Flora and Althea have established Peak USA JV LLC ("Peak USA") - a 50/50 joint venture aiming to capitalize on the beverages market. Each party to the joint venture contributed $250,000 of operating capital.
Peak USA will link Flora's U.S.-based CPG team with Althea's Peak Processing Solutions ("Peak"), which is a recognized market leader in cannabis-infused beverages. Peak has a 40% market share in Canada.
Peak USA will combine Flora's brand-launching expertise with Althea's processing experience to produce the next generation of beverages for the U.S. market.
According to Headset Data, the beverage market segment currently represents only 1% to 3% of the U.S. cannabis market. First-time daily cannabis use overtook alcohol, with roughly 17.7 million users compared to 14.7 million for alcohol.
Fort Lauderdale, Florida--(Newsfile Corp. - June 4, 2024) - Flora Growth Corp. (NASDAQ: FLGC) ("Flora" or the "Company") has formed a joint venture with Althea Group Holdings (ASX: AGH) ("Althea") to enter the hemp-derived beverage market.
"Aligning with Althea instantly bolsters our credibility within the beverage sector. Their very special, world-class emulsion technology has established the very foundation of this category. Coupled with our expertise in brand development, sales, and marketing, this partnership will position us as a frontrunner in the market, setting a standard that competitors will find challenging to emulate. Our focus lies not solely on cannabis but on providing an alternative to alcohol. Our objective is to establish a nation-wide brand," said Clifford Starke, Chief Executive Officer.
The partnership is strategically positioned to establish cannabis beverages distribution in the U.S. by adeptly handling regulations and facilitating market access via CPG channels like wine and liquor stores.
The joint venture will leverage the strengths and resources of both Peak and Flora to capitalize on current commercial opportunities in the beverage market in the U.S., driving mutual growth and success. Peak contributes production know-how, while Flora brings a wealth of brand launching, sales and marketing expertise within the dynamic landscape of lifestyle brands in the U.S. Flora has introduced some of best-selling gummies, edibles, vapes and accessories in the U.S. through its e-commerce platform of over 350,000 customers and a robust business-to-business distribution network.
Althea's Peak estimates that it produces close to 40% of all cannabis beverages available in Canada. Cannabis-infused beverages are a rapidly growing product category within the cannabis industry and currently represents 2.1% of the Canadian adult-use cannabis market, which equates to approximately CAD$134.4 million.
According to Headset Data, beverages still represent only about 1% to 3% of the U.S. cannabis market with plenty of room for further growth. Beverages also benefit from the fact that people are seeking an alternative to alcohol alternative. Data Bridge Market Research estimates that the U.S. infused beverages market is expected to reach half a billion by 2030, at a CAGR of 14.7% during the forecast period.
According to data analyzed by Carnegie Mellon University, daily or near-daily cannabis use is now more common than similar levels of alcohol consumption in the U.S. First-time daily cannabis use overtook alcohol, with roughly 17.7 million users compared to 14.7 million for alcohol.
"Today's milestone in the establishment of our joint venture with Flora is testament to Althea's relentless dedication to innovation and growth. As we embark on this strategic venture, we are unwavering in our commitment to delivering excellence in the rapidly evolving cannabis beverages market in the U.S. With our combined expertise and shared vision, we are poised to drive success and create lasting value for our stakeholders," said Joshua Fegan, Althea's Chief Executive Officer and Managing Director.
About Althea Group Holdings Limited.
Althea Group Holdings Ltd is a global leader in the manufacturing, sales and distribution of cannabis-based medicines and recreational cannabis products. Althea services these sectors via two distinct business units. Althea, the company's pharmaceutical business, offers a comprehensive range of cannabis-based medicines which are made available to patients via prescription. Peak Processing Solutions, Althea's recreational cannabis business, produces legal cannabis products purchased by adult consumers in retail stores.
Flora Growth Corp. is a consumer-packaged goods leader and pharmaceutical distributor serving all 50 states and 28 countries with 20,000+ points of distribution around the world. For more information on Flora, visit www.floragrowth.com.
This press release contains "forward-looking statements," as defined by U.S. federal securities laws. Forward-looking statements reflect Flora's current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words "believe," "expect," "anticipate," "will," "could," "would," "should," "may," "plan," "estimate," "intend," "predict," "potential," "continue," and the negatives of these words and other similar expressions generally identify forward-looking statements. These forward-looking statements include, but are not limited to, statements about: the viability and success of a joint venture between the Company and Althea Group Holdings, Flora's ability to benefit from the beverages sector, the growth projections of the beverages space, including but not limited to revenues, CAGR and market share, the introduction of new beverages to the U.S. market, the replication of Peak's business processing capabilities and success in the U.S., the growth of Flora's financial performance measures due to beverages, Flora's e-commerce and distribution network selling beverages successfully or at all, the utilization of the proprietary cannabis emulsion Envision? in the U.S. market, and the impact of new product launches and partnerships. Such forward-looking statements are subject to various and risks and uncertainties, including those described under section entitled "Risk Factors" in Flora's Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the "SEC") on March 28, 2024, as such factors may be updated from time to time in Flora's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov/edgar. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in Flora's filings with the SEC. While forward-looking statements reflect Flora's good faith beliefs, they are not guarantees of future performance. Flora disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based on information currently available to Flora (or to third parties making the forward-looking statements).
