Drinks heavyweight Breakthru moves into cannabis
Breakthru Beverage Group is the latest drinks firm to make a play for cannabis after investing in Canada’s CannTrust Holdings.
North American wine, beer and spirits distributor Breakthru and cannabis producer CannTrust have signed a letter of intent to form an exclusive partnership.
Subject to customary closing conditions, Breakthru will purchase 902,405 common shares, equalling CA$9.23 million (US$7m), in CannTrust, which it calls a “long-term market share leader”. Under the deal, Breakthru will have the option to purchase an additional two million common shares.
The group will also establish a cannabis-focused sales brokerage operation and develop and route-to-market platform for CannTrust in Canada.
The new unit – which will be “entirely separate” from Breakthru’s Canadian drinks business, Breakthru Beverage Canada – will commence operations when recreational cannabis use becomes legal in Canada next month.
Breakthru’s cannabis operation will work directly with provincial control boards and designated retail outlets to support sales of CannTrust’s portfolio of products.
“We’re excited to work with the most respected producer in Canada and leverage our well-established business model, which will put us at the forefront of shaping a high performing organisation and socially responsible industry,” said Danny Wirtz, vice-chairman of Breakthru Beverage Group.
“This is a logical extension of our expertise and provides a new growth opportunity into this emerging market.”
CannTrust has made “significant investments” in capacity and innovation to create the “next generation” of cannabis products, including edibles and infused beverages, which are expected to launch next year.
Company president Brad Rogers said: “We have a nano-technology that enables us to produce cannabis-infused beverages neutral in taste and clear as water. This technology will position us to be a leader in Canada and in future markets globally.”
Breakthru follows in the footsteps of fellow North American drinks distributor Southern Glazer’s, which in May this year entered into a partnership with cannabis producer Aphria to distribute its products throughout Canada.
The first drinks group to make a major move in cannabis was Constellation Brands, which acquired a minority stake in Canopy Growth Corporation last year for US$191m, announcing its intention to create cannabis-infused drinks.
The group poured an additional US$4bn investment into Canopy last month, marking the largest investment in the cannabis industry to date.