Missing out on $57B. Food innovation hubs. Healthier airports.
Missing the boat
So often, regulation protects the incumbents.
In healthcare, in banking, in hospitality — safety and security regulations (while so important!) cost money to satisfy and raise the barriers to entry for new players.
As Goldman Sachs CEO LLoyd Blankfein has said, “burdensome regulation acts as a bit of a moat around our business.”
But there’s one emerging area where regulations are hurting global CPG leaders.
The CPG challenge
Since cannabis isn’t legal everywhere, many leading food, beverage, and alcohol conglomerates can’t yet even discuss it — despite spreading legalization and market size projections hitting $57B.
While startups are busy trying to build the Keurigs of cannabis (Wisp), the Cadbury of cannabis (Défoncé), the Shiseido of cannabis (Lord Jones) and more, regulations are forcing global incumbents to sit on their hands.
These startups may be relatively small today, but they’re developing the brand recognition, vendor relationships, and product blends that could help them rapidly expand as legalization continues.
We’ve seen 3 exceptions so far:
Constellation Brands, owner of Corona, Svedka, and other alcohols, invested in Canada’s Canopy Growth in order to move into cannabis-infused drinks
Tobacco giant Philip Morris invested $20M into Syqe Medical, a cannabis vaporizer startup, in 2016; however, Philip Morris framed the deal as one focused on tobacco
German conglomerate Katjes, which makes candy and owns VICKS cough drops, invested in CBD lemonade startup Hemptastic last year
But overall, cannabis CPG startups are practicing playing ball before Unilever, Nestle, Estee Lauder, and others even get onto the court.
In some areas, such as food and beverage, incumbents may be sacrificing new business opportunities by waiting on the cannabis sidelines.
In others — including alcohol, tobacco, and skincare — cannabis and cannabis-infused products could siphon away sales and become direct threats.