'The new avocado toast': A former Coca-Cola and AB InBev executive reveals why every food and beverage boardroom needs to be talking about cannabis
- Chris Burggraeve, a former Coca-Cola and AB InBev exec turned cannabis startup founder, said CBD - a non-psychoactive component of marijuana - will be the food industry's "next big thing."
- Burggraeve left the corporate world to found the upscale cannabis brand Toast in 2016.
- Big consumer packaged goods companies like Coca-Cola are already exploring deals to cash in on the CBD craze.
According to Chris Burggraeve - a former executive of Coca-Cola and AB InBev turned cannabis startup founder - CBD has already claimed the throne as the next trendy food industry ingredient of choice.
"CBD is the new avocado toast," Burggraeve told Business Insider in a recent interview. CBD, or cannabidiol, is a non-psychoactive compound in marijuana that's thought to have therapeutic benefits.
It's already a $1 billion business in the US, and some analysts estimate the market could explode to $22 billion across a range of categories, including beverages, snacks, and beauty products, in the next four years.
"CBD is the new thing now, but it will be the new thing for a while because this is very fundamental," Burggraeve said. "It's much bigger than kale, much bigger than quinoa, and much more fundamental."
Burggraeve comes from a traditional consumer packaged goods, or CPG background, working with industry giants like Coca-Cola and Proctor and Gamble. From 2007 to 2012, he served as the chief managing officer for Budweiser's parent company, AB InBev.
When Burggraeve parted ways with InBev, CBD-infused food and beverage was still a radical notion. Even two years ago, when he cofounded upscale cannabis brand Toast, the recent news that Coca-Cola is exploring a potential deal with a cannabis-maker would have been shocking.
Now, however, Burggraeve says nearly every CPG industry peer he speaks with has one question: How do I get in on the action?
The action has ramped up in a big way, as large beverage-makers and other CPG giants push into the CBD world.
It won't be long before every CPG giant pursues a cannabis strategy
In addition to Coca-Cola reportedly eyeing a CBD-infused beverage deal, Constellation Brands - the beermaker behind Corona and Modelo - recently paid $4 billion for a 38% stake in the Canadian cultivator Canopy Growth.
Lagunitas, Heineken's popular California-based brand, has developed a hoppy, THC-infused sparkling water. And Molson Coors recently entered a joint venture with Hexo, a publicly-traded cultivator, to produce marijuana-infused beer for the Canadian market, among other deals.
Insiders say the floodgates are just opening - and it won't be long before every big CPG company outlines a cannabis strategy.
"We are seeing high-profile companies, in addition to institutional investors, waking up to opportunities in the space," Ben Kovler, the CEO of the publicly-traded cannabis company Green Thumb Industries, said.
PepsiCo, however, shot down rumors that it was exploring cannabis deals on a Tuesday conference call with investors. Hugh Johnson, PepsiCo's CFO, said in response to a question on cannabis-infused products that the company looks at everything, but has no plans at this point to enter into the market, due in part to regulatory issues.
But the demand for cannabis-infused beverages isn't going away. According to the investment bank Canaccord Genuity, CBD beverages could become a $600 million market along over the next four years, with CBD beverages accounting for $260 million alone.
"If there is still somebody who isn't watching this and having an opinion on what to do and what not to do, then they should reexamine whether they are a worthy board member," Burggraeve said.
Unlike many trends that sweep the food and beverage, like kale or sriracha, CBD (and cannabis more generally) has the potential to span categories, inventing and reinventing itself in a wide range of brands and products.
Beer will always be beer, Burggraeve said. Soda will always be soda. CBD, meanwhile, is uncharted territory - and the forms it has already taken vary widely. It can be a coffee add-in, a facemask ingredient, or even a new beverage category.
An investment in a cannabis brand now could pay off exponentially, especially as more states legalize marijuana.
Burggraeve thinks other CPG executives should heed his advice when it comes to cannabis: "We ignore it at our peril."
Read more of our cannabis industry coverage:
- Hedge fund legend Leon Cooperman is investing in the marijuana industry - and it's another sign the sector is heating up
- Famous short seller Andrew Left is creating a cannabis fund. He explains why the market's not in a bubble, but does need to 'chill out'
- One of the world's largest beer makers is about to start producing marijuana-infused drinks
- 'These things rarely happen in someone's career': Activist investor thinks a marijuana cultivator's stock is wildly undervalued
- The rising stars of marijuana's investment scene that everyone from Wall Street to Silicon Valley should know