Joint Ventures are Leading the Cannabis Beverage Space into the Future; Sproutly Canada (CSE: SPR) (OTCQB: SRUTF), Hexo Corp., Canopy Growth
POINT ROBERTS, Wash., Nov. 13, 2018 (GLOBE NEWSWIRE) -- Investorideas.com, a global news source covering leading sectors including marijuana and hemp stocks releases a sector snapshot with a focus on the recent JV’’s (joint ventures) and investments in the cannabis infused beverage market.
Why the urgency to invest and partner in the space? Multiple sources including Business Insider quoted recent market projections from Canaccord Genuity reporting,” Marijuana-infused beverages could become a $600 million market in the US in the next four years and big beverage makers are looking to take advantage of that opportunity.”
“Revenue from cannabis beverages could outpace the general demand for cannabis products by over two times, capturing 20% of the market for marijuana edibles by 2022, according to the analysts.”
Most recent JV news hitting the sector; Sproutly Canada, Inc. ( CSE: SPR ) ( OTCQB: SRUTF ) (FRA: 38G) just announced that it has entered into a letter of intent with Global Canna Labs Limited, the Caribbean’s largest medical cannabis producer, to establish a joint venture for the purpose of developing, producing, distributing, marketing and selling cannabis infused beverages, edibles and topical products derived from Sproutly’s fully licensed, APP Technology.
From the news: “Partnering with Global Canna Labs on this joint venture allows Sproutly to expand its business outside of Canada with a leading, low cost cannabis cultivator in Jamaica that has proven distribution in across the Caribbean and expanding into the European Union,” said Keith Dolo, Chief Executive Officer and Director of Sproutly. “This partnership will enable Sproutly to diversify its product portfolio and accelerate its global distribution network from a low-cost regulated jurisdiction.”
Continued: “Paul Glavine, Chief Executive Officer of Global Canna Labs said, “We are eager to roll out this partnership with Sproutly on their APP technology. We have explored a number of options regarding extraction and cannabis technology solutions for beverage and derivative products – APP Technology is in our view the superior choice for beverage formulations. With our current supply and expansion plans to over 1 million square feet of cultivation, we see this partnership with Sproutly as a step towards utilization of our large-scale production towards a finished-product strategy.”
In early October, a substantial JV cannabis beverage announcement came from Molson Coors Canada (MCC), the Canadian business unit of Molson Coors Brewing Company, and HEXO Corp. ( TSX: HEXO ) ( OTC:HYYDF ). They reported the formation of a joint venture to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization.
The joint venture, Truss, is led by former Molson Coors executive, Brett Vye, in the role of Chief Executive Officer. Vye reports to the Truss board of directors consisting of three members appointed by MCC and two members appointed by HEXO.
Mark Hunter, President and CEO of Molson Coors was quoted in an article earlier this month saying “clearly there are lots of numbers being bandied around with regard to the potential size of the cannabis market in Canada.” He went on to say, “I think, if you take the average, then it suggests that the market may be somewhere between $7 billion and $10 billion in market value, with beverages somewhere between 20% and 30%, and that’s obviously non-alcoholic cannabis infused beverages. Even if you take the low end of that estimate, then it suggests that the beverages segment could be circa $1.5 billion of value. We’re well placed to take a meaningful share of that segment.”
Not only are many companies looking to be the first to the beverage market, whether locally or internationally, but the consumer demand seems to be pushing that direction as well.
According to one survey, “76% of US and Canadian’s surveyed said they would use legal cannabis-infused products for therapeutic reasons, with nearly a quarter indicating that they’d try recreational cannabis via skincare products like lotions, creams and lip balms. 41% of the participants said they’d be more likely to try recreational cannabis through food, slightly higher than the 39% of those surveyed who said they would smoke it.”
There has been heavy investment into this concept, the largest example being the $5 Billion CAD [$4 Billion USD] investment from Constellation Brands into Canopy Growth Corp. ( NYSE:CGC ) ( TSX:WEED ), though speculation continues around Coca Cola’s interest in the Cannabis sector.
In a recent CBC article, Bruce Linton, the founder and co-CEO of Canopy Growth said ”new products developed by Tweed represent the next big opportunity.”
Continued: “I think if you’re not preparing things two years in advance, you’re never ready,” he said. “Right now, none of the chocolate or gummy bears or beverages can be prepared or sold, but we’re doing experiments on how to make them.”
Walmart, much like Coca Cola, according New Frontier Data “has also led some investigation into the cannabis market for although Walmart does not sell CBD products, it does sell a variety of hemp-derived products; such as hemp oil, hemp soap, and hemp fiber.”
Continued: “At present, none of these large hemp companies sell CBD-related products, but look for some of them to start in 2019 as several leading brands look to expand their product offering into hemp-derived CBD to capitalize on mass market distribution opportunities. For now, all eyes are on the Farm Bill and FDA to give mass markets retailers, like Walmart, the green light to begin selling hemp products with CBD.”
As countries race to allow new legalization for cannabis, companies in the sector continue to push to be leading innovators. The next year offers the potential passing of the 2018 Farm Bill as well as the legalization of edibles and beverages in Canada on October 2019, which could see consumers very close to their first ‘cannabeverage’.
Investors can expect to see more money flow and JV’s as the sector ramps up.
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