Is Cannabis the Next Stage in the Coke-Pepsi Rivalry?

Cannabis stocks roared in mid-September on the news that Coca-Cola (NYSE:KO) was in talks with Canadian cannabis producer Aurora Cannabis (TSX: ACB) to explore CBD-infused beverages. Both companies were mum on the talks, but reports indicate that a deal could be very close. Coca-Cola stock has climbed 3.7% over the past month.

According to Canaccord Genuity analysts, the cannabis-infused beverage industry could grow into a $600-million market in the United States by 2022. This would represent 20% of the total edibles market. CBD-infused beverages are expected to make up nearly half of the $600-million market.

Cannabis is already putting pressure on alcohol sales, and CBD and cannabis-infused beverages could do even more damage as legalization trickles through the states south of the border.

PepsiCo (NASDAQ:PEP) is also reportedly looking into the cannabis market. Pepsi CFO Hugh Johnston told CNBC on October 2 that the company was looking at “critically” investing in cannabis. However, Johnston was not willing to divulge any specific plans. It appears the decades-old rivals could soon be sparring in the cannabis sphere.

Although the competition will be interesting, the foray into cannabis should boost both going forward. Soft drinks have struggled to post growth in North America over the past decade, as top companies are seeking opportunities in Africa and Asia.

This new industry could provide a spark that these companies will welcome in the near term. What form that will take will depend on the legislative progress made in the United States on cannabis use.

This article provided by NewsEdge.