Beverage Startups
The Cannabis Beverage Market Remained Strong During COVID-19, Says Ben Larson
Back in 2019 I talked with Ben Larson, the CEO of Vertosa. We discussed the rising trend of Hemp-CBD brands in the beverage industry and the near future for this beverage market niche. However, the world and the industry itself has changed due to COVID-19. Today, I have the pleasure of talking with Ben once again.
It’s been more than 9 months after our talk back in 2019. Can you tell us what major changes has Vertosa had ever since then?
Hard to imagine it has been 9 months already. We’ve grown and evolved tremendously as a company in no short part due to the COVID-19 crisis. Removing travel and going largely virtual the past four months have given us the opportunity to really focus on the essential parts of our business, streamline processes, build even greater transparency internally and externally, and really lean into product development and R&D. Most importantly, our company culture has really blossomed and morale seems to be better than ever.
Deemed an essential part of the supply chain, the business has also been strong, so we’ve continued to expand both in product offerings and geography. We’re proud to announce milestones such as new partnerships with top beverage brands such as Calexo and Caliva, as well as an expansion into Canada through a strategic partnership with VIVO Cannabis, a producer known for premium cannabis products and services that will enable Vertosa to act as a platform for hemp and cannabis brands to grow in other regions with the same great active ingredients.
I have heard about the initiative of collaborating with flavor houses in order to develop new options for CBD infused beverages. What are the most remarkable findings and creations?
How brands and product developers think about CBD, or more broadly hemp, as an ingredient is evolving quickly. In the past, there was a propensity for manufacturers to come to us almost as an afterthought; as in, we have this fully formulated product, please just add CBD to it without changing anything. While we’ve been successful in doing that, the conversation is often much different now. We’re engaging companies during the ideation stage – literally sometimes just a pitch deck in hand – helping our partners design products from the ground-up in a more holistic fashion.
Our customized approach really allows the product makers to stretch the bounds of their imagination and explore incorporating various aspects of the cannabis plant beyond CBD for a truly unique experience. Terpenes, for instance, can create unique flavors that nod to the origin of the active ingredient, and when treated with our emulsion technology, can also significantly impact the consumer’s experience. We’ve also recently developed two certified organic formulations that have a more floral appeal, which for a natural products manufacturer, acts more as a base ingredient to build around instead of being an afterthought.
So, it’s important to understand how cannabis will function within the beverage’s formulation from the very beginning. Therefore, Vertosa works closely with each of our partner brand’s flavor house to achieve the whole desired experience of the end product. It’s also important for us to consider that there are other ingredients that influence how consumers will absorb the infusion. We need to understand what’s in the product and how those other ingredients will influence the whole experience and effects of the cannabinoids. There’s that compatibility component, so we need to familiarize ourselves with the flavor house’s ingredient base and the different options. It’s a very symbiotic relationship.
Vertosa has been actively operating outside the United States as well. What major projects or initiatives have been launched in Canada and Europe? Tell us more about them.
As I mentioned, last month we announced an expansion into Canada through a partnership with VIVO Cannabis. Working with VIVO, we can help propel the next exciting phase of the cannabis movement in Canada by offering the same quality and consistent ingredients north of the border as we do in the States, effectively creating a platform for our brand partners to expand upon. Stay tuned for the forthcoming product launches.
In general, the vision of Vertosa’s business is to create a platform for which companies and products can expand. So even though regulators create barriers, we have a reliable active ingredient that can be created regionally as well as inactive ingredients that can be shipped to multiple legal markets. Our expansion into Canada is the first real step in achieving that vision and we plan to do even more of this.
Of course, Europe is on our radar, and being that we operate in both cannabis and hemp, there are different limiting regulations and barriers that we have to consider. But Vertosa has infused products on the market in Europe, such as VitoCoco’s Infused beverages, which are available in the UK. But overall, we are being deliberate and careful with how we enter every market.
The impact of COVID-19 has been huge to the beverage market worldwide. What actions has Vertosa taken to decrease the negative impact?
COVID-19 disrupted every industry and shook our entire world to its core. However, when it came down to it, the cannabis beverage market remained strong and made major strides through the pandemic. It was an encouraging silver lining in a trying time. The growth in the space is likely because infused beverages are typically designed for individual consumption and can be consumed discreetly, which is ideal during social distancing. They are also an approachable, familiar way to consume cannabis for less experienced users and those looking to avoid smoking during this time.
In stressful times like these, to have a healthful alternative to alcohol and other substances is game-changing for consumers, and it is showing in the positive growth of our business.
The health crisis has formed new trends in many markets. Have you noticed any new trends in the beverage market? Any specific changes in the CBD-infused beverage niche?
Have you heard of the Entourage Effect? The combination of various cannabinoids that creates a unique experience, and often more efficacious, than a single cannabinoid alone, like CBD. Well, the Entourage Effect goes well beyond the compounds in the plant. Because CBD reportedly has strong anti-anxiety, anti-inflammatory and anti-stress effects, product makers are starting to pair these with other ingredients that can work alongside CBD to create incredibly efficacious experiences.
In times of immense stress, producers and brands are now thinking of CBD and other cannabinoids, such as CBN and CBG, as active ingredients that can work alongside ashwagandha or valerian root or other popular actives. Producers are also starting to understand CBD more and developing products tailored to specific demographics and uses instead of just broadly trying to put CBD in everything – or have CBD replace alcohol. The market is becoming more sophisticated, and consumers are becoming more sophisticated. Most importantly, the conversation is well beyond just CBD now and we’re often testing for detection of minor cannabinoids.
While we’re starting to see people think more creatively about their formulations, we’re also witnessing a greater creativity around engaging the consumer. Brands are thinking deeply about how to connect and speak with their customers and are often exploring direct-to-consumer sales channels. This is exciting because it allows the brand to think beyond a single product and design an entire customer journey through their brand.
I asked you this question 9 months ago, however I wonder if anything changed. In your opinion, CBD-infused beverages are the next big thing or just a short-term trend? Why?
CBD beverages, and beverages infused with other cannabinoids including THC and Delta-8, are most definitely here to stay. In fact, according to a report by Prohibition Partners, the global cannabis drinks market will be worth $1.82 billion by the end of the year.
In these extremely difficult times, infused beverages offer an appealing, approachable, and affordable alternative to alcoholic beverages. And thanks to Vertosa’s proprietary emulsion technology, there are also more sophisticated and high-end varieties of cannabis beverages than ever before, from wine to beer to cold brew coffee to fresh juice to sparkling water. We can also expect to see notable consumer brands from beer, spirits, coffee, energy drinks and more bring exciting new products to market.
However, when it comes to questioning if CBD will be an established, standalone industry, the answer is complicated. CBD is a single compound. As an active ingredient, CBD will be ubiquitous across many consumer-packaged goods and industries. At Vertosa, we consider the whole plant with hundreds of compounds at play and pride ourselves on providing the expertise to create a truly elevated cannabis experience.
For more information visit Vertosa’s website.
