September 28, 2021 -- InvestorsHub NewsWire -- NetworkNewsWire
Editorial Coverage: As part of the reopening economy, investors
should be monitoring several trends in the healthcare space,
including several that fall in the “natural wellness” or “natural
alternatives” categories. The COVID-19 pandemic shone a
bright light on lifestyle and self-care as people were encouraged,
and often mandated, to stay at home. The trend further points to
the next phase of cannabis market maturation, dubbed cannabis 3.0,
against the backdrop of legislators discussing the Cannabis
Administration and Opportunity Act that would create a national
market for marijuana. Looking to address this
opportunity, BevCanna Enterprises Inc. (CSE: BEV)
(OTCQB: BVNNF) (FSE: 7BC) (Profile) has been expanding and
diversifying its business in 2021 from its core business as a
high-capacity cannabis beverage company into a diversified health
and wellness company through a number of accretive acquisitions.
BevCanna is emerging as a leader among a group of companies,
including the
Valens Company (TSX: VLNS) (OTCQX:
VLNCF), Neptune Wellness Solutions Inc. (NASDAQ:
NEPT), NewAge Inc. (NASDAQ:
NBEV) and AYR
Wellness Inc. (CSE: AYR.A) (OTCQX: AYRWF), that are
innovating and taking aggressive approaches to capitalize on the
growing cannabis consumer trend moving toward a more wholistic
wellness lifestyle business.
- Quince Market Insights estimates the 2021 market will reach
$19.89 billion and forecasts that the sector is now positioned to
see 27% CAGR.
- BevCanna has completed two significant acquisitions, giving it
two cannabis-related licenses and a global presence in natural
wellness markets.
- BevCanna operates a 40,000-square-foot, state-of-the-art
beverage production facility with annual capacity of 210 million
bottles.
- BevCanna’s acquisition of Embark Health adds revenue and IP as
well as a second production facility to increase its asset base to
more than $100 million.
Click here to view the custom infographic of
the BevCanna Enterprises Inc. editorial.
Cannabis 3.0 Has Arrived
Owing to increased use for medicinal purposes, Quince Market
Insights sees the global cannabis market ready to accelerate in a
big way. The firm
estimates the 2021 market will reach $19.89 billion and
forecasts that the sector is now positioned to see 27% compound
annual growth.
Cannabis 1.0 was the legalization of the plant, and 2.0 was the
introduction of derivatives into the market such as edibles and
other consumables. With cannabis 3.0 on the horizon, and U.S.
legalization looming, cannabis is becoming normalized, and
consumers are integrating it into their everyday lives, as an
ingredient in mainstream products in everything from drinks and
pharmaceuticals to personal hygiene and beauty products.
The upcoming widespread applications have underscored market
activity as companies position for the future. BevCanna
Enterprises Inc. (CSE: BEV) (OTCQB: BVNNF) (FSE:
7BC) has been a standout, diversifying already robust
operations and acquiring innovative wellness brands and companies
that expand its product offering and manufacturing capabilities to
new channels such as direct to consumer e-commerce, high-growth
adult-use cannabis products, hemp-derived CBD products, and
wellness-focused noncannabis products bridging the intersection of
two of the fastest-growing consumer categories: wellness and
cannabis.
BevCanna leadership has decades of experience creating,
branding, and manufacturing iconic brands, with CVs including
positions at the likes of Rogers, Best Buy, SC Johnson, Walmart,
Pepsi, Costco, Colgate, and more. The company owns in-house brands
Anarchist Mountain, Pure Therapy and the innovative TRACE water
& supplement brand, along with partner brands Keef Brands in
its portfolio. As the United States moves towards federal cannabis
legalization, the Keef partnership provides wide exposure to more
than 1,000 U.S. dispensaries. With the acquisitions of Naturo Group
and Pure Therapy complete, BevCanna just inked another
company-maker-type of deal.
Naturo Group: A Company Maker on Its Own
BevCanna planted its flag in the wellness space in November 2020
with an agreement to purchase Naturo Group, a company that had been
a close partner since 2017. The acquisition brought in about $38
million in assets, including a British Columbia-based,
40,000-square-foot, state-of-the-art, HACCP-certified beverage
manufacturing facility with capacity of 210 million bottles
annually in PET/RPET, aluminum and glass formats; a pristine onsite
alkaline spring water source; 315-acres of land for outdoor
cultivation purposes; and proprietary Health Canada-approved fulvic
and humic plant-based mineral formulation. The land and alkaline
spring water source alone are valued at more than $28
million, a true value proposition for a company with a market
capitalization around $56 million. In addition, BevCanna already
has government approval to expand its facility to
170,000-square-feet for CPG and cannabis purposes.
With the Naturo Group
acquisition, BevCanna brought the TRACE brand under its
umbrella, a leading mineralized water and supplement brand
that is sold in more than 3,000 Canadian retail locations, and is
actively expanding into the U.S. market with an initial focus on
California, Illinois and New York markets. While mostly supported
by anecdotal evidence, fulvic acid is heralded as a natural
supplement and immune system enhancer for warding off a variety
of diseases and
conditions, including allergies, eczema and even Alzheimer’s
disease. The products catalog contains a variety of alkaline and
natural spring waters, plant-based mineral concentrate, plant-based
mineralized shots and more.
Pure Therapy
The acquisition of Naturo Group came only a month after BevCanna
agreed to acquire Pure
Therapy, a natural health product company selling a range of
meticulously crafted goods, including nutraceutical and hemp-based
cannabidiol products, through its e-commerce platform across North
America and Western Europe. At the time of acquisition, Pure
Therapy had a base of approximately 23,000 customers, which
BevCanna has already grown by about 15%, with 3,270 new active
customers. The company also plans to accelerate growth by
leveraging the decades of marketing expertise that the Pure
Therapy’s team brings to the table.
BevCanna plans to launch its own nutraceuticals and CBD products
into the global health and wellness market, including the
burgeoning U.S. CBD space. The company has a jump start in the
lucrative U.S. markets through Pure Therapy and its partnership
with Keef Brands, a top U.S. cannabis-infused beverage company.
Embark Health, $100 Million in Assets
Last week, BevCanna made another significant acquisition,
entering a definitive agreement to buy Embark Health Inc. for C$21
million. The all-stock transaction valued BEV stock at C$0.45, a
33% premium to the average price of the stock for the five days
leading into the deal being disclosed.
Embark has extensive manufacturing and intellectual property
assets related to high-end solventless cannabis extracts such as
bubble hash, traditional pressed hash, rosin, dry sift and its
best-selling Hazel Hash Stick. Embark also boasts the capacity to
manufacture cannabis concentrates, liquids, powder beverage mixes,
topicals and edible products. The company generated C$790,000 in
revenue at ~65% gross margin in the last three months through its
four adult-use brands. The potential resonates in the deal’s
details, which include earn-out payments to Embark shareholders if
revenue reaches $92.18 million within three years.
The acquisition also gives BevCanna part of health and wellness
product company ProteinQuest, for which Embark is the majority
shareholder. Folding in Embark is beneficial to BevCanna in
multiple ways including the combined company totaling more than
$100 million in assets on the balance sheet.
In addition, the already impressive management team at BevCanna
is also gaining some new faces, namely Bruce Dawson-Scully (founder
and CEO of WeedMD); Marcus “Bubbleman” Richardson (best known for
being the founding pioneer of bubble hash); Michael West (global
extraction expert who has developed, designed and built more than a
dozen world-class extraction facilities for companies such
as Cresco Labs
(CSE: CL); and Curtis Leifso, an expert in enhanced
bioavailability drug-delivery technology.
Move Now or Pay Later
Savvy companies are seeing the trend shifts happening and making
moves to get in front of them to maximize market share. Some
companies are stepping into the cannabis space while others are
diversifying within the cannabis market, and some are expanding
from the cannabis space into the broader health and wellness
markets. Regardless of the strategy, the moves are making noise and
getting investors’ attention.
The
Valens Company (TSX: VLNS) (OTCQX: VLNCF), a leading
manufacturer of cannabis products, has been active with
acquisitions to grow its company. On Sept. 1, 2021, Valens completed the acquisition of Verse
Cannabis, a pioneer in the value segment that quickly emerged
following its launch in August 2020. That was only one day after
the company inked an agreement to acquire Citizen Stash Cannabis
Corp in an all-stock transaction valued at
approximately $54.3
million on an enterprise value basis. Valens expects the
acquisition of the licensed producer to be accretive in 2021 and
2022 before synergies.
Neptune Wellness Solutions Inc. (NASDAQ:
NEPT), a diversified health and wellness company, is
focused on building a portfolio of high-quality, affordable
consumer products in response to long-term secular trends and
market demand for natural, plant-based, sustainable, and
purpose-driven lifestyle brands. Quebec-based Neptune has 130 SKUS across eight brands spanning
cannabis, organic food and beverage, and personal care and beauty
that are sold at 20,000 retail locations. During Q1 fiscal 2022,
Neptune generated revenue of $12.4 million, exceeding guidance and
beating the year prior quarter by 83%.
NewAge Inc. (NASDAQ:
NBEV) commercializes a portfolio of organic and
healthy products worldwide primarily through a direct-to-consumer
distribution system. Colorado-based NewAge competes in three major category platforms
— health and wellness, healthy appearance, and nutritional
performance — and leads a network of more than 400,000 exclusive
independent distributors and brand partners around the world.
NewAge is looking to build on a record $124 million in revenue
during its second quarter, in part by partnering with
social-selling technology firm Kwikclick to launch an affiliate marketing
platform and collaborate on transforming the traditional influencer
and social selling influencer model.
AYR
Wellness Inc. (CSE: AYR.A) (OTCQX: AYRWF), a
vertically integrated cannabis multistate operator, has had a busy
September. In a matter of a few weeks, AYR has
opened Liberty Health Sciences West Pensacola, its 41st operating
dispensary in Florida; launched its Origyn Extracts premium
concentrates line in Pennsylvania and advanced more acquisition
deal flow. The company now has a binding letter of intent to
acquire PA Natural Medicine LLC, an operator of three licensed
retail dispensaries in Pennsylvania, and a definitive agreement to
acquire Cultivauna LLC, the owner of Levia-branded cannabis-infused
seltzers and water-soluble tinctures.
The cannabis market has been in a bit of a lull lately as many
investors wait for lawmakers on Capitol Hill to make their next
move. Companies, however, aren’t waiting. The market is quickly
approaching an inflection point in a post-COVID economy, and those
who hesitate just may get left behind — or at least pay dearly
to catch up.
For more information about BevCanna Enterprises Inc., please
visit BevCanna
Enterprises Inc. (CSE: BEV) (OTCQB: BVNNF) (FSE: 7BC).
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