Canopy Growth may be known for being one of Canada’s largest cannabis companies, but its biggest hit of the current earnings season has a different connection with grass.
drew praise from analysts for the performance of BioSteel, a hydration product used on the green 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 the performance of BioSteel.
Canopy Growth sales of BioSteel jumped to C$29.2 million ($22.4 million) from C$7.5 million in the year-ago quarter. The company cited growth in its distribution channel including 1,400 Walmart Inc.
By contrast, the cannabis business remains difficult in Canada due to price wars and oversupply as well as economic headwinds.
While Canopy Growth’s medical sales rose 6% from the prior quarter, adult-use sales in Canada dropped 5% from the previous quarter.
“While we’re encouraged by the cost savings work that is underway at WEED, we believe that the global cannabis segment will likely have a negative margin for the remainder of the year,” Azer said.
Given that spirits maker Constellation Brands
holds a controlling stake in Canopy Growth, it’s not a big surprise that it’s pushing into the drinks market. The beverage market also gives Canopy Growth a way to tap the U.S. market without violating federal laws against importing cannabis.
In another major move into drinks, Tilray Brands Inc.
said Monday it paid an undisclosed sum for Montauk Brewing Co., which it described as the No. 1 craft brewer in the metro New York City market.
Tilray already owns Sweetwater, a craft beer ranked as the 10th-largest craft brewer in the U.S.
“Upon federal legalization in the U.S., Tilray plans to take full advantage of its strategic infrastructure, operations and consumer loyal brands across beer, spirits, and snack-food categories to parlay into THC-based products and further expand its commercial opportunities,” Tilray said recently.
At last check, Tilray offers Sweetwater products in 42 states as well as a tap room in Fort Collins, Colo., and at Denver Airport.
All told, Tilray’s beverage unit generated $20.7 million in revenue in its first quarter ended August 30, up 34%. from $15.5 million in the year.
Bill Peters contributed to this report.