Aurora Cannabis in Beverage Talks Again
Coca-Cola (NYSE: KO) has had enough of slogans throughout its long history. One recurring theme dating back to 1969 is "Information technology'south the real thing." Now a potential deal with Coke could brand a top Canadian marijuana grower the real matter, too.
Aurora Cannabis (NASDAQOTH: ACBFF) is in serious talks with Coca-Cola to develop cannabis-infused beverages, co-ordinate to a report past BNN Bloomberg Goggle box. Could a deal with Coke and Aurora exist even bigger news than Constellation Brands' (NYSE: STZ) partnership with Canopy Growth (NYSE: CGC)?
Image source: Getty Images.
Key differences
There are some important differences betwixt the potential deal between Coca-Cola and Aurora Cannabis than the one between alcoholic beverage maker Constellation Brands and Canopy Growth. Ane biggie is that the kind of cannabis-infused potable Coke is contemplating might not exist the same equally what Constellation and Canopy are envisioning.
BNN Bloomberg reported that Coca-Cola wouldn't comment on any discussions with Aurora. However, a company spokesman stated in an email to BNN Bloomberg that "along with many others in the potable industry, nosotros are closely watching the growth of non-psychoactive CBD [cannabidiol] every bit an ingredient in functional wellness beverages around the world. The infinite is evolving chop-chop."
Canopy Growth CEO Bruce Linton has said that his company and Constellation program to launch cannabis-infused beverages including zero-calorie drinks with mixtures of cannabinoids. He told CNBC'southward Jim Cramer in an interview this summer, "We're talking about going into a bar and having a tweed and tonic."
Coca-Cola, on the other hand, appears to exist interested in more-therapeutic cannabis-infused beverages targeting relief of cramping, inflammation, and pain. A source told BNN Bloomberg that Coke is looking to develop cannabis-infused beverages in the "'recovery beverage' category."
Also, Constellation Brands made two pregnant investments in Awning Growth. In October 2017, Constellation partnered with Canopy and bought a 9.nine% stake in the marijuana grower for around $191 million. Last month, Constellation invested another $4 billion in Canopy, upping its stake to 38%. Information technology seems more than likely that Coca-Cola would form a joint venture with Aurora instead of buying a big chunk of the company like Constellation did with Canopy.
A huge impact
No affair how you await at information technology, a bargain with Coca-Cola would exist huge for Aurora Cannabis. Information technology would too be tremendously important for the cannabis industry overall.
After the Constellation-Canopy partnership was starting time appear last year, many (including yours truly) idea that it was important in large part considering it helped further legitimize the cannabis industry. And when Molson Coors later picked its cannabis partner, I thought that was another stride toward legitimization of the industry.
Like many others, I figured that the floodgates might open up for other major companies to class alliances with marijuana growers. That appears to be what is happening. Reports accept surfaced recently that Guinness brewer Diageo might be next amid alcoholic drink companies to forge a cannabis partnership. There'south speculation that big tobacco companies could jump into the fray likewise.
Only if Coca-Cola partners with Aurora, it would enhance the level of legitimization of the cannabis industry more whatever of the other deals, in my view. Coke is one of the most well-known and respected brands in the globe. A Coca-Cola deal would also increment the likelihood that even more than beverage makers, of both alcoholic and nonalcoholic drinks, could establish partnerships with marijuana growers.
1 peculiarly applicable Coke slogan
There have been many slogans for Coca-Cola through the years. I think that one of those slogans is peculiarly applicable in the word nigh a potential deal with Coke and Aurora: "Make it existent." I bring up that old Coke slogan from 2005 for a couple of reasons.
First, at that place isn't a deal even so. BNN Bloomberg reported that Coca-Cola met with another meridian Canadian marijuana grower, Aphria, a couple of months ago, but those discussions didn't go anywhere. Information technology's possible that talks between Coke and Aurora could fizzle out as well. It's non real until a deal is done.
Second, for investors considering Aurora Cannabis or other marijuana stocks, arrive real when yous evaluate these stocks. Information technology'south easy to go defenseless up in the giddiness of big deals with big companies and the rapid growth of cannabis markets across the world. But retrieve besides that marijuana stock valuations reflect a lot of this growth. Some might argue that the stocks reflect a lot more than growth than is likely to exist experienced over the next few years.
However, shares of Aurora Cannabis soared on the news about the possibility of a partnership with Coca-Cola. And for good reason. Information technology looks like the Coca-Cola slogan that's nearly relevant of all might be this one: "Have a Coke and a smile."
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of Molson Coors Brewing. The Motley Fool has a disclosure policy.
Source: https://finance.yahoo.com/news/deal-coca-cola-could-aurora-153300338.html
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