Naturally Splendid Acquisition Vertically Integrates Hemp/Marijuana and Nutrition Business
May 8th, 2018
Exclusive, News, Top Story
Consumer demand for products enhanced with omega-3 fatty acids has grown from $25.4 billion in 2011 to $34.7 billion by 2016, driven by the North American market that accounts for 43 percent of global demand. In fact, nearly half of Canadians have used, or are currently using, omega-3 natural health products and more than half of Americans indicates that they’re attempting to increase omega-3 ingredients in their diets – both trends pointing towards strong demand. Plant based proteins have seen substantial growth in recent years, with Research and Markets forecasting a global market of nearly $10.9 billion in 2022, representing a CAGR of 6.7% in the coming years. Industrial hemp is an ideal source for cannabis extracts like CBD (cannabidiol), a market estimated to reach $2.1 billion annually by 2020. In this regard, industrial hemp provides the perfect balance of omegas supporting human health, has more digestible protein than any plant on earth…and is a lower cost biomass input for cannabis extracts when compared to marijuana.
Naturally Splendid Enterprises Ltd. (TSX-V: NSP) (FSE: 50N) (OTCQB: NSPDF) is approaching this market in a unique way, using its proprietary technology to convert hemp seed oil (rich in omega-3 and other essential fatty acids) into a water-soluble powder that can be integrated into nearly any food or beverage product. Naturally Splendid’s recent acquisition of Absorbent Concepts Inc. and its hemp seed processing facility is a major boon to the company as it seeks to penetrate three significant and growing markets – plant based omegas, plant based protein, and cannabis extracts – all three categories perfectly positioned for industrial hemp and marijuana.
ACI Acquisition Adds Value, Experience
The acquisition of Absorbent Concepts provides a number of benefits for Naturally Splendid. Perhaps the biggest, and most obvious, is that the company will now have total control over their own manufacturing facility and processes used to produce its extensive line of hemp-based products. This level of vertical integration, from R&D through manufacturing to distribution and sales (both wholesale and retail), strengthens the company’s position considerably as it no longer relies on the whims of third parties.
ACI brings with it a team of experts that add considerably to Naturally Splendid’s existing experience and expertise. ACI is one of North America’s only strictly organic hemp seed processors, and the team there is well-versed in cannabinoid extraction and laboratory analysis. Led by founder Pete Scales, a noted evangelist for the hemp movement and Director of the Canadian Hemp Trade Alliance (CHTA), ACI offers field extension services for hemp farmers to help them with issues such as whole plant utilization and organic growing techniques. ACI also has a history of developing its own nutritional products, and its expertise is perfectly synergized with Naturally Splendid’s mission and goals.
The factory’s location is also ideal in many respects. Located in Abbotsford, BC, ACI is close to Vancouver’s population, international airport, and shipping ports. It provides easy access to the US border and Interstate 5, the Trans-Canada Highway, and the incredibly rich agricultural industry of southwestern BC. In short, it’s a perfect hub for a company with both national and international ambitions.
NSP’s New CEO Providing Strong Leadership
Appointed interim CEO in January, Doug Mason recently took the helm for good. Naturally Splendid has made a fairly speedy transition from a bulk hemp seed distributor to a wholesale ingredient and consumer brand company. Mr. Mason brings his extensive consumer products experience to guide Naturally Splendid through even more expansion and growth as the company moves into the revenue production and marketing phase.
Mr. Mason presided over 20 years of innovative consumer product development and marketing with Jolt Cola and Clearly Canadian. With Naturally Splendid’s consumer product lines ranging from nutraceuticals to cosmeceuticals to pet supplements, he has a lot of raw material to fashion into profitable brands. His track record indicates he is more than capable, and the new factory/lab/extraction facility should solidify the back end of the company as he refines the company’s consumer-facing outreach…possibly into beverage categories where he has had considerable success taking Clearly Canadian to over $200,000,000 annually in just its third year of operation.
One interesting development to keep an eye on is Naturally Splendid’s pursuit of a Cannabis Dealer License in Canada. A Cannabis Dealer License allows the holder to handle, extract, research, develop, import & export cannabis and related products, from both industrial hemp and marijuana. As Canada’s new legalization of adult-use cannabis takes hold, such a license could prove incredibly valuable to the company, allowing it to expand beyond hemp into the wider variety of products that can be developed from cannabis extracts. This all ties back in to the ACI acquisition and that facility’s capabilities as well, giving Naturally Splendid the perfect factory/lab for such endeavors.
All in all, the Absorbent Concepts acquisition could prove transformative for Naturally Splendid, especially considering its new leadership, consumer focus, and expanding market due to Canada’s evolving regulatory environment.
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