DRAM

Adaptogenic CBD sparkling water & drops

CDB Euphorics Drinks

Timeline

Founded

01/11

Memo

clement

04/19

Seed

Series A

Series B

Series C

clement

Apr 07, 2019

Euphorics Drinks

The trend

If you’ve been following Food Tech the past couple of years, you’ve probably noticed that a common theme for many startups has been to try to remove the “negative / harmful” aspects of food production and consumption. Whether it’s meatless meat(plant based or lab grown), shipping container grown fruits and vegetables, or candies with less sugar, this trend is pushing for healthier and less environmentally harmful products.

Alcohol is also on this list. A new generation of drinks promise to offer similar effects that many people seek when drinking alcohol (stress relief, disinhibition...) without the short and long term side effects (hangover, addiction, physical and mental consequences).

This promise is not new (it has been tried in the past), but I believe the current environment is more favourable for these startups:

  • Direct-to-Consumer brands: Distribution had always been a huge barrier to entry for small companies in the food business (getting your product in supermarkets and promoting it cost you millions of dollars). Now with social media, like Instagram, it’s possible to build a billion dollar company selling directly to your customers.

  • Consumer awareness: Consumers are more and more aware of the danger and environmental impact of many products they consume, and choose brands that offer better alternatives.

  • Legal pressure: Governments around the world are increasingly regulating substances that cost our society billions of dollars in health issues (like nicotine or sugar). At the same time, they are legalizing a growing number of products that were previously considered too dangerous to be sold legally (like marijuana).

Market

👍 The main reason I picked CBD sparkling water is because I believe products containing cannabinoids will create a huge market in the next decade. When you mention cannabis, most people think of big blunts, drug dealers and getting high. But cannabis actually contains 113 different types of cannabinoids, a class of chemical compounds that affect physiological processes including appetite, pain-sensation, mood, and memory. CBD is one of them, and is not a psychoactive constituent of cannabis like THC (THC will get you high, not CBD).

👍 While recreational cannabis is still illegal in the majority of the world, the situation is changing. In the US, it has been legalized in several states. We’re not there yet in Europe, but CBD is already legal in food supplements or cosmetics, if it also contains less than 0.2% of THC . There’s no doubt that in some years more cannabinoids compounds will be legalized in major markets (for both recreational and medical use).

👍 ”Worldwide legal cannabis spending spiked to $12.2 billion in 2018 and is projected to grow 38 percent to $16.9 billion in 2019. This is a significant jump from $9.5 billion in 2017.” Source.

Product

🤔 There are no definitive clinical studies that have confirmed CBD effects (many are underway), but it is already used for a variety of use cases such as sport recovery, sleeping and anxiety issues, or even concussion treatment.

👎 It still has to be proven scientifically if (and how) CBD alone can provide “relaxing effect”.

👍 In the US, a wide variety of products combining CBD with THC are already available (from cosmetics, to drinks, chocolate and even coffee). You can even choose the concentration of each compound to fit your profile and need (the lower the THC level, the lighter the effect, you won’t end up stoned). So yes, I believe the real potential will be unlocked once higher concentration of THC will be legalized in more markets.

Acquisition

👎 Due to the bad image of cannabis in general, the branding aspect will be very tough to crack for companies selling such products (how to appeal to "normal consumers"). But It's also a great opportunity for direct-to-consumer brands compared to more established ones.