Karma Water is the latest established beverage brand to enter the CBD space, announcing today the launch of Karma CBD Water, a new line developed in collaboration with Canopy Growth scheduled to roll out next year.
The new drinks utilize Karma’s patented Push Cap bottle format, which when pushed releases a powder containing 25 mg of CBD distillate, adaptogens, vitamins and flavor into an 18 oz. bottle of water. The drinks are available in Blood Orange Papaya, Blueberry Yuzu, Cranberry Lime, Lavender Orange and Watermelon Dragonfruit varieties.
“From the get-go, the mantra behind Karma is that it actually delivers on the promise of wellness,” Karma CEO CJ Rapp told BevNET in a call. “The brand continues to be in the vitamin enhanced water space, the probiotics enhanced space, and as of today, the CBD enhanced space. The common denominator is wellness, and we will let the consumer ultimately determine what active ingredients they seek most.”
The collaboration between Karma and Canopy came about through the companies’ shared strategic partnership with spirits multinational Constellation Brands. In 2019, Constellation acquired a minority ownership stake in Karma’s parent company, Karma Culture LLC, in a deal that marked the conglomerate’s first investment in a non-alcoholic beverage brand. Constellation initially purchased a 9.9% stake in Canopy in 2017, but upped its stake to 38.6% in May 2020.
According to Rapp, Karma began exploring a CBD line extension over two years ago and has since then worked to strengthen its overall business and establish its working relationship with Constellation Brands before launching the new product.
Tara Rozalowsky, VP of beverages and edibles at Canopy Growth, told BevNET that despite competition in the space, Karma is entering the CBD category at a critical point for mainstream consumer interest in the cannabinoid. Citing internal data, she said 38% of American consumers have already tried CBD with another 35% saying they’re interested in trying CBD within the next year. Canopy now estimates the CBD beverage category will grow to about $500 million by the end of 2022.
Much of the surging interest in CBD has been fueled by the pandemic. As consumers sought out new ways to de-stress during last year’s lockdowns, CBD product sales grew significantly as new users came into the category and existing consumers increased their intake, she said. Beverage in particular has emerged as a leading format for CBD, and despite the continued lack of FDA guidance on the ingredient, the industry is now moving ahead with a stronger push to expand the footprint of CBD drinks in the market.
Over the past several months, numerous alcohol distributors, most notably Southern Glazer’s Wine & Spirits (which Canopy partnered with in April to distribute its Quatreau line of CBD-infused sparkling waters) have begun partnering with CBD beverage brands, signalling a shift in how mainstream DSD houses and retailers are approaching the category.
“That tidal wave of growth is coming from the mainstream,” Rozalowsky said. “It’s happening now.
Karma CBD Water will be distributed through Constellation’s beer distribution network and will be sold in retail nationwide as well as online. According to Rapp, the line will have an SRP of $4.99-$6.99 and the brand intends to target mainstream channels including convenience and conventional. Currently, the company has identified 18 states that are “CBD friendly,” Rapp said, but intends to take a slow rollout approach by only targeting select markets and retailers at first.
The CBD-infused drinks are available for wholesale now and will begin rolling out to stores in November and December, but Karma has slated January as its soft launch for when the products will begin selling through to consumers.
Constellation Brands currently distributes Karma’s core water line through its DSD network and the brand has been working over the past two years to expand its DSD reach nationwide. According to Karma president Jeff Platt, the brand’s network now covers 39 states and is expected to grow to all 50 states by mid-2022.
Rapp and Platt noted that the brand has experienced mid-to-high double digit growth over the past several years and is currently on track to grow 80% in 2021. Karma has increased its customer base by 40%, Rapp said, and in existing retailers sales have grown between 10%-35% over the past year.
In particular Karma has expanded its footprint in convenience stores, including retailers like Speedway, Platt added. As well, Walmart — where the brand has been for three years without adding additional SKUs — sales have risen by roughly 50% year-over-year.
“Immune support has taken on an entirely new and more important role, and where we feel good is that Karma has been talking about immune support since the day it was launched in 2011,” Rapp said. “So Karma didn’t necessarily alter its approach or its points of emphasis in response to COVID, instead what Karma has been saying all along began to resonate to a greater degree because of this horrible pandemic.”
Update 10/5/2021: This article has been expanded to include comments from the Karma and Canopy Growth teams.