$1 Trillion Global Health and Wellness
Sector Presents Growing Opportunities for Cannabidiol
Companies
CannabisNewsWire Editorial Coverage:
Cannabidiol (CBD) products are reaching into the mainstream through
a growing health and wellness sector, and savvy companies are
looking to position themselves to make the most of this
momentum.
- The health and wellness market grown to over $1 trillion
globally as of 2017
- Positive shifting regulations globally is opening major
international markets to CBD products, especially CBD infused food,
beverages and natural health products
- Larger fortune 500 level food and beverage companies are
beginning to consolidate this major growth market via major
investments and mergers and acquisitions.
In a groundbreaking move, Phivida Holdings, Inc.
(CSE: VIDA) (OTCQX: PHVAF)
(PHVAF Profile) has
become the first CBD company to have their CBD food, beverage and
natural health products cross over into major national mainstream
grocery distribution in the United States. Isodiol
International, Inc. (CSE: ISOL) (OTC: ISOLF) (FSE: LB6A.F)
is also expanding CBD’s reach through a growing chain of vaping
shops. And the potential for wellness beverages is demonstrated by
Koios Beverage (CSE: KBEV) (OTC: SNOVF), with its
expanding range of brain-boosting drinks. Within the cannabis
market, The Green Organic Dutchman Holdings Ltd. (TSX:
TGOD) (OTCQX: TGODF) is
providing organic, sustainable cannabis, a source of CBD that meets
other consumer interests. And CV Sciences, Inc. (OTC:
CVSI) is researching new CBD products and searching for
ways to bring those products to market as the sector continues to
grow in size and diversity.
Adding to Health and Wellness
The health and wellness sector is currently huge business.
Conservative analysis places its value at over $1
trillion, while at least one commentator cites figures as high as
$3.7 trillion. The willingness to make purchasing decisions
based on better health and a longer life is no longer a niche
interest. From gyms to health foods to counseling, consumers are
spending a growing proportion of their income on creating
healthier, happier lives.
Cannabidiol (CBD) products have become significant recent
additions to the wellness market. Derived from cannabis plants, CBD
is an active ingredient that has shown many potential health
benefits without the intoxicating “high” provided by cannabis’
other main active ingredient, the THC found in marijuana. Research
into CBD is still in its infancy, but that research has shown the
ingredient’s potential to improve wellness in several ways. As
legal changes make it easier to develop and produce CBD products,
those products appear set to take an important place in the health
and wellness market.
Reaching into the Grocery Market
One of the companies benefiting from this trend is Phivida Holdings,
Inc. (CSE:VIDA) (OTC:PHVAF). Phivida
(pronounced “fii-vee-daa”) is a producer of premium hemp oil
extracts and capsules, the company provides health-conscious
customers access to the benefits of CBD without unnatural
chemicals. With a new C-suite management team in place consisting
of former senior executives of Red Bull, Proctor & Gamble,
Labatt’s and the former CEO of Seagram’s International, Phivida is
now preparing to launch a CBD-infused beverage brand and has found
a major partner to work with to ensure this strategic move is
successful.
Phivida recently announced a groundbreaking exclusive national
agreement with Acosta, Inc., a sales and marketing leader for
the consumer-packaged goods industry in the United States, to
distribute Phivida’s products, including the new beverage.
Distributed through Acosta’s Natural Specialty Sales (NSS)
division, Phivida’s drinks will be the first CBD hemp brand to
cross over into the national mainstream distribution system in the
states.
Natural specialty groceries are a significant market in North
America, currently valued at USD $4.1 billion and growing.
Obtaining a foothold in this market marks a historic milestone for
CBD products, as well as a commercial coup for Phivida. NSS’s reach
extends into 2,400 regional natural specialty grocery stores and
the potential to expand into over 25,000 major national grocery
stores across the U.S, including leading retailers such as Whole
Foods, Sprouts, Walmart, and Kroger’s.
The major disruptive nature of the rapidly expanding cannabis
and CBD-hemp markets have begun to draw attention from big players
in the food and beverage industry as well. For example,
Constellation Brands (NYSE: STZ) behind Corona beer and Svedka
vodka, recently made a major investment in cannabis company Canopy
Growth. And Southern Glazer’s, North America’s biggest wine and
spirits distributor, has created a Canadian subsidiary to sell
cannabis-infused products.
This trend is one that other major food, beverage and alcohol
companies will almost certainly follow. As the market for CBD
products grows, forward-thinking organizations will be looking for
mergers and acquisition opportunities with CBD companies to gain
exposure to this fast-growing market and protect their positions
against disruption from the global cannabis sector.
Changing Regulations Drive Growth
The growth of the CBD sector is being driven by a global shift
in the legal status of cannabis.
In the United States, regulated cannabis is now legal for both
medical and recreational use in a number of states. On a national
level, the Senate and House of Representatives are working to
resolve differences between the two Congressional bodies’ versions
of the 2018 Farm Bill, which include action to legalize
industrial hemp. If the pro-hemp language remains in the final
version of the bill, it would mark a significant shift in policy at
the federal level, making it easier for businesses across the
country to grow hemp and produce CBD products derived from it.
In Canada, the passing of Bill C-45 is set to make recreational
cannabis legal across the country in October. The bill also
includes rules for the production and sale of CBD-infused
food and drink, creating a market for companies such as Phivida
to sell new products as early as 2019.
Such moves are supported by the work of major global bodies. The
World Health Organization (WHO) recently completed a report that
found CBD is neither toxic nor addictive, making it safe for
consumption. The report also highlighted CBD’s health benefits. The
World Anti-Doping Agency (WADA) has removed CBD from its list of
prohibited substances, allowing athletes to use it for
treatment of pain and inflammations.
Making the most of this shift, Phivida is focusing on
establishing an international presence. The deal with Acosta will
provide distribution into a network of more than 27,000 U.S. retail
outlets. In Canada, the company has created a joint venture
with WeedMD to be the first to market with one of the
first-ever federally legal cannabis beverage manufacturing
facilities in the world — a major milestone. A deal with
Namaste Technologies means Phivida products open the European
Union and United Kingdom markets, while another deal with
Asayake provides new opportunities for distribution in Japan.
These partnerships have helped establish Phivida as the
fastest-growing brand in CBD foods and beverages just as that
market appears ready to take off.
Building a Business
Of course, CBD isn’t a magic product that will instantly give
businesses success. Phivida’s achievements have been made possible
by a skilled management team with experience in the beverages
sector.
The company’s chief officers are all veterans of Red Bull’s
North American operations, where they helped build the energy drink
category from nothing to $300 million a year. CEO James Bailey
worked as president of Red Bull Canada and held senior positions at
Merrell Outdoors, Beneath Apparel, Adidas, Blue Goose and Salomon.
Chief Marketing Officer Michael Cornwell is a former director of
marketing at Red Bull Canada and was CMO at both Samsung NZ and
Microsoft NZ. Chief Commercial Officer Doug Campbell was previously
director of sales at Red Bull North America and director of
national accounts at Stoli Group. The company’s advisers and
directors also bring a powerful raft of experience to their roles,
including time spent in senior management at Proctor and Gamble, in
executive management at Labatt’s, and as CEO at Seagram’s
International.
This powerful team is committed to ensuring Phivida operates
with a tight capital structure. The company has more than $15.5
million CAD in cash and no debt. Just over 60 million shares have
been distributed or are outstanding. With a fully diluted total of
71 million shares available, the company has ready access to
approximately CAD $29 million in cash. With a strong leadership
team and financial foundations, Phivida has achieved the first
crossover of CBD beverages into major national mainstream retail
distribution across the United States, as well as globally.
Surge of CBD
Regulatory change and consumer interest are also driving growth
for a range of CBD and wellness businesses.
Isodiol International, Inc. (CSE: ISOL) (OTC: ISOLF)
(FSE: LB6A.F) provides a wide range of CBD products.
Through its KURE Corp. subsidiary, the company strongly promotes
CBD in vaping products. KURE recently announced plans to
expand its retail footprint by opening new premises and acquiring
existing vaping stores.
Koios Beverage (CSE: KBEV) (OTC: SNOVF) is a
manufacturer and distributor of drinks and supplements designed to
boost brain function, enhance health and improve productivity. The
company recently announced the release of four new flavors of its
brain-healthy drinks. Like Phidiva, Koios is turning beneficial
supplements into beverages, making the drinks more appealing to a
wide market.
The Green Organic Dutchman Holdings Ltd. (TSX: TGOD)
(OTCQX: TGODF) produces
cannabis tailored to the wider interests of health and well-being
customers. Many of these consumers are deeply concerned with
environmental issues, and the company’s organic, sustainably grown
cannabis means that its products live up to these ethical
standards.
CV Sciences, Inc. (OTC: CVSI) is a CBD company
with two distinct divisions. The pharmaceuticals part conducts
research to develop new products, thereby expanding the
possibilities of CBD. Meanwhile, the consumer products division
focuses on getting those products to market.
The intersection of the CBD and wellness sectors is creating
opportunities for businesses and consumers alike. As laws,
attitudes and expectations continue to change around the world,
these opportunities will only continue growing.
For more information about Phivida Holdings, please visit
Phivida Holdings, Inc. (CSE:VIDA) (OTCQX:PHVAF)
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