The Canadian cannabis stocks and/or CBD players we’ve picked are looking to get a piece of an estimated US$4.5B cannabis beverage market
SmallCapPower | September 17, 2019: With the growing legalization trend of cannabis, many companies are looking for new niche markets to expand within the cannabis market. Many cannabis companies are betting big on beverages. It is predicted that cannabis beverages will generate total revenue of about US$4.5B by 2025, with a CAGR of approximately 15.6% between 2019 and 2025 (Zion Market Research, 2019). Some predict there will be sufficient demand for this product due to the rising market demand for wellness beverages by consumers and health food fanatics. Today we have filtered out four Canadian cannabis stocks and/or CBD players that are gearing up to enter the cannabis beverage market.
*Share prices as at September 13, 2019, data obtained from S&P Capital IQ
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The Alkaline Water Company Inc. (TSXV:WTER) – $2.58
Cannabis Beverages
The Alkaline Water Company is a producer of premium bottled alkaline drinking water sold under the brand name Alkaline88®. With its innovative, state-of-the-art proprietary electrolysis process, the Company produces healthy, all-natural and great-tasting alkaline water for a balanced lifestyle. On August 8, 2019, Alkaline reported Q1/20 financial results highlighted by revenue of $10.2M, an increase of 28.8% YoY, and a gross profit of $4.1M. Management also provided F2020E guidance, with annual revenue expecting to come in between $46M to $50M with an estimate gross profit of between $18M to $20M. On September 9, 2019, The Alkaline Water Company announced that it would acquire all outstanding common and preferred stock of AQUAhydrate in an all-stock deal for 19,565,217 common shares and 3,750,000 preferred shares of Alkaline (preferred shares subject to earn-outs) at an undisclosed price.
- Market Cap: $110.9M
- 90-Day Return: 5.7%
- YTD-Return: -41.8%
- 90-Day Average Trading Volume: 69,830
BevCanna Enterprises Inc. (CSE:BEV) – $0.57
Cannabis Beverages
BevCanna Enterprises develops and manufactures cannabinoid-infused beverages and consumer products for in-house brands and white-label clients. Based in British Columbia, BevCanna has a world-class 40,000-square-foot, HACCP certified manufacturing facility, with a current bottling capacity of up to 72M bottles per year. On Sept. 16, 2019, Nextleaf entered into an exclusive supply agreement with Bevcanna, a cannabinoid-infused beverage developer and manufacturer, for an initial term of three years after the legalization date of infused products in Canada.
- Market Cap: $26.2M
- 30-Day Return: -17.2%
- 30-Day Average Trading Volume: 89,640
- *Note: BevCanna began trading on July 2, 2019
HEXO Corp. (TSX:HEXO) – $5.64
Cannabis
HEXO is a consumer-packaged goods and cannabis experience company. It currently operates 2.4M sq.ft of facilities in Ontario and Quebec. The Company utilizes a hub-and-spoke business strategy that involves partnerships with Fortune 500 companies. Through this strategy, HEXO brings its brand value, cannabinoid isolation technology, licensed infrastructure and regulatory capability to established companies, leveraging its distribution networks and capacity. On June 12, 2019, HEXO reported Q3/19 financial results, which showed revenue of $15.9M, a QoQ decrease of 1.5%. Additionally, the Company reported having cash and cash equivalents and short-term investments of $17.6M and capital of $219.1M. Last summer, HEXO announced a joint venture (JV) with Molson Coors, called Truss, to develop non-alcoholic, cannabis-infused beverages.
- Market Cap: $1,449.4M
- 90-Day Return: -24.0%
- YTD-Return: 19.7%
- 90-Day Average Trading Volume: 10,540,000
Sproutly Canada Inc. (CSE:SPR) – $0.40
Cannabis Beverages
Sproutly is a Toronto-based cannabis company that focuses on the cannabis beverage and edibles market. The Toronto facility cultivates pharmaceutical-grade cannabis and is working on formulating the first natural, completely water-soluble cannabis solution. On April 30, 2019, the Company announced its Joint Venture with Moosehead Breweries to develop and produce non-alcoholic beverages in Canada. The beverages developed through the partnership are expected to have an effect on consumers five minutes after consumption and last up to 90 minutes.
- Market Cap: $76.4M
- 90-Day Return: -43.6%
- YTD-Return: -2.5%
- 90-Day Average Trading Volume: 161,520
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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