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Coca Cola Co. said Monday that it was closely monitoring the growing marijuana-drenched beverage market and responded to a media report that the world's largest beverage producer was talking to Aurora Cannabis, Canada.
The discussions about a possible product tie-up, reported by the Canadian financial channel BNN Bloomberg, may open a new front in Coke's struggle to overcome the slow demand for his sugary soft drinks by diversifying into coffee and health-oriented drinks.
The report said there was no guarantee that discussions between the companies would be successful, but that Aurora shares responded with an increase of 22 percent. Coke supply increased slightly in a New York market, weakened by concerns about trade tariffs.
The marijuana industry has attracted interest from a handful of big company names like Canada and a wave of US states has begun to legalize recreational use of the drug.
However, US companies are still cautious about taking steps in a company that remains illegal under US federal law.
Both Coke and Aurora, in separate statements, said they were interested in cannabidiol-soaked beverages, but could not comment on market speculation.
Coke and Aurora are likely to develop drinks that will relieve inflammation, pain and cramps, according to the BNN report, including sources that are familiar with the issue
A collaboration between Coke and Aurora would mean the first entrance of a large producer of non-alcoholic beverages to the market for cannabis-related products, until now a hunting ground almost exclusively for the alcohol industry.
Coroniemaker Constellation Brands pumps more than $ 4 billion in Canopy Growth marijuana producer to produce cannabis-based products while the Canadian arm of Molson Coors Brewing Co. has said that it is with Hydropothecary Corp. cannabis-infused drinks.
The size of the Constellation investment, announced a month ago, led to speculation with other buyouts, investments and partnerships in the industry, raising Canadian marijuana shares.
"We still expect to see more deals between Canadian cannabis companies and the larger players in the global alcohol market who have not yet been exposed to the category," said analyst Vivien Azer van Cowen.
Azer said he would not be surprised by a similar step from Pepsi with "with CBD seemingly a good compliment to their market share leading Gatorade franchise."