The Green Organic Dutchman (TGOD.T) has entered the U.S. CBD beverage market as a founding investor in Califormulations.
Formed in partnership with Symrise AG (SYIEY.Q), a European chemical producer, Califormulations aims to “become the preeminent beverage formulation and commercialization centre in the United States.”
Though TGOD already has a beverage arm, Califormulations will be an ancillary institution to its work on that front.
In essence, Califormulations combines the strengths of its founders into an entity capable of capturing a larger market share than TGOD and Symrise could separately.
From the release:
TGOD will work with Califormulations to expedite the US launch of TGOD branded organic hemp-based CBD beverages, as local laws and regulations permit.
We know what TGOD brings to the table. The company has a surplus of capital and experience in cultivating hemp-CBD through its assets in Poland.
It’s worth noting that its new partner, Symrise, is a giant in its own right. The company has a market cap of $12B and reported sales of CAD$ 1.28B in Q1 2019.
The company is in the “flavor and fragrance” markets, manufacturing everything from beverages to pet foods and perfumes.
We hold market-leading positions in a number of segments – from baby and pet food to fragrance ingredients, menthol and oral care. Our overall global market share amounts to 11%.
Together, TGOD and Symrise will be developing a cannabis beverage for U.S. markets, providing an in-demand product to an enormous market without the constraints of maintaining upkeep on brick-and-mortar locations.
Using Symrise’s beverage innovation centers in Laguna Beach and Teterboro as a U.S. beachhead, TGOD will be able to leverage its new partner’s R&D technologies to develop and distribute its beverages where permitted by law.
Califormulation’s rapid innovation approach:
- Insights & Design
- Prototyping & Evaluation
- Development & Production
- Activation Ecosystem
Combined with Califormulations’ 100,000 square foot bottling facility, TGOD and Symrise have hit the ground running with existing infrastructure and expertise in the cannabis and beverage worlds.
The focus will be on having bulk non-infused beverage concentrates produced and shipped by Califormulations to TGOD-owned and contracted manufacturing sites around the globe, including Canada, for infusion with cannabinoids and distribution within legal markets.
CBD is gaining popularity as a beneficial dietary supplement, though its acceptance in legal circles is slow going and TGOD’s shipping of beverages to more accommodating locales for infusion may be a way to skirt this.
The passage of the 2018 farm bill legalized hemp cultivation in the U.S., but local governments have been less enthused about the prospect of CBD usage.
In February, New York City announced it would be fining restaurants that added CBD to their food and beverages.
California’s state legislature also passed a bill that banned the sale of cannabis infused alcoholic beverages in late 2018.
According to Cannalawblog.com, the American Food and Drug Administration currently deems the use of hemp-CBD-infused food and drink illegal, though its limited enforcement of this ruling should be encouraging to manufacturers looking to get into the USD$20B functional beverage market.
As far as partners go, TGOD could have done much worse. We’re looking forward to seeing (and tasting) what Califormulations produces.
–Ethan Reyes
Full disclosure: The Green Organic Dutchman is an Equity.Guru marketing client.
