- Toronto-based company makes alcohol-free beer and wine
- Expanding into potentially lucrative cannabis-infused beverages
- Proven consumer products with nearly 2 million bottles of wine already sold into the market
What Hill Street Beverage does:
Hill Street Beverage Company Inc () (OCTMKTS:HSEEF) is a Canadian company that makes alcohol-free beer and wine, as well as adult-format beverages.
The company offers red, white, sparkling, and rose wines under the Vin(Zero) and Vintense brands. It sells beer under the Hill Street Craft, Designated Draft and MADD virgin craft brand names.
Hill Street’s beer and wine lineup have won numerous medals and accolades in North America, including three Gold, two Silver, and two Bronze Medals at the US Open Beer Championships, the Retail Council of Canada’s Grand Prix award, and a prestigious Double Gold Medal at the San Francisco International Wine Challenge.
A wholly-owned subsidiary, Hill Avenue Cannabis Co, was created to manage its business in the legal cannabis segment. Under a three-year-long agreement with Molecule Holdings will include both formulating and manufacturing beverage products using proprietary infusion technologies provided either by Molecule or Hill Street’s joint manufacturing partnership with Lexaria Biosciences, once Hill Street’s cannabis processing facility has been licensed by Health Canada.
About 90% of the company’s revenue currently comes from wine sales, even though ironically its stock ticker symbol is BEER. Its products can be found in about 4,000 grocery and retail stores in Canada and the US as well as through its website.
But the Toronto-based company sees big growth opportunities beyond non-alcoholic wine and bee and iis expanding its business model to include the production and the sale of potentially lucrative cannabis-infused beverages.
How is it doing:
Hill Street Beverage reported fiscal second-quarter results on March 3, 2021, revealing rising net revenue and a narrowing net loss in its first quarterly report since acquiring the cannabis assets of Lexaria Biosciences Corp on December 9, 2020.
In the three months ended December 31, Hill Street saw net revenue grow 8% to C$745,748 from C$689,276 in the same period of 2019. The net loss improved 50% to C$481,000 from C$956,000, which the company attributed to increased online sales revenues of 166%, improved gross margin and cost management efforts.
During the quarter, the Toronto-based company completed the milestone deal with Lexaria Bioscience, which will propel forward Hill Street’s plans to launch Cannabis 2.0 related products. The transaction gives Hill Street exclusive global rights in perpetuity to Lexaria’s DehydraTECH technology to make products that contain THC and other psychoactive cannabinoids. The agreement also expands Hill Street’s license with Lexaria HempCo to make products that contain CBD on a global basis for 10 years.
Hill Street said with its third-quarter numbers that it anticipates its cannabis beverages will launch toward the end of the third quarter of fiscal 2021. The firm struck a manufacturing deal with Molecule Inc in the previous quarter ahead of a planned launch of its (V)ia SPRIZA cannabis-infused beverages brand.
There have been big changes in the Hill Street Beverage boardroom too since the turn of the year, On January 29, the company announced the appointment of veteran financier Jack Fraser as its chairman. Hill Street noted that Fraser is a serial growth venture operator and financer, with more than 30 years of experience in digital media and e-commerce.
The board, at the same time, also separated the role of CEO and chairman into two independent functions, adhering to best practices and improving its corporate governance.
Then, at the start of February, Hill Street said it was appointing current board members Lori Senecal and Craig Binkley as co-CEOs on an interim basis. The two fill the role of outgoing CEO Terry Donnelly, who is expected to remain with the beverage company as a board member until its next annual general meeting.
Binkley is a successful global business leader and experienced CEO who is now a sought-after advisor and board member to clients ranging from Fortune 500 to small business entrepreneurs. He has been on the board of Hill Street since 2017 and was a member of the team that completed Hill Street’s going public transaction in 2018. Senecal was the Global CEO of the leading marketing and communications firm Crispin Porter Bogusky and Kirshenbaum Bond. She was named to AdWeek’s Power 100 List and one of Fast Company’s most creative people in business.
The company said both Binkley and Senecal will remain in position until Hill Street completes its review for a permanent CEO.
A few days later, Hill Street Beverage also announced that it had appointed philanthropic entrepreneur and private investor Raymond Bisaillon to its board of directors. In 2012, he launched Bisaillon Asset Management Inc, a full-service financial planning firm in Sudbury Ontario, having worked as a Senior Financial Advisor with CIBC Imperial Service since 2002.
On the financing front, at the end of January, Hill Street announced its intention to complete a non-brokered private placement of units at $0.08 each. The group said then that the size of the offering had not been finalized but it had secured initial commitments totaling about $2.5 million. The company anticipated closing the private placement in one or more tranches
- More news on integration of cannabis assets acquired from Lexaria Biosciences
- Cannabis beverages launch toward the end of the third quarter of fiscal 2021
- Completion of review for permanent CEO
What the boss says:
“Our attention to costs and our focus on the most profitable lines of business helped us improve gross margin and the bottom line,” Hill Street Beverage CFO Hinta Chambers said in a statement ith the firm’s 3Q results.
“The new opportunities we are now able to pursue by leveraging the IP assets of Lexaria Canpharm will help further drive quality of margin through highly differentiated products as well as scale through expanded geographic scope,” Chambers added.
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