEB) new scientific initiative with the University at Buffalo's Center for Integrated Global Biomedical Sciences includes collaboration on a global program to advance cannabinoid sciences implementation research and safety for both supplement and biomedical use of cannabinoids. The objective of the partnership is to identify optimal approaches to advance the safe use of cannabinoid-containing products and identify the gaps in current knowledge.

This growing acceptance of cannabis, and specifically CBD, isn't likely to slow and has sparked the explosion of new CBD-infused products and brands within the consumer-packaged goods (CPG) space. Industry leaders in this explosive growth market are positioned for exponential growth.

For more information about The Alkaline Water Company, please visit The Alkaline Water Company.

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