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Puration makes foray into the European CBD Beverage Market

14 Oct Puration makes foray into the European CBD Beverage Market

Puration Inc (OTCPINK: PURA), a leading CBD infused sports drink maker, which produces the EVERx CBD beverage, announced its foray into the European market, a move that is likely to generate over $ 4 million in annual revenue. EVERx is a sport –nutrition beverage with over $1 million in sales in 2018 and over $1 million in sales in the first six months of 2019 and targeting $4 million in sales by 2019-year end. The first shipment is scheduled for dispatch later this month but the Company is yet to announce the name of the distributor or the terms of the agreement owing to confidentiality concerns.

Puration Inc (OTCPINK: PURA)

Market Cap: $36.85M; Current Share Price: 0.0646 USDChart
Data by YCharts

The Company initiated its European market campaign at the Arnold Schwarzenegger’s Arnold Sports Festival Europe in Barcelona, an event which also witnessed its first official launch in Ohio, before becoming a regular participant of the events organized worldwide. The Company intends to capitalize on the rapidly arising opportunities in the European CBD market, which is likely to reach $1.7 billion by 2023 according to a report by the Bright field Group.

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EVERx CBD infused sports water, which was launched in 2017, grew by 600% in the first year after the launch to become the leading CBD infused beverage in the sports nutrition market. The product comes in Kiwi Strawberry and Lemon Lime flavors besides the original. The product is touted to have twice the CBD content when compared to conventional CBD infused waters available in the market.

Furthermore the Company is set to launch Tranquil Tea and Coffee infused CBD beverages in the market in order to pursue its target of $4 million sales in 2019.

The Growing acceptance of Marijuana and CDB-based products has given birth to various niche industries. There are numerous companies that offer CDB–based products such as oils, topical lotions, bath salts, edibles, aromatherapy, you name it and chances are that there is already someone offering the product in the market. There is growing competition in the field and this has led to innovations and pushing the envelopes to capture and even create new markets for the product.

In 2017, The WHO expert committee on Drug Dependence (ECDD) concluded  that in its unadulterated form, CBD does not cause harm or have abuse potential. While further research is underway on the subject it has been proved that CBD is well tolerated in humans and is safe.

There is now a growing demand for product offerings such as Cannabis-infused beverages. There are two categories on offer, the first one is THC-infused drinks that are similar to alcoholic beverages and give a “high” on consumption, the second category is the CBD-infused beverages that are known for their therapeutic effects and are being touted as wellness products. These are often infused with existing beverages such as coffees, tea, beer etc. However, the market is still at a nascent stage as Marijuana has still not been completely legalized in the U.S.

The U.S, where the use of cannabis has only been legalized in 33 states for medical use and 11 states for recreational use, is one of the largest untapped markets for Cannabis, with an estimated value of over USD 11.9 billion in 2018, which is likely to grow at a CAGR of 24.1% from 2019 to 2025. There have been series of mergers and acquisitions in the Cannabis space, which have seen consolidation of major players such as Aurora Cannabis, Canopy Growth, Curaleaf etc, in the anticipation of legalization of marijuana in the U.S by the end of 2019.

Currently 33 states in the U.S along with Washington, D.C. have legalized medical marijuana while 10 states (plus D.C.) permit recreational cannabis. 2018 was a great year for CDB industry, not only was the Farm Bill passed that allowed for the sale of hemp and hemp-based cannabidiol products, but the FDA also approved its very first cannabis-derived drug Epidiolex for treatment of seizures.

The Global legal marijuana market is likely to reach over USD 66.3 billion by the end of 2025, as per a report by Grand View Research, Inc, growing at a CAGR of 23.9%. There is a growing acceptance of the curative effects of cannabis, with some countries such as Canada and certain states of U.S legalizing the use of Marijuana for medical and recreational use. Research has time and again shown that cannabinoids (CBD), extracted from the cannabis plant, have varied medical uses with minimal side effects, making it a sought after alternative to traditional pharmaceutical options.

Image Source: Unsplash

A report by Zenith Global and Beverage Digest estimates that the U.S Cannabis-based drinks market which was approximately US$86 million in 2018 will reach US$1.4bn in the US in 2023, owing to a growing popularity and acceptance. We take a look at some of the early movers in this field, who are set to make a splash in the market with their expertise in production, capacity and distribution channels.

Buoyed by the success of its EVERx CBD Infused Sports Water, the Company is now focused on the creation and commercialization of a new THC infused beverage in Canada, which can leverage on the legalization of marijuana in the country. PURA acquired a Canadian cannabis player in January 2019, and has already developed a formula named THC Savor, along with chalking up a distribution plan to capitalize on the opportunities being presented in the CBD beverages market. The Company is actively seeking strategic acquisitions and partnerships of other beverage operators in the cannabis beverage space to further its cause.

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The Company’s primary goal was to establish a reputation for delivering the highest quality cannabis extract based on its patented cannabis extraction process, which was altered to develop its own cannabis infused food and beverage products. PURA has realigned its focus on establishing a cannabis cultivation business, which will help the Company diversify and capitalize on opportunities arising in the cultivation field, along with creating greater shareholder value. The aim is to expand its existing operations in the U.S and Canada and build the highest quality extraction process in the market place.

Puration recently changed the packaging design of its product after a market testing of its new logo design, in addition to changing its packaging form, from bottle or six-pack option to a more convenient 4-pack option, which the Company believes will boost its sales prospects further.

Risk Assessment

  • U.S Cannabis-based drinks market which was approximately US$86 million in 2018 will reach US$1.4bn in the US by 2023, as per an estimate by Zenith Global and Beverage Digest. This presents a great opportunity for specialty beverage companies such as PURATION, to establish a strong foothold in this emerging market.
  • The Company is diversifying its product offerings to include CBD-infused products such as Tea and Coffee infused with CBD. These would help the Company capitalize on the growing opportunities in the CBD-based beverage space and reach out to a larger customer base.
  • The Company is pursuing strategic partnership and acquisitions of fellow beverage operators in order to build capacity and make inroads into overseas markets. This strategy will help the company to create a faster and robust retail footprint as well result in economies of scale and operations.
  • The Company is planning to diversify into cultivation, which is one of the fasting growing ancillary cannabis industries. The demand for quality product is ever growing, and will help the Company leverage its proprietary patented cultivation techniques, to establish a strong brand name and collaborate with other players in the cannabis space.
  • The Cannabis Industry is governed by stringent regulations and is fraught with uncertainty, the Company will have to be prepared to adapt to any changes in policies or regulatory framework and capitalize on new opportunities that may arise in the future.
  • Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any position within the next 72 hours.

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