Although SPR had just received a cultivation license for a Toronto grow facility designed to produce pharma-grade weed, we quickly zeroed in on its Bioscience Division.
Sproutly owns propriety technology, that could radically change the retail weed beverage market.
At that point – three months prior to Canadian legalisation – there were two big questions marks hovering over Sproutly’s ambitions:
- Will legalisation radically increase cannabis demand?
- Will cannabis & beverages have a happy marriage?
The early results are in.
An Angus Reid poll indicates that an astonishing one in eight Canadians has used cannabis since legalisation of the rec market on October 17, 2018.
Health Canada says producers have shipped more than 14,500 kilograms of dried cannabis and 370 litres of cannabis oil to date.
Demand – check.
BNN Bloomberg recently reported that Coca-Cola (KO.NYSE) is in “serious talks” with Aurora Cannabis (ACB.T) to manufacture and market cannabis-infused beverages.
The company behind Diet Coke, Sprite and Minute-Maid reported annual revenue of USD $35.4 billion in 2017, down 15.5% from the prior year.
Coca-Cola, like other big beverage companies, is looking for new revenue streams in international markets. Corona beer maker Constellation took a $4 billion stake in Canopy Growth (WEED.T).
Cannabis & beverages – check.
In the last 48 hours, Sproutly has bulked up its beverage team, adding Constantine Constandis to the Advisory Board.
Mr. Constandis is global C-level executive with over 34 years of experience in the wine and spirits industry in Canada, USA, Europe and Asia.
Mr. Constandis is a former senior executive at Pernod Ricard (RI.PA). Its global portfolio includes Absolute Vodka, Jameson, Glenlivet, and Beefeater.
Pernod Ricard has a market cap of $37 billion, 2017 Revenue of $8.9 billion.
“To date there is no evidence that the legalisation of cannabis will have an impact on the consumption of premium spirits,” a nervous Alexandre Ricard recently told his shareholders.
“Constantine’s experience in brand building, operations, sales and marketing in the highly-regulated spirits industry will prove to be extremely valuable to Sproutly,” stated Keith Dolo, President and CEO of Sproutly.
Constantine’s “advisor” status will be temporary. Sproutly’s board is currently at maximum capacity. At the next AGM, SPR intends to nominate a larger Board of Directors to accommodate Constantine.
A day earlier, November 28, 2018 – Sproutly announced that Michael Bellas, CEO and founder of Beverage Marketing Company joined SPR’s board of directors.
“Mr. Bellas’ experience in the beverage industry, working with some of the largest global companies and brands in the beverage sector adds tremendous value to Sproutly’s mission,” stated Dolo.
“It is my belief that Infuz20 demonstrates significant competitive advantages as compared with emulsion and encapsulation methods,” stated Mr. Bellas. “The APP technology licensed by Sproutly will make the production of true consumer beverages with natural ingredients from cannabis plants a reality.”
Current consumer products are dominated by extracted oils that can only be delivered in vaporizers and selected edibles.
“Beverage products are currently limited to the use of emulsifiers or oil nanoparticles and not true solutions in water,” states Sproutly, “These not only limit proper delivery to the body but also prevent a broader acceptance of the current products.
Why does this matter?
The APP technology isn’t about health benefits for hippies – it changes the uptake and release cycles of cannabis ingestion.
With APP you get high quicker, and un-high quicker
That means you can go to a social lunch, consume a water-soluble cannabis beverage, walk back to your office, and re-engage with your professional duties.
It also means you can unwind at dinner, and still be able to read a novel before you go to bed.
Many intoxicant-consumers like to get nimbly in – and out – of their high.
Sproutly’s initial drink portfolio:
- Focused Energy Drink – Formulated to deliver mood uplifting & focused energy without the use for caffeine or stimulants. Containing a blend of minerals, vitamins, natural plant chemicals, natural flavors, and Infuz2O derived from one or more strains of cannabis to complement the experience.
- Relaxation Drink – Formulated to deliver relaxation and stress relief. Containing a blend of minerals, natural plant chemicals, natural flavors, and Infuz2O derived from one or more targeted strains of cannabis to complement the experience.
- Sleep and Anxiety Relief Drink – Formulated to reduce anxiety and assist restful sleep. Containing a blend of minerals, plant and other natural chemicals, natural flavors, and Infuz2O derived from a targeted variety of hemp to complement the experience.
“If you can take the good stuff into a soluble form without having to mostly destroy its inherent goodness,” wrote Equity Guru’s Parry, “you’re on the shelves at Loblaws.”
In the US alone, Canaccord estimates that by 2020 the THC-infused beverage market could be valued at $340 million.
We believe the addition of Mr. Constandis and Mr. Bellas to Sproutly’s board – will accelerate the company’s progress in the exploding cannabis & beverage space.
By mid-morning, SPR is up 8% to .32 – with a market cap of about $54 million.
Full Disclosure, SPR is an Equity Guru marketing client, and we own the stock.