Public Investor Overview...This Presentation may contain statements which constitute...
Transcript of Public Investor Overview...This Presentation may contain statements which constitute...
Public Investor OverviewJanuary 2020 TSXV: BEER
Where Craft Beverages Meets Craft Cannabis
Introduction
TSXV: BEER
Forward Looking Statements
This Presentation may contain statements which constitute “forward-looking information”, including statements regarding the plans, intentions, beliefs and
current expectations of the Company, its directors, or its officers with respect to the future business activities and operating performance of the Company. The words
“may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions, as they relate to the Company, or its
management, are intended to identify such forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of
future business activities or performance and involve risks and uncertainties, and that the Company’s future business activities may differ materially from those in the forward-looking statements as a result of various factors. Such risks, uncertainties
and factors are described in the periodic filings with the Canadian securitiesregulatory authorities, including the Company’s quarterly and annual Management’s
Discussion & Analysis, which may be viewed on SEDAR at www.sedar.com. If you have read this far, please use the coupon code NewFriend10 on our website for ten
percent off your first order. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements
prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the
Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause
results not be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements
other than as may be required by applicable law.
-3-
“While other players are creating portfolios that mirror legacy market cannabis products, we believe that cannabis-infused beverages, specifically designed to provide an alternative to high quality craft produced alcoholic beverages, have the biggest opportunity.”
Mission:createthepreeminent
cannabis beverage company.
- Terry Donnelly, CEO of Hill Street Bev Co.
-4-
Hill StreetStrategy
Create the preeminent
cannabis beverage
company to win in Canada
and be well-positioned to
expand globally as
regulations evolve.
Leverage Existing Alcohol-Free Beverage
Platform to Bring Cannabis-Infused Beer
and Wine to Market in Canada in 2020.
Award-Winning AF Beverage Platform
Establish Hill Street Bev Co as the
Preeminent Cannabis Beverage Company
in Canada.
Preeminent Cannabis Beverage Co.
Expand to adjacent US market and
overseas as global regulations evolve.
Global Cannabis Beverage Leader
-5-
COMPANYHIGHLIGHTS
Hill Street Bev Co. is an
established Canadian
brand with a successful
track record in alcohol-
free beverages.
Established Canadian Alcohol Free Beverage Brand
Exclusive Marketing Partnerships
Established Relationships with Numerous Retailers
Lexaria Cannabis Infusion Technology
Experienced, Brand-Building Management Team
-6-
Hill Street has strong competitive advantages.
Access to the legal Canadian cannabis market
Investment in a beverage focused cannabis firm with an established trademark and alc-free market presence
Availability of market, consumer, and product information at a detailed level
Ability to leverage Hill Street supply chain and expertise to launch brands in cannabis space
Detailed market, operational and strategic knowledge ahead of US / EU legalization
TSXV: BEER
Industry Overview
The global legalization of Cannabis is a once in a lifetime event.
-8-
The global cannabis market is estimated to reach ~$166 billion by 2025.
Canada was the first G7 country to legalize recreational Marijuana in 2018.
Cannabis edibles, including beverages, were legalized in Canada in October of 2019, and are expected to be a $2.7B market in 2020.
Canada is the 1st and best incubator for federally legal cannabis products as other major countries legalize.
Cannabis has enormous
market potential.
Source: Euromonitor International
-9-
Recreation is the major
driver of
cannabis usage.
Canadian Usage
Recreational – 78%Medical – 22%
58% use cannabis to have fun with friends.
41% use cannabis as an alternative to alcohol.
18%
19%
25%
26%
29%
34%
41%
48%
58%
62%
66%
To help connect with others
To improve sex life
To heighten senses
To increase creativity or expressiveness
For special medical reasons (pain, etc.)
To make activities more interesting
As an alternative to alcohol
To improve mood
To have fun with friends
To reduce stress or anxiety
To help relax or sleep
Reasons for Using Recreational Cannabis
Source: Deloitte 2018 Cannabis Report
-10-
60%
46% 45% 44%
38%
0%
10%
20%
30%
40%
50%
60%
70%
Alcohol E-Cigarettes Smoking Cannabis Vaping or Edibles Tobacco
Beverage is the most
socially acceptable format for recreational cannabis use.
Social Acceptability of Using Various Products Occasionally
Source: Canadian Cannabis Survey 2018
Beverage is clearly the most socially accepted recreational format.
Smoking and vaping are not permitted in the majority of locations across the world.
The Vaping Crisis has increased consumer reticence for this format!
-11-
FutureCannabis Market
$65 bn+
Wine $80bn
Spirits $70bn
Beer$125bn
Size of Alcohol Beverage Markets (US+Canada 2018)
The beverage
alcohol market shows huge potential for
cannabis beverages.
27%
22% 22%
12%
26%
23% 23%
11%
28%
21% 22%
12%
Beer Wine Spirits Other
Overall United States Canada
Of Consumers Surveyed Who Would Try Cannabis Recreationally, Which Beverages Would They Replace?
Sources: Statista, BW166, AT Kearney, New Frontier Data, Marijuana Business Daily
-12-
Investor Target Company Invested Dollars (USD)
$4bn
$3.4bn
$200mm+
$100mm+
JV
$7Bn invested in cannabis
beverages will demand a return.
(Pending)
-13-
Adult-format beveragesare the biggest
opportunity for Cannabis 2.0
▪ $275bn+ beverage alcohol market in the US and Canada…
▪ Large future Cannabis market of over $65bn+ in 5-7 years
▪ More socially acceptable than smoking or vaping
▪ Alcohol format de-selects minors
▪ Micro doses mimic onset & duration of effect from beverage alcohol
▪ Socially inclusive to match beverage alcohol occasions
▪ Healthier than alcohol
-14-
Cannabis-
Infused
beverages are a healthier alternative to alcohol.
Consumers Are Looking for Healthier Alternatives to Alcoholic Beverages
33% of Canadians are willing to pay a premium for
health-enhancing products. (1)
47% of regular alcohol drinkers are looking to reduce
their consumption. (2)
Health is the #2 concern for US consumers. (3)
Health Benefits of Hill Street Cannabis-Infused vs. Traditional Alcoholic Beverages
60-80% fewer caloriesLess toxic
No hangover
Sources: (1) Business Development Bank of Canada, (2) The Harris Poll, (3) Conference Board® Global Consumer Confidence Survey
-15-
Alcohol-free beverages are one of
fastest growing categories.
+19% yoy
Category Growth*(alcohol free beer, wine, cocktails, mixers,
cider)
55% vs. 34%AF Beer % of total AF beverage sales
2018 vs. 2017
+27% yoy
Growth in AF beer sales
This Is Not a Niche.
135 million adults on prescriptions contra-indicated to
alcohol in the US and Canada, That is 44% of the adult population.
52% of adults in the US who drink alcohol are either
trying now or have tried before to reduce their alcohol intake.
Sources: Nielsen, Forbes
-16-
Summary of Amended Regulations
• Limit of 10 mg THC in any cannabis infused product
• No alcohol beverages mixed with cannabis
• Prohibition on marketing cannabis products
• Separate licensed production facilities required (no co-
production of alcohol and cannabis)
Canadian
edibles are
now legal, and
Hill Street is
ready.Hill Street’s Advantages
• Limit on THC per unit increases the value of cannabis
infusion technology and increased effectiveness
• Hill Street is able to leverage proven alc-free recipes that
share base liquids with cannabis infused line
• Co-packing facilities for different formats (bottles, cans, pills,
tablets, drink mixes, lotions, etc.) are now available across
the country. No need for huge capital investment.
Hill Street has been preparing for three years to capture market share that is up for grabs.
Company Overview
TSXV: BEER
-18-
150+ years of cannabis, beverage, and consumer expertise.
Terry DonnellyChief Executive Officer
Hinta Chambers, CPA, HBBAChief Financial Officer
Bruce AndersonChief Production OfficerJune Nicholson, BA
Chief Marketing & Sales Officer
Management Team
Reuban Nadesan, CA CPAHead of Corporate Strategy & Partnerships
Parvinder Shergill, CPA, MBAController
Terry Donnelly - 30+ years’ experience in marketing and advertising, servingmost recently as Chief Marketing Officer, Canada for MDC Partners (NASDAQ:MDCA), the largest Canadian marketing services company with $1.3B inrevenues and over 17,000 employees. He was the co-founder of Adcentricity,EVP, Digital at Mandrake, and a board member/investor in a number of publiccorporations, including two TSX listed companies.
Craig Binkley - Former President of Consulting for PROHBTD. He was CEOof Northstar Research Partners, Chief Consulting Officer for Zyman Group, aworld leader in beverage strategy consulting. Craig served as Vice Presidentof Marketing for Coca-Cola Mexico and Worldwide Director of Marketing forDiet Coke® and Coca-Cola’s Minute Maid® brands. Craig attended DavidsonCollege in North Carolina and completed postgraduate work at HarvardBusiness School’s Program for Management Development.
Jack Fraser - currently Managing Director of BDC Capital. Prior he was VP
Finance for Ssense, a fashion ecommerce business. He has raised over $1Bnin capital, and built major ecommerce brands such as iTravel2000,Bookit.com and TravelZest. He holds an MSc and MBA from Northwestern,and has a Bcomm in Economics from the University of Guelph.
Lori Senecal - former Global CEO of renowned ad agency Crispin Porter +
Bogusky and Chair and CEO of New York based KBS+P. She was one of FastCompany’s Most Innovative People of 2017, President and Global ChiefInnovation Officer of McCann Worldwide, and named AdAge’s Top 4 People toWatch. She has over 30 years of beverage marketing experience working onbrands like Coke, Dos Equis, Coors, Nestle and many others. She has a BCommfrom McGill University.
Kevin Ruddle is the VP Operations and Partner in VinFirst InnovativePackaging, the largest packaging facility in North America for alcoholicbeverages in the Prisma Tetra format. He is a pioneer in alcoholic beveragepackaging, and has been operating in the Niagara wine and spirits industry forover 25 years. Kevin led VinFirst’s initial investment into Hill Street, ultimatelybecoming the major shareholder in the company.
Rudy Sawatzky - President and owner of Grey Forest Homes and VinFirstInnovative Packaging. Rudy is a major property developer, investor andentrepreneur in the Niagara region of Ontario.
Board of Directors
-19-
Hill Street has won numerous medals and accolades including three Gold, two Silver, and two Bronze Medals at the U.S. 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 proven
marketing
platform for
cannabis
beverages.
Hill Street AF WineHill Street AF Beer
Hill Street will leverage its AF beer and wine expertise to build brand awareness for the infused beverage line.
Beer and Wine Awards
-20-
Representative Experience*
Leading Alc-free RetailersHill Street’s
retail
expertise has
increased
listings 500%
in two years.
Hill Street’s relationships with its numerous current alcohol-free retailers create additional brand awareness
*Represents professional experience of executive team and board members
-21-
Partnered
with the best
market-
proven
infusion
technology▪ Patented water-soluble infusion tech
▪ Allows for odorless, tasteless cannabis infusion of any beverage
▪ Altria invested $12mm in technology
▪ 5 to 10 times faster acting (less than 15 minutes) than other similar cannabis infusion technologies in the market
▪ Hill Street holds one of only 6 beverage licenses for use of technology
▪ 50+ patents pending, 14 issued
About DehydraTECH
▪ Global, semi-exclusive licensing agreement to utilize Lexaria’s patented DehydraTECH technology for beverage production
▪ Hill Street will be able to infuse its award-winning Alcohol-free beverage line with both THC and CBD in a cost-effective manner
Lexaria – Hill Street Partnership
Lexaria’s DehydraTECH is the best cannabis infusion technology on the market, allowing for odorless & tasteless infusion up to 10x
faster than other technologies
CSE:LXX
-22-
This is full
spectrum
cannabis oil
converted to
water soluble
powder.
▪ Full Spectrum Oil converted to Powder provides consumers with the best experience, as the ingredient contains all of the major and minor cannabinoids, flavonoids, and terpenes.
▪ Completely shelf stable, and prescriptively doseable. Can be used as an ingredient as easily as sugar.
▪ Can be compressed into tablets, turned into drink mixes, added to baked goods, topicals, lotions, creams.
▪ Provides onset in as little as 5 min, and duration of 90-120 min.
▪ No nano-emulsion required (Nano is banned in Quebec & UK)!
▪ Hill Street will infuse each beverage product with a unique strain of cannabis, giving the beverage the attributes associated with that strain, i.e., uplifting, relaxing, creativity-enhancing, indica vs sativa, etc. None of these differentiated experiences are possible if you are using an isolate or distillate of cannabis oil!
Lexaria’s Process Makes Every Cannabis 2.0 Edible Better
CSE:LXX
-23-
▪ Generated roughly $2mm in corporate social responsibility donations
▪ Research-led initiatives to support cannabis and alcohol-free beverages as alternatives to alcohol
▪ Lead sponsorships and usage of endorsement for alcohol-free & cannabis products
Select Partnerships
How Hill Street Makes a Difference
Marketing
partnerships
with leading
Canadian
health
organizations.
These partnerships allow Hill Street to reach 15mm+ Canadians
-24-
Company Timeline
• Product development, innovation & formulation
• Contracted with Lexaria for rights to Cannabis Infusion
Technology
• Publicly listed via a reverse merger
Jul ‘18
• Developed beer-making strategy
• Won key partner agreements with Canadian health
associations
Sep ‘18
• Recreational Marijuana Legalized
in Canada
• Expanded Quebec Distribution with 3,000 new stores
Oct ‘18
• Proof of concept for new dealcoholizing
and cannabis infusion
technologies
Dec ‘18 May ‘19
• Distribution & licensing strategies
June ‘19
Summer ‘19
• Legalization of Cannabis Edibles in
Canada
Oct ‘19
• Cannabis-infused beer and wine
launched in market
Summer ‘20
The Company plans to launch cannabis-infused beer and wine in Canada in 2020.
Founding Member, 2019
• Helped create Cannabis Beverage Producers Alliance
Apr ‘19
• Final version of Cannabis Edibles
regulations released
Sep ‘19
• Manufacturing and global licensing
partnership with Lexaria announced
-25-
Creating an End-to-End Cannabis Beverage Business
Combined With Marketing Partnerships to Drive Demand
*Hill Street has multiple options to bring beer and wine production in-house moving forward
Beer*
- 3rd Party Craft Suppliers
Wine*
- 3rd Party Wine Suppliers
Craft Grown CannabisFrom Licensed
Producers Cannabis Distribution Agency
Provincial Wholesalers and Licensed
Retailers / Dispensaries
Co-packing agreements with Multiple Co-packers
Liquid Source Infusion and PackagingDistribution and
Sales ForceConsumer
Sales
Hill Street Business Strategy
-26-
Recognized
expertise as
industry
leaders in
cannabis
beverages
-27-
Nearly 10%
brand
awareness
prior to
launch.
“It’s not like some of that other non-alcoholic stuff that’s dank and
heinous… this tastes like GREAT beer.”
- Howard Glassman, Midas Letter Live
“Wow… that’s fantastic! Really does have an incredible flavor profile.”
- James West, Midas Letter Live
-28-
▪ Proven consumer products with nearly 2MM bottles of wine already sold into market.
▪ Market proven infusion technology which mimics onset and duration of alcohol
▪ Significant product benefits when compared to alcohol
▪ Sophisticated flavours aligned with consumer preferences
▪ Marketing partnerships with leading medical research organizations that can reach over 23MM Canadians annually.
▪ Cause-related brands generate higher consumer loyalty and brand preference
▪ Multiple media partnerships aligned with shareholder interests.
Craft Beverages Meets Craft Cannabis
Summary