TORONTO, Canada — Entourage Health Corp. (formerly WeedMD Inc.), a Canadian producer and distributor of cannabis products and brands, announced Aug. 31 that its subsidiary and license holder WeedMD RX Inc. has signed agreements with BBCCC, Inc., a subsidiary of The Boston Beer Company, Inc., and Ontario-based Peak Processing Solutions, a subsidiary of Althea Group Holdings Ltd, to launch a new portfolio of non-alcoholic cannabis-infused beverages in Canada, with production commencing in Q4 2021.
Under the terms of the five-year development, supply, manufacturing, sales and marketing agreements, BBC and Peak will develop the beverages with Entourage’s cannabinoid-rich input biomass processed at Peak’s Windsor, Ontario facility. Entourage will be the exclusive distributor of the cannabis-infused beverages in Canada leveraging Entourage’s expansive local sales and marketing network.
“The cannabis market is constantly evolving and with a growing base of consumers seeking consumption alternatives, we’re excited to partner with Boston Beer and Peak to elevate our offerings with Canadian-made, cannabis-infused beverages developed by one of North America’s most iconic craft beer brands,” said George Scorsis, Interim CEO and Executive Chair of Entourage. “We are proud to expand into another consumer vertical with award-winning partners of well-known products that will focus on all segments including the emerging self-care market. Our collective industry expertise coupled with extensive cannabis research and advanced branding strategies will lay the foundation for new product collaborations and further market expansion opportunities at scale. Our strong industry presence, sales force and reputation for consistently delivering award-winning brands in Canada makes this an ideal collaboration.”
"Since the early days of medical access, Entourage has cultivated accessible, quality-produced cannabis that is considered a benchmark in a regulated market – and they truly exemplify what we look for in our suppliers,” said Paul Weaver, Head of Cannabis at BBCCC Inc. “This partnership is further strengthened by Peak Processing Solutions, with the talent and systems in place to ensure every drink is prepared with the highest care and excellence. We are excited to work with Entourage and Peak to bring best-in-class beverages to Canadian consumers.”
Peak Founder and President, Gregg Battersby added: “The team at Peak are delighted to partner with two industry leaders in Entourage Health and The Boston Beer Company to develop what promises to be an exciting range of cannnabis-infused beverages. This collaboration is further validation of Peak’s significant and unique capabilities in the Cannabis 2.0 space, and the latest in a growing list of strategic and innovative partnerships.”
Cannabis Beverage Market
The Cannabis 2.0 market represents a strategic market opportunity given that products within the category yield a substantial price premium in the Canadian adult-use market compared to dried flower and cannabis oils (Reference: Nurturing New Growth; Canada Gets Ready for Cannabis 2.0, Deloitte). Cannabis beverages are appealing to new-to-cannabis consumers as an alternative to traditional alcohol beverages, many of whom are also using the products for self-care or wellness reasons.
According to Deloitte’s recently issued Cannabis Report, “cannabis non-combustibles and health-and-wellness products now represent the industry’s greatest long-term growth potential.” (Reference: Deloitte 2021 Cannabis Consumer Report). As more cannabis-infused products become available via mainstream consumer goods, greater appeal is expected from a larger base of consumers with varied cannabis-intake preferences.
The beverage market has already seen significant transformation over recent years through innovation and e-commerce growth. A recent report by Million Insights estimates the cannabis beverage market will grow at a CAGR of 17.8 per cent from 2019 to 2025 to reach US$2.8 billion.(1) The report found this growth is being driven by a range of factors, including the rise of the health and wellness movement and the preference for cannabis beverages among millennials.
Transaction Summary & Strategic Benefits
Under the terms of the supply and manufacturing agreement, Entourage will supply, on an exclusive basis, all cannabis input materials required by Peak to manufacture BBC-branded, non-alcoholic cannabis-infused beverages.
BBC and Entourage also entered into a sales and marketing agreement under which Entourage will license certain newly-developed brands from BBC and leverage its national sales force and sales licenses to market, distribute and sell the products in Canada with the support of BBC’s deep brand-building expertise.
Strategic Benefits:
Branded Craft Beverage Expertise: With its extensive experience, top-tier status and global success in launching craft beers, ciders, hard iced teas and hard seltzers, Boston Beer recently created a Canadian subsidiary, BBCCC, Inc. to focus on formulating non-alcoholic cannabis beverages in Canada. BBCCC Inc. is entering this key market while continuing to gauge the regulatory environment in the U.S. for future expansion opportunities. With innovation at its core, Entourage looks to expand its consumer offerings and diversify into new markets with new innovative, third-party-branded products.
Robust Ontario-based Operations: Peak has one of the first large-scale independent processing facilities of its kind, specializing in the manufacturing and distribution of cannabis-infused beverages, concentrates, topicals and other Cannabis 2.0 products. Peak and Entourage have a long history of working together in developing hydrocarbon extract of freshly harvested and frozen cannabis biomass to produce live resin formulations of renowned Entourage cultivar, Pedro’s Sweet Sativa. This partnership represents a natural progression and evolution of Peak and Entourage’s relationship and is a testament to the success of this association.
Strengthened Distribution Capabilities: Entourage will leverage its expansive and efficient cultivation and distribution network to manage production, market and sell the new cannabis beverage products. The Company has a robust and established infrastructure with distribution reach to approximately 95% of the Canadian retail market. Additionally, Entourage is continuously and successfully meeting emerging industry demand with its ever-expanding medical cannabis portfolio and rapidly growing retail footprint. The Company is strategically ready to test the entry of cannabis-infused beverages in the self-care and medical markets.
