Versatility is Key as Cannabis-infused Beverages Gain Popularity and Market Share

As cannabis acceptance becomes more common around the globe, countries are specifically exploring opportunities within the medical segment. The recreational segment, however, remains a major segment of the cannabis industry. Primarily, the U.S. accounts for the majority of the global cannabis sales as the country held approximately 90% of the North American cannabis market, while the North American region itself accounts for 95% of the global market, according to Mordor Intelligence. As cannabis continues to spread, new segments within the industry arise. Notably, the cannabis-infused beverage market has grown rapidly as legalization begins to take place. These beverages are becoming widely popular since they could satisfy both medical and recreational uses. According to Bloomberg, citing data compiled by Canaccord Genuity, the U.S. cannabis-infused beverage market is projected to reach USD 600 Millionwhile accounting for approximately 20% of the cannabis edible market. Although the beverage segment makes up a rather smaller portion of the overall cannabis market, major players in the industry are already investing in cannabis-infused beverages. Additionally, revenue from the cannabis beverage market could potentially outpace the general demand for cannabis products by over two times. American Premium Water Corporation (OTC: HIPH), Pyxus International Inc. (NYSE: PYX), New Age Beverages Corporation (NASDAQ: NBEV), The Alkaline Water Company Inc. (NASDAQ: WTER), HEXO Corp. (OTC: HYYDF)

Currently, the cannabis-beverage market accounts for approximately 6% of the total U.S. edible market, but with investments from large industry leaders, the sector is positioned for significant growth. Demand for CBD or THC-based beverages is rapidly growing as legalization continues to spread. The sector has drawn interest from large beverage companies as they intend to use cannabis-infused beverages for either recreational or medical purposes. While the market remains rather small, many companies are looking to seize the opportunity and enter early on. “Interest has spiked from the beer industry on mounting evidence of a substitution relationship between cannabis and alcohol, while large soda companies increasingly view CBD as a natural fit within their strategically important wellness offerings,” Bobby Burleson, Canaccord Genuity Managing Director wrote.

American Premium Water Corporation (OTC: HIPH) yesterday announced that, “it has signed an agreement with Cutting Edge Beverages to be the Company’s distribution agent in the Northeast. Cutting Edge Beverages has relationships with large grocery chains, natural health stores, convenience stores, and independent retailers.

American Premium CEO and Interim Chairman Ryan Fishoff, commented, ‘I am happy to announce that we have brought on Cutting Edge Beverage to lead our efforts to expand our retail footprint in the Northeast. With the passage of the 2018 Farm Bill, the ‘gloves have come off’. All retailers are looking to get CBD products on their shelves and we are working feverishly to fill the demand. Cutting Edge will connect us with the retailers that will provide the Company that ability to expand its footprint while increasing brand awareness. Having over 30-plus years of experience in the beverage industry, and a successful track record generating exponential growth for other brands, I am excited to have Cutting Edge bring their book of business to the CBD category and help us with our goal to make LALPINA CBD a market leader in the category.’

With distribution being one of the Company’s primary goals in 2019, as outlined in Mr. Fishoff’ letter to shareholders, the Company has added two new commercial outlets that will be selling LALPINA CBD beverage. MojoVape, (http://www.mojovape.com ) an online retailer focused on vape pens will begin selling the product in January. LALPINA CBD will be its first non-vape product. Additionally, the Company began selling LALPINA CBD product in its first upscale car wash in Miami Beach, FL (http://www.sobefinest.com). This is the first of many planned launches in the coming months for the Company.

‘The Company is focusing on adding distribution where it can derive a strategic advantage. In many cases these will be in channels that currently do not have even beverage distribution, but it will allow for the product to get in front of a customer who would fit the demographic target. Mojo Vape is a great addition for us. I am honored that they chose us to be their first beverage product. CBD products, especially beverages are complimentary to vapes and I think it will beneficial for both parties. Sobe Finest is another non-traditional account that I believe will be successful for the Company and a template for future expansion in this untapped sector. High end car washes attract customers with disposable income. I am excited to see both these channels develop along with the rest of our distribution strategy that I presented last year targeting four primary markets within the broader focus of the strategy that I outlined to shareholders last week. I am quite confident that focusing on these markets and getting penetration into multiple channels will yield measurable and sustained results for the Company, creating shareholder value and increasing top-line revenue heading into 2019,’ concluded Mr. Fishoff.”

Pyxus International Inc. (NYSE: PYX) is a global agricultural company with 145 years’ worth of experience delivering value-added products and services to businesses and customers. Pyxus International, Inc. recently announced that its joint venture, Criticality, an integrated North Carolina-based industrial hemp company operating under North Carolina’sindustrial hemp pilot program, has launched “Korent,” its new line of cannabidiol (CBD) oil products. Korent’s full-spectrum oil drops are available in Vanilla Mint and Grape flavors, in multiple sizes and concentrations. Flavors were custom designed for hemp products in partnership with Purilum, LLC, a leading flavor manufacturer and Pyxus-affiliated company. Criticality specializes in environmentally-friendly, all-natural, solvent-free supercritical fluid extraction and purification. It recently announced the development of a CBD production facility in Wilson, North Carolina. The 55,000-sq. ft. facility will be one of the largest facilities of its kind in the state. Construction is expected to be finalized by the end of the 2018. “Criticality’s science-based approach to the extraction, refinement and formulation of high-quality CBD products makes it well positioned in the market and presents a huge growth opportunity for both Criticality and Pyxus,” said Pieter Sikkel, Pyxus’ President, Chief Executive Officer and Chairman of the board.

New Age Beverages Corporation (NASDAQ: NBEV) is a Colorado-based healthy beverage company focused on inspiring, educating, and hydrating consumers. New Age Beverages Corporation recently announced the closing of the merger with Morinda Holdings, Inc., a Utah-based healthy beverages and lifestyles company with operations in more than 60 countries around the world. Merger creates one of the largest healthy beverage companies in the world with USD 300 Million in net revenue, USD 20 Million in adjusted EBITDA, USD 200 Million in assets, and over USD 40 Million in working capital; Combination brings a leading portfolio of healthy beverages, with multi-channel penetration spanning traditional retail, e-commerce, and in-home; with a hybrid route-to-market spanning direct-store-delivery (DSD), wholesale, and direct-to-consumer; Merger provides infrastructure and market access for New Age’s Health Sciences products and portfolio of CBD-infused beverages worldwide. Brent Willis, Chief Executive Officer of New Age Beverages commented, “Since the announcement of the merger, we have been extremely busy. New Age continues to secure major national retail distribution on its key brands, and Morinda has been rapidly expanding its new Noni+Collagen brand globally. More cost synergies are emerging from the convergence teams and the countries are extremely enthusiastic about the potential of New Age’s current and impending brand portfolio through their system. Integration is already well on track, and we have a high degree of confidence in our plans for 2019.”

The Alkaline Water Company Inc. (NASDAQ: WTER) has developed an innovative, state-of-the-art, proprietary electrolysis process that produces healthy alkaline water for a balanced lifestyle. The Alkaline Water Company Inc., with products bottled under the trademark Alkaline88®, recently announced that its wholly-owned subsidiary, A88 Infused Beverage Division, Inc., has entered into an exclusive formulation, development, and supply agreement with American Nutritional Products Inc., headquartered in Carson City, Nevada. This Agreement solidifies the Company’s ongoing relationship with ANP to finalize the formulations for the Company’s Cannabinol (CBD) and infused products. ANP has agreed to initially develop 5 to 7 functional waters including 3 to 4 in the CBD area and 2 to 3 in the vitamin and antioxidant segment. Each will be uniquely formulated to match both consumer demands and taste profiles. Under the terms of the Agreement, A88 Infused will be granted the exclusive right to products developed by ANP, which will be used in the development of the Company’s new line of infused beverages. “For over 25 years, Maria Watson, President and Chief Executive Officer of ANP, has been an industry leader in the nutraceutical world. Her formulation team has over 40 years of experience in the development and marketing of infused beverages containing CBD, nutraceuticals, and organic flavoring, making them an ideal partner to work with in the development of our new line of products. We both recognized the synergies of our companies and this agreement was a logical extension of our recently signed co-packing agreement. The depth of knowledge and expertise provided by ANP will ensure that A88 Infused is able to introduce some of its infused beverages to market by the end of this calendar year,” stated Richard A. Wright, President and Chief Executive Officer of The Alkaline Water Company.

HEXO Corp. (OTC: HYYDF) creates and distributes innovative, easy-to-use and easy-to-understand products to serve the Canadian cannabis market. Molson Coors Canada, the Canadian business unit of Molson Coors Brewing Company (NYSE: TAP), and HEXO Corp. recently announced that they have closed the transaction previously announced on August 1, 2018, to form a joint venture to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization. The joint venture, Truss, will be led by former Molson Coors executive, Brett Vye, in the role of Chief Executive Officer. Vye will report to the Truss board of directors consisting of three members appointed by MCC and two members appointed by HEXO. “With the backing of two partners with deep Canadian roots, proven success, and market-leading experience in the respective beverage and cannabis industries in Canada, Truss will hit the ground running,” said Brett Vye, Chief Executive Officer at Truss. “When consumable cannabis is legalized in Canada, Truss will be ready to make its mark as a responsible leader in providing high-quality beverages for the Canadian consumer. Why “Truss”? We are joining together the extensive experience and excellent practices of each partner to build a powerful foundation for the future.”

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