Beverages the next cannabis frontier for TGOD
new division will foster a first-of-its-kind collaborative environment
The hemp and cbd category is projected to reach $1 billion in sales in the united States by 2020, mainly driven by the natural food and beverage category.”
In the cannabis world, almost every venture represents a new frontier. For The Green Organic Dutchman (TGOD), that next frontier is the beverage market.
In recent months, TGOD has made three major announcements that will play a key role in their cannabinoid beverage strategy moving forward, starting with the launch of The Green Organic Dutchman Beverage Division. This dedicated global division is focused on creating industry-leading branded products, as well as supplying organic base ingredients for use in global beverage brands.
The division is banking on 125 years of combined experience in the industry to provide a strategic pathway into the cannabis market for largescale beverage companies. This path will take on various forms, from direct investment to joint ventures.
The division’s home will be a new 40,000-square-foot research and development centre within TGOD’s 72-acre Valleyfield property, which includes space for product development and pilot manufacturing of novel and proprietary cannabinoid infused beverages. “This division will foster a first-of-its-kind collaborative environment for joint ventures and partnerships, and will ultimately create a distribution platform for domestic and international markets,” says Brian Athaide, CEO.
The beverage market offers a wide-open field for innovation on the cannabis side. According to research firm Brightfield Group, the hemp and CBD category is projected to reach $1 billion in sales in the United States by 2020, mainly driven by the natural food and beverage category. The global industry sales average is over $1 trillion.
“Cannabis-infused beverages are set to explode in the mainstream market,” Athaide says. “When you consider these numbers, there is significant potential for health and wellness-based cannabinoid-infused beverages, such as CBD iced teas, juices and sports drinks.”
TGOD also announced the appointment of Prem Virmani to the position of chair of beverage science and research. No stranger to the consumer beverage scene, Virmani was recently inducted into the Private Label Hall of Fame.
In his 40-year career, he has led development in every major beverage category, including the Sam’s Choice Cola program for Walmart, President’s Choice Cola for Loblaw, and major private label brands for Publix, Wegmans and Safeway. Before joining CBOD, he was SVP of global science and research for Cott Beverages Inc.
“Prem is an absolute expert in formulations and working in beverage divisions,” says Andrew Pollock, vice-president of marketing. “He has developed soft drinks for retailers around the world and sends me 10 emails a day with his ideas. Given the remarkable talent we have, I would say we are well on our way to developing a really nice beverage line-up.”
The third major initiative has been establishing an international distribution base. This August, TGOD signed an agreement to acquire HemPoland, a leading European manufacturer and marketer of premium organic CBD oils. The company distributes to more than 700 locations in 13 countries.
This strategic acquisition provides access to HemPoland’s vast distribution network, its premium Cannabigold brand and its stateof-the-art hemp oil extraction technologies, says Danny Brody, vice-president, investor relations. “HemPoland provides an important strategic pathway into the European market for products and licensing deals.”
TGOD also has cultivation, export and retail capabilities in Jamaica after entering a 49-per-cent equity deal with Epican, the country’s first company to acquire a cultivation licence. “With the distribution network we have created, TGOD is now operating in more countries than any other LP,” Brody says.
As for the U.S. market, which has strict export restrictions, the plan is to license brands and technology that TGOD can bring to Canada for manufacturing and distribution to international channels. Licensing deals to date include Evolab, the developer of the No. 1 selling vape technology in Colorado; CBx Sciences, a developer of cannabis-infused health and beauty lines; and Ripple Sc, which has a patent-pending suite of fast-acting, water-soluble products for infusion into beverages and foods.
The potential for revenue growth in the cannabis space is significant, Brody notes. “The market cap of the top three alcohol and the pharmaceutical companies is close to $1 trillion each. For the top three tobacco companies, it’s half a trillion. Cannabis is at $30 billion, which means we’re not even 10 per cent of the way to realizing what the industry could be worth.”
Beyond the numbers, the cannabis market opens countless opportunities for groundbreaking innovation and research, Pollock adds. “Cannabis can show up in a number of formats. While our initial business in October will be core flower and oil products, in the future there will be all manner of applications. For us, beverage is one of many of those possibilities.”