Hill Street Beverage Company CEO Terry Donnelly joined the Investing News Network to provide his views on the cannabis-infused beverages market as well as the company’s strategy to disrupt the market.
According to Hill Street Beverage Company (TSXV:BEER) Chairman and CEO Terry Donnelly, consumers are looking for healthier alternatives to alcohol. He believes that cannabis-infused beverages could be the solution consumers are looking for.
In the interview below, Donnelly talks about the company’s distribution network and upcoming products as well as how the company is positioning itself to be a disruptive force within the cannabis industry. To date, Hill Street has developed a distribution chain that services over 4,000 locations across Canada.
With the recent legalization of value-added cannabis products, Hill Street is preparing for the cannabis-infused beverages market, which led to its acquisition of OneLeaf Holding. Donnelly expects OneLeaf to provide the company with an extensive portfolio of cannabis genetics, 90 percent of which are not commercially available. He believes that the acquisition will generate over C$100 million in annual revenue, as OneLeaf’s facility is relatively unique within Canada. Once the facility is operational, Hill Street intends to offer licensed producers co-packing opportunities at the facility.
Donnelly thinks that Hill Street’s agreement with Lexaria Bioscience (CSE:LXX,OTCQX:LXRP) is the final step needed to create a disruptive cannabis-infused beverage brand. Lexaria has developed a technology that creates a tasteless, odorless powder that does not lose the terpenes and cannabinoids found in cannabis. According to Donnelly, the technology will help the company produce an unmatched taste and experience. Hill Street expects to roll out its cannabis-infused beverages by early 2020.
Below is a transcript of our interview with Hill Street Beverage Company CEO Terry Donnelly. It has been edited for clarity and brevity.
Investing News Network: Please tell us about Hill Street and some of its recent developments.
Hill Street Beverage Company CEO Terry Donnelly: I’m Terry Donnelly, the chairman and CEO of Hill Street Beverage Company. Our ticker symbol on the TSXV is BEER. Hill Street is building a portfolio of non-alcoholic wine and beer under the Hill Street brand, which launched 18 months ago. Consumers can find our products in major grocery chains across Canada including Loblaws (TSX:L), Shoppers and Sobeys.
We also recently acquired OneLeaf Cannabis, a cannabis cultivation and processing company in Saskatchewan. We’re currently constructing product packaging, bottling and canning lines for cannabis-infused beverages, which we hope to release in early 2020. In the meantime, we’ve been building our distribution channels and are working on the development of our cannabis-infused products.
INN: What makes the cannabis-infused beverage market so attractive?
TD: The cannabis-infused beverage marketplace could be attractive to consumers who are looking for a healthy alternative to alcohol. The number one reason why consumers are moving away from alcohol is due to moderation. For the past seven years, the total volume of alcohol sold annually has reduced as consumers seek out healthier alternatives and live healthier lifestyles. Alcohol is a toxin and Class 1 carcinogen that causes about 5 percent of all diseases. As people become more aware of this, they start to look for alternatives and cannabis is seen as the healthier, safer intoxicant that lacks the health issues alcohol is known to cause.
We believe that cannabis-infused beverages will be a socially acceptable way to consume cannabis when compared to the unacceptable forms of vaping and smoking. Cannabis is also not toxic, which will eliminate issues like hangovers and overdosing, making it appealing to consumers.
INN: Could you please expand on the significance of your recent acquisition of OneLeaf?
TD: The OneLeaf acquisition will provide us with access to a large portfolio of cannabis genetics comprised of over 700 unique cannabis cultivars, 90 percent of which are not commercially available. This will allow us to create products that are different from what’s currently on the market. We believe our provincial buyers will be excited about the kinds of genetics and products we will be bringing to the marketplace.
The OneLeaf building also has a 31,000 square foot bottling and canning production facility attached to it. The facility is capable of generating over C$100 million per year once the legal marketplace opens up. We’ve had a tremendous amount of interest from licensed producers who are interested in co-packing opportunities with us, as OneLeaf’s facility is fairly unique. There won’t be too many licensed producers with bottling and canning lines that are willing to co-pack and produce products for other brands and companies. Once the facility is operational, we believe that we’ll have a strong line of co-packing customers that will keep the facility operating at full capacity.
INN: How will Hill Street and OneLeaf’s products work together in the market to build your brands?
TD: We believe that OneLeaf will produce an array of premium-quality craft products at its 17,000 square foot cultivation facility, which is expected to produce about 2,000 kilograms of cannabis per year. We believe that our products will be in high demand due to their terpene content and high THC content, where some of our cultivars are producing up to 34 percent THC.
We intend to infuse our beverage products with the same caliber of craftsmanship and quality as OneLeaf’s cannabis products. We believe that the integration of a premium dried flower product and a beverage will be the disruptive pairing in the market and something that cannabis connoisseurs will be looking and willing to pay a premium for. We hope this will provide the company with a distinct position in the marketplace and terrific profit margins.
INN: How does Hill Street intend to stand out in the cannabis-infused beverage space?
TD: Hill Street has stood out in the alcohol-free space for awhile now as we’ve won multiple world championships for our wine and beer products. The quality and taste of the products that we produce along with our marketing and branding could be a disruptive force in the industry. We’ve created a new tone and attitude to the alcohol-free space that’s markedly different from the tired old approach that many established alcohol companies have been using.
We’ve primarily focused on the taste of our products to ensure that they appeal to consumers. The technology platform that we’ve licensed from Lexaria allows us to create products that have no impact on taste. No matter what we’re producing, it will be a delicious tasting beverage. The experience we’re able to create with OneLeaf’s cannabis and Lexaria’s full spectrum infusion capabilities will ensure that all the terpene content and major and minor cannabinoids are there. Lexaria’s technology does not produce an isolate or distillate, but a full spectrum oil that is rendered into an odorless, tasteless powder that can be infused into the beverage to create an experience similar to smoking or vaping. We’re excited about what that represents from a consumer standpoint.
This interview is sponsored by Hill Street Beverage Company (TSXV:BEER). This interview provides information which was sourced by the Investing News Network (INN) and approved by Hill Street Beverage Company in order to help investors learn more about the company. Hill Street Beverage Company is a client of INN. The company’s campaign fees pay for INN to create and update this interview.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Hill Street Beverage Company and seek advice from a qualified investment advisor.
This interview may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, receipt of property titles, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The issuer relies upon litigation protection for forward-looking statements. Investing in companies comes with uncertainties as market values can fluctuate.