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Saturday, Jul 2, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

The weed wire

Neptune Wellness pivots further into CPG with Kraft Heinz deal

The Canadian cannabis extractor will distribute Kraft Heinz products across four geographic regions

Neptune Wellness pivots further into CPG with Kraft Heinz deal
Neptune Wellness pivots further into CPG with Kraft Heinz deal

Canadian cannabis extractor Neptune Wellness Solutions Inc. (TSX: NEPT) continues to pivot its business, striking another global distribution deal with a major consumer packaged goods company.

The Quebec-based firm said Monday it will distribute and market products for Kraft Heinz — which include Jell-O, Kool-Aid and Maxwell House — into into India, Vietnam, the Caribbean Islands and Latin America.

The partnership will add significant incremental revenue staring in fiscal 2021, Neptune says. The firm will also look to leverage the deal to expand global distribution for Neptune’s branded products throughout the regions, which have a combined population of 2.1 billion.

“The deal with Kraft Heinz is yet another milestone in Neptune’s dramatic expansion of its marketing reach and transformation into a business-to-consumer operation, and it particularly underscores others’ faith in Neptune… to deliver results outside of North America,” CEO Michael Cammarata said in a statement.

The move comes just weeks after Neptune partnered with Unilever, a British-Dutch multinational CPG company that sells 400 brands in more than 190 countries.

Last month, the extraction company told financial news site The Fly it will provide Unilever’s selling partners with products in its U.S. and Canadian warehouse system to support growth in the hygiene category.

The partnership could generate revenues of US$65-137 million over the next 18 months, based on projections from both enterprises, according to a statement.

Neptune expects to receive first shipments of products into its inventory by the end of October. The distribution agreement does not require any minimum annual purchase commitments.

The two major CPG partnerships are further examples of Neptune shifting away from third-party extraction services in the Canadian market.

In its first-quarter report, the company said it increased revenues by 124 per cent sequentially because it pivoted towards fighting Covid-19, introducing new products like plant-based hand sanitizers.

Cammarata says his company launched a new digital platform for its sanitizers, which are sold through retailers like Costco and Home Depot. The new platform will also facilitate distribution of Unilever’s hygiene products.

“As we started entering with our brands and other brands into the marketplace, we wanted to build a new supply chain that was modernized,” CEO Cammarata said.  “One thing that Covid has done is forced people to look at digital working as well as new supply chains that can ramp up and down based on demand and react in near real time,”

Neptune projects $28 million–$32 million in revenue for the second quarter ending Sept. 30, after recording $21.3 million in first-quarter revenue.

Company stock has climbed 10 per cent to US$2.20 on the Nasdaq since the Kraft Heinz deal was announced Monday.

Read more: Neptune Wellness gains Health Canada sales licence

Top image via Kraft Heinz


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