Canopy Growth may be known for being one of Canada’s biggest cannabis companies, but its biggest hit of the current earnings season has a different connection to weed.
drew praise from analysts for introducing BioSteel, a hydration product used on the playing field by Kansas City Chiefs quarterback Patrick Mahomes as well as players in the National Hockey League.
Cowen analyst Vivien Azer said Thursday that Canopy Growth’s third-quarter revenue of $117.9 million beat her estimate by 4%, driven “almost entirely” by BioSteel’s performance.
Canopy Growth’s sales of BioSteel jumped to C$29.2 million ($22.4 million) from C$7.5 million in the previous quarter. The company cited growth in its distribution channel, including 1,400 Walmart Inc.
In contrast, the cannabis business remains difficult in Canada due to price wars and oversupply, as well as economic difficulties.
While Canopy Growth’s medical sales rose 6% from the previous quarter, adult-use sales in Canada fell 5% from the previous quarter.
“While we are encouraged by the cost savings work underway at WEED, we believe the global cannabis segment will likely have a negative margin for the remainder of the year,” Azer said.
Whereas spirits maker Constellation Brands
owns a controlling stake in Canopy Growth, it’s no big surprise that it’s entering the beverage market. The beverage market also gives Canopy Growth an opportunity to tap into the US market without running afoul of federal laws against the importation of cannabis.
In another big move in beverages, Tilray Brands Inc.
said Monday that it paid an undisclosed amount for Montauk Brewing Co., which it describes as the No. 1 craft brewer in the metro New York market.
Tilray now owns Sweetwater, a craft beer ranked as the 10th largest craft brewery in the US
“Following federal legalization in the US, Tilray plans to take full advantage of its strategic infrastructure, operations and consumer-loyal brands in the beer, spirits and snack categories to leverage THC-based products and further expand its commercial capabilities” , Tilray said recently.
At last check, Tilray carries Sweetwater products in 42 states, as well as a tap room in Fort Collins, Colo., and at the Denver airport.
Overall, Tilray’s beverage unit generated $20.7 million in revenue in its first quarter ended Aug. 30, up 34 percent. of $15.5 million during the year.
Bill Peters contributed to this report.