Alcohol Giant Diageo Looking for Cannabis Related Deals in Canada

Diageo, a British multinational alcoholic beverages company, with its headquarters in London, England and offices in all six inhabited continents, is one of the world’s largest distillers and is now looking for cannabis related deals in Canada.  

The company, which sells many popular bands of alcohol like Guinness beer, Smirnoff vodka and Crown Royal Canadian Whisky, is looking to enter the cannabis market. It looks to add marijuana infused beverages into its profile and attract customers who are waiting to legalization of recreational marijuana.

Companies in the alcohol sector have been worried that legal weed could eat into their sales and have been trying to incorporate weed in different ways in their products including infused beverages and edible products.

According to a report from investment firm Cowen and Company LLC, availability of legal recreational marijuana leads to significant decline in binge drinking.

“As cannabis access expands, we expect further pressure on alcohol sales, given this notable divide in consumer consumption patterns,”  Vivien Azer, a senior analyst covering beverage and tobacco companies at Cowen, wrote in a research report.

Cannabis infused edible products such as beverages and candy will not be legal in Canada until October next year.

According to financial media reports, Diageo has met with several Canadian companies in the past month to gauge their interest in a deal for a potential investment or collaboration to create new cannabis-infused beverages. A senior executive team from Diageo attended a Toronto marijuana conference and held several meetings with cannabis companies in the city to discuss possible partnerships or an equity arrangement, according to sources familiar with the matter.

Other alcohol companies are looking to enter the marijuana market too. Bloomberg reported that ties between the alcohol and cannabis industries have grown closer in recent weeks. Molson Coors announced it was forming a joint venture with Hydropothecary Corp. to develop cannabis-infused drinks.

Similarly, Constellation Brands increased its ownership interest in Canopy Growth Corp, and said it would make a $5-billion investment that will give the alcohol producer around 40 per cent stake in Canada’s largest licensed cannabis producer, according to a Bloomberg report which also said Cannabis would generate $75 billion in global sales by 2030.

The world is watching Canada as it legalizes recreational weed and the marijuana industry is all set for an epic transformation. Canadian companies are seeing interest from across the globe and listed marijuana companies have seen their stocks shoot up due to the hype the sector is getting.

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