This article is part of Food & Beverage Insider’s July Healthy Beverage theme that explores opportunities and innovation in the beverage sector. Throughout the month we will provide industry insight into growth categories, investigate novel clean ingredients and formulation strategies, address regulatory compliance and toast successes.

Beer is one of the most popular alcoholic beverages consumed around the world, with its origins dating back thousands of years to Mesopotamia. Commonly produced with fermented cereal grains, hops, water and yeast, ingredients such as fruits, herbs and spices also can be used to add flavor and notes to beer. All beer falls under two styles—lagers and ales—and there are literally hundreds of substyles (think porters, stouts, double IPAs, bocks etc.) depending on ingredients, color, bitterness, alcohol by volume (ABV), fermentation process, etc.

An Allied Market Research report valued the global beer market at US$593 billion in 2017 and projected it to reach $685 billion by 2025, growing at a compound annual growth rate (CAGR) of 1.8% from 2019 to 2025. However, the industry was heavily impacted by the pandemic. According to the global alcohol trade organization IWSR, global beer sales declined 9% in 2020 as on-premise sales dried up and brands either scaled back operations or shuttered completely. That said, there are some bright spots.

While on-premises beer sales experienced a downturn, home consumption and online sales of beer increased around the world as consumers washed down tasty suds from established beer brands as well as local and regional craft breweries.

As noted by Laura Swain, Food & Beverage editor at London-based trends intelligence agency Stylus, amid the turbulence, many consumers gravitated toward healthier, lighter brews, while beer brands invested in sustainable production and championed social justice.

Organic rising

Driven by increased consumer demand for clean, transparent and sustainable products, U.S. organic sales soared to new highs in 2020, jumping a record 12.4% to $61.9 billion, marking the first time total sales of organic food and non-food products have surpassed the $60 billion mark, according to the 2021 Organic Industry Survey released by the Organic Trade Association (OTA).

The continued rise of organic creates opportunities for beer brands to gain a foothold in the organic beer space. According to Transparency Market Research, rising awareness about organic beer’s benefits over conventional beer is driving demand, and organic brews are gaining favor among women looking for low-calorie beers with lower alcohol content. Additionally, the emergence of local breweries and increasing popularity of non-alcoholic organic beer among the younger population is promoting the sales of organic beer across the globe.

The market research firm noted higher prices, low shelf-life (as compared to conventional beer), and socio-religious and cultural factors preventing beer consumption all contribute to market constraints. Nevertheless, new product development, collaboration with commercial channels such as hotels, restaurants, beer shops, pubs, beer cafes and mega events is expected to drive the market.

Myriad players in the global organic beer market range from well-known brands such as Samuel Smith Old Brewery, Lagunitas Brewing Co. and Aslan Brewing Co. to smaller, yet thriving, brands like Bison Brewing Co., Butte Creek Brewing Co., and Eel River Brewing Co. That said, big beer brands also are capitalizing on consumer thirst for organic.

Anheuser-Busch took up the organic mantle in February 2018 with the introduction of Michelob ULTRA Pure Gold, a USDA Organic light lager with organic ingredients sourced from the finest farms. At just 85 calories, 2.6 carbs and a superior golden taste, Michelob ULTRA Pure Gold was the first organic beer from a national brewer. In April 2021 the brand announced ULTRA Pure Gold is now brewed with 100% renewable electricity from solar power. The announcement marks a major sustainability milestone for Michelob ULTRA Pure Gold, as it is the first beer within the Anheuser-Busch U.S. portfolio to make this distinction.

In April 2021, Molson Coors launched its first USDA Organic beer, Coors Pure, a light lager made with organic hops, organic barley and water. The beer, containing only 92 calories, 3.5 carbs and zero sugar, is light and effervescent with a clean finish and minimal aftertaste.

Low- to no-alcohol on tap

Sober-curious is all the rage, and beer brands are responding to requests for low- to no-alcohol options. As noted by Swain in Stylus’ proprietary “Beer + Cider 2021 Sector Outlook,” the 0% ABV market is growing globally, despite the dip in worldwide sales. Additionally, beer brands are developing lighter, wellness-focused beer options for the growing segment of health-conscious drinkers.

IWSR’s “No- and Low Alcohol Strategic Study 2021,” reported the no- to low-alcohol beer and cider category commands a 92% share of the total no- to low- alcohol segment. In the U.S., off-premise sales of non-alcoholic beer grew 38% to $188 million in 2020 and is expected to grow 9.7% annually through 2024. In another analysis, IWSR noted while non-alcoholic beer has existed for decades, in markets like the U.S., non-alcohol beer has been premiumized through the release of no-alcohol versions of non-lager styles, long the domain of non-alcoholic beer. More recent non-alcoholic styles such as IPAs, stouts or porters are starting to make an impression, driven particularly by new challenger brands, many of which are not linked to traditional brewing.

Launched in 2017, Partake Brewing is a non-alcoholic craft beer brand that focuses on flavor, health, socializing and inclusivity for people who choose not to drink alcohol, whether out of need or, increasingly, as a lifestyle choice. The brand was founded by Ted Fleming after a diagnosis of Crohn’s disease led him to give up alcohol. He turned to drinking non-alcoholic beer to maintain the connection and interaction that comes with social drinking, but the lack of variety and taste inspired him to brew his own. Partake now brews a variety of craft non-alcoholic beers boasting great taste and low calories—10 to 30 calories depending on beer type. In September 2020, the company raised $4 million in series A funding round to help support its category leadership expansion in the U.S.

In July 2021, Flying Dog Brewery entered the non-alcoholic party with the introduction of its Deepfake Non-Alcoholic IPA, the newest addition to its year-round lineup. Using Mosaic, Simcoe and Centennial hops, Flying Dog’s innovative brewers crafted a 0.5% ABV smooth-drinking brew with an aroma and flavor profile dominated by hop notes of orange, grapefruit, mango and passionfruit. “Choosing a non-alcoholic beer shouldn’t mean suffering through a tasteless, watery imposter,” said James Maravetz, vice president of marketing at Flying Dog Brewery. “Deepfake gives you the satisfaction of drinking a real beer, without the added calories and alcohol. It would fool anyone.”

What’s on tap?

Market opportunities abound for beer brands looking to serve up healthier options to thirsty consumers. From organic to no- to low-alcohol, low-calorie and low-carb, the possibilities are endless. That said, consumers also are aligning themselves with brands that share their social and eco-consciousness.

Swain noted beer brands have doubled down on their sustainability initiatives, reducing carbon emissions and cutting down even further on packaging waste. Breweries are collaborating across the world to raise awareness and funds for social justice and COVID-related causes. Specifically, Scottish beer producer Brewdog has committed to reducing its carbon emissions to net-zero by September 2022. Its current crowdfunding initiative Equity For Punks: Tomorrow will see all funds go toward a number of sustainability projects across its global operations, including investment in wind and solar power, CO₂ recovery, recycled and recyclable packaging innovation, electric vehicle fleets and converting waste ingredients into energy sources. It is also planting a 2,000-acre forest in Scotland to offset carbon emissions and to produce materials for packaging.

AB InBev is working with Australian metals producer Rio Tinto to create low-carbon aluminum cans produced using renewable hydro-power and recycled metals. These cans use 30% less carbon to produce than using traditional can production techniques. Meanwhile, plastic reduction across the beer sector is moving apace, with Dutch brewer Heineken the latest to roll out new “green grip” recyclable and compostable multipack rings across all of its U.K. canned beers in 2020, removing 512 tons of plastic from supermarket shelves.

Finally, purposeful partnerships are imperative, Swain noted. In 2020, beer brands came together across borders to raise funds for worthy causes and awareness around important issues. In June, San Antonio brewery Weathered Souls Brewing Co. launched its Black is Beautiful campaign to raise awareness around racial injustice. It invited brands across the world to commit to creating a stout beer and donate the proceeds to organizations that support equality and inclusion. So far, 1,221 breweries across all 50 U.S. states and in 22 countries have agreed to take part.

To learn more about the trends shaping not just beer but the beverage category as a whole, be sure to check out Food & Beverage Insider’s latest digital magazine, covering innovation and formulation across the healthy beverages market.

The Consumer Brands Association (Consumer Brands) said in a recent letter to FDA’s acting commissioner that the agency must establish a regulatory framework for CBD to protect consumers.

Despite FDA’s long-held position that CBD cannot be sold in conventional food or dietary supplements, the market has continued to grow, with a Consumer Brands/Ipsos poll finding 26% of Americans have used CBD.

“It is time for the federal government to engage more meaningfully on regulating CBD, given the continued expansion of a ‘Wild West’ CBD market,” said Betsy Booren, senior vice president of regulatory and technical affairs with Consumer Brands, in a July 22 press release. “Smart, clearly articulated regulations are essential to providing consumers assurance a product is safe regardless of which state it was purchased in and gives them the information they need to make informed choices.”

In the absence of federal rules governing CBD, many states have jumped in to regulate the market. In a July 22 letter to FDA’s acting commissioner, Dr. Janet Woodcock, Booren pointed out a lack of uniformity among the states. She said 38 states have 135 proposals that “threaten to further confuse the disparate CBD regulations already on states’ books.”

“Some states, like New York, have promulgated very robust regulatory requirements,” Booren wrote to Woodcock. “Unfortunately, well-intentioned state CBD regulations have created a confusing, conflicting regulatory patchwork that fails to establish uniform requirements for the safe formulation, production, labeling and marketing of these products.”

Consumer Brands requested FDA:

• Update stakeholders on the scientific data needed to ascertain the safety of CBD products;
• Create a framework where CPG companies notify FDA of CBD-containing products and furnish safety data for the agency’s review;
• Provide an update on its progress in establishing a regulatory framework for CBD products;
• Provide technical aid to Congress;
• Continue to target “bad actors” in enforcement actions; and
• Develop a plan of action for moving CBD-containing products on the current market to the new regulatory framework.

Consumer Brands, which was known as the Grocery Manufacturers Association until changing its name in 2020, represents the consumer packaged goods industry. Its members have more than 1,700 brands, and several people on its board of directors are affiliated with food and beverage heavyweights like ConAgra Brands, General Mills and The Coca-Cola Company.

“The Consumer Brands Association is united with the FDA in the shared belief that American consumers need smart, consistent regulations to assure CBD products in the marketplace are safe,” Booren concluded in her letter to Woodcock. “We look forward to working toward this shared goal.”

An FDA spokesman said the agency will respond directly to Consumer Brands.

On July 22, Consumer Brands also sent a letter to Sen. Ron Wyden, a Democrat from Oregon who chairs the Senate Committee on Finance and introduced a bill in 2021 known as S.1698, or the Hemp Access and Consumer Safety Act. Consumer Brands expressed its support for the bill, which would legalize CBD and other hemp-derived ingredients in dietary supplements and conventional food and beverages.

A recent poll conducted by Consumer Brands found 74% percent of American consumers either incorrectly assume or don’t know if CBD is regulated, Consumer Brands advised Wyden. In the same poll, when asked to judge their knowledge of CBD on a scale of one to ten, consumers rated themselves an average of 3.3.

“The widespread availability of CBD-containing products, coupled with this knowledge gap and the lack of federal regulation should create urgency for FDA to engage,” Jen Daulby, Consumer Brands’ senior vice president of government affairs, wrote to Wyden. “American consumers deserve to know that the products they are using are manufactured using best practices and are safe for their intended use.”

 

 

 

 

 

 

This article is part of Food & Beverage Insider’s July Healthy Beverage theme that explores opportunities and innovation in the beverage sector. Throughout the month we will provide industry insight into growth categories, investigate novel clean ingredients and formulation strategies, address regulatory compliance and toast successes.

As the world slowly recovers from the COVID-19 pandemic and the immense disruption it has caused, the theme of the last 18 months or so could easily be “stress and anxiety.” From worries about getting sick or one’s family getting sick, to concerns about the economy, job market, climate and more, today’s consumers have more than enough reasons to be on edge.

Perhaps that is why cannabidiol (CBD), one of 133 identified cannabinoids within the cannabis plant and researched for its possible beneficial effects on anxiety and other health issues (Perm J. 2019;23:18-041), has exploded onto the beverage market. The popular ingredient, originally marketed in capsules, sprays and oils, can now be found in nearly every kind of beverage, from water to coffee to beer and everything in between, even while continuing to exist in a legal gray area.

Regulatory concerns

FDA has made its position clear that CBD cannot be added to food and beverage products, largely as a result of originally being an active ingredient in a drug product, the epilepsy medication Epidiolex. FDA’s official website, in an FAQ on all things hemp- and cannabis-related, states the following:

10. Is it legal, in interstate commerce, to sell a food (including any animal food or feed) to which THC or CBD has been added?

A. No. Under section 301(ll) of the FD&C Act [21 U.S.C. § 331(ll)], it is prohibited to introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) to which has been added a substance which is an active ingredient in a drug product that has been approved under section 505 of the FD&C Act [21 U.S.C. § 355], or a drug for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public.

However, a quick glance around any grocery or convenience store reveals this position is being largely ignored by the food and beverage industry, as the door remains open for a future reversal. Regarding enforcement, over the years in the CBD market, FDA has mostly focused on firms making claims their CBD products treat diseases—regardless of product category. As long as a brand avoids misleading claims about its CBD-infused product, FDA has thus far shown it is largely willing to look the other way.

“It is time for the federal government to engage more meaningfully on regulating CBD, given the continued expansion of a ‘Wild West’ CBD market,” said Betsy Booren, senior vice president of regulatory and technical affairs, Consumer Brands Association, in a recent statement calling for better federal oversight.

Because of this current selective enforcement, responsible brands are taking advantage and creating exciting new products designed to potentially help alleviate some of the stress of daily life. And, despite the legal gray area in which CBD food and beverage products reside, business is booming and opportunity is abundant.

CBD drink market explosion

Grand View Research tabulated the global CBD beverage market to be worth US$901.8 million in 2018, with an expected 17.8% compound annual growth rate (CAGR) through 2025 to nearly $3 billion. According to its report, “CBD-infused cannabis drinks registered the fastest growth [compared to THC-infused beverages] in 2018. Also, the demand is expected to witness a surge over the forecasted period owing to the non-psychoactive properties of CBD.”

“We see beverages becoming a stronger category across the board, for a variety of reasons,” said Chris Shade, Ph.D., founder and CEO of Quicksilver Scientific, which operates in the field of nanoemulsion technology. “There is more and more interest in cannabinoid beverages, and consumers continue to move away from sugar-based, high-calorie drinks. We’re looking forward to a lot of interesting developments in beverages this coming year.”

“Consumers are looking for added health benefits in their beverages, even alcoholic beverages,” added Ian Monat, CEO and founder of Rhythm CBD Seltzers. “To that end, in 2021, I foresee a wider acceptance of CBD in beverages, and you’ll start seeing more CBD seltzers being merchandised alongside the kombucha and other wellness or anti-inflammatory products on the shelf.”

Grand View Research’s report largely agreed with these experts, noting that many consumers consider CBD drinks as wellness products, akin to kombucha—a probiotic drink. And that the perception of functional benefits can be “expected to boost the adoption of the product, resulting in the growth of the segment.”

On the market

Rhythm is a line of CBD-infused seltzers taking advantage of both the CBD and sparkling water crazes. The brand offers three varieties—Dream, Awake and Recover—all utilizing CBD via full-spectrum hemp extract. The Awake variety also includes 50 mg of caffeine, allowing for a synergy between the energy provided from caffeine and potential calming effects of CBD. Turmeric root (Curcuma longa) extract is used in the Recover variety, while 5 mg melatonin is added to the Sleep flavor to promote rest. All three flavors are also vegan, gluten-free, non-GMO, keto-friendly, low calorie and naturally sweetened with monk fruit.

In March, Beak & Skiff, , an apple orchard and producer of ciders, spirits and wine, released its USDA Certified Organic CBD sparkling water. Each 12-ounce can contains 20 mg full-spectrum hemp extract while remaining zero-calorie, sugar-free and gluten-free as well as Whole30 approved. Available in Black Cherry and Blood Orange flavors, the brand also ensures consumers know exactly where their products come from. According to the company, “Beak & Skiff manages the entire supply chain for the sparkling water, from growing the hemp to developing and manufacturing each can.”

CENTR is another brand combining the CBD and seltzer boons. Each 12-ounce can of sparkling CBD beverage contains 30 mg CBD and natural citrus flavors. Available in both regular (8 g of sugar) and sugar-free, the brand takes things one step further by also featuring mocktail and cocktail recipes on its site to best utilize the product for post-pandemic at-home mixologists.

Of course, some brands are cutting out the middleman and infusing already alcoholic beverages with CBD. Hop & Hemp Brewing Co. launched what it said is the U.K.’s first CBD-infused, low-ABV (alcohol by volume) craft beer back in 2019. These brews are extremely low ABV at just 0.5% while also containing 8 mg of CBD per bottle. The brand positions itself as an alcohol alternative that allows consumers to “take the edge off without risking a hangover the following morning.”

Two Flowers IPA, one of seven CBD-infused offerings from Portland, Oregon-based brewer Coalition Brewing Co., has a more traditional 6% ABV while also containing 10 mg CBD. Consumer reviews have called the drink “naturally calming” and “elevating,” while maintaining the crisp bitterness consumers expect in an IPA.

Of course, it isn’t just alcohol and seltzer jumping on the CBD bandwagon. Two of the most widely consumed drinks on Earth—coffee and tea—are finding success in the CBD space. Buddha Teas began offering CBD-infused versions of traditional teas, with options like Chamomile; Matcha; and Peppermint, as well as some less common choices such as Tulsi Ashwagandha (Ocimum tenuiflorum and Withania somnifera); Turmeric and Ginger; and even a Mushroom variety, back in 2018. Each tea bag contains 5 mg of water-soluble CBD.

Kickback, which offers hemp-infused lemonades, also released a line of both CBD coffee beans and loose tea for home brewing. Its coffee, in flavors like O.G. Cali Rise and O.G. Cali Daze, contains 90 and 120 mg of CBD, respectively, per bag, which comes out to around 5-7 mg of CBD per cup.

And, for consumers looking to get their CBD from whatever their favorite beverage is, any time, Zolt offers CBD-infused flavor packs to mix with water or any other beverage of choice. The brand offers nearly a dozen different flavor options, with CBD-infused Morning Lemon Tea, Tarim Peach Tea, Tropical Orange, Passion Fruit and more. These stick pouches each contain 20 mg full spectrum hemp extract and also come with other functionalities. For example, the Passion Fruit variety, Boost+, also includes Reishi mushroom extract (Ganoderma lingzhi), green tea extract and guarana (Paullinia cupana) for energy. The Dreamy variety includes a vegan collagen booster, 5 mg melatonin, 300 mg gamma amino butyric acid (GABA), 250 mg KSM-66 ashwagandha and 100 mg hyaluronic acid.

Looking ahead

The 2018 Farm Bill officially put hemp and its extracts back into the view of food and beverage manufacturers. Even with CBD’s status as a food and beverage ingredient lacking any clear federal oversight, consumer demand has forced the hands of brands and formulators to produce.

Even outside of food and beverage, public perceptions and opinions on hemp and cannabis use are changing, and as laws around the country reflect those changing positions, the popularity of these products can only be expected to rise. Recreational marijuana use is now legal in 18 states plus Washington, D.C., and Senate Majority Leader Chuck Schumer (D-N.Y.) has, as recently as July 2021, publicly spoken about his desire to pass a federal marijuana legalization bill.

Changing laws mean a changing landscape when it comes to the inclusion of hemp and marijuana—including CBD, the high-inducing THC and the multitude of other cannabinoids. As consumers continue to seek alternative methods of relieving stress and anxiety—and laws around the U.S. evolve to allow hemp and marijuana to join that list of alternatives—expect the CBD-infused beverage market to fully join along for the ride.