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Sproutly Canada Inc
Symbol SPR
Shares Issued 227,848,354
Close 2019-10-07 C$ 0.37
Recent Sedar Documents

Sproutly, Moosehead affiliate continue work on JV

2019-10-08 07:28 ET - News Release

Mr. Keith Dolo reports

SPROUTLY PROVIDES BUSINESS UPDATE ON THE MOOSEHEAD JOINT VENTURE FOR CANNABIS BEVERAGES

Sproutly Canada Inc. has provided an update on: 1) its previously announced joint venture with OCC Holdings Ltd., an affiliate of Moosehead Breweries Ltd.; and 2) in respect of progress made to date in the development of cannabis-infused beverages intended for sale in the Canadian market via Toronto Herbal Remedies Inc. (THR), Sproutly's Health Canada licensed cannabis producer.

"In the past five months, significant resources have been dedicated towards creating a portfolio of infused beverages that will be ready for consumers following legalization in Canada," said Matthew Oland, chief executive officer of the joint venture. "On May 1, 2019, I took over the leadership of the initiative. To date, we have made significant strides in developing the brand strategy, products, packaging, manufacturing and logistics for the infused beverages. I am confident in our ability to deliver a great tasting beverage to Canadians that provides a controlled, strain specific, cannabis experience utilizing Sproutly's naturally water soluble cannabinoids known as Infuz20. Infuz20 has proven to deliver the cannabis effects in less than five minutes with the experience lasting up to 90 minutes, as advertised. We are eager to bring our beverages to market showcasing the finished infused beverages utilizing such a truly unique technology."

"Although the legal framework of the joint venture has taken longer than expected, both Moosehead and Sproutly have allocated significant resources to the joint venture since the announcement in May, 2019. As a result, there has been substantial progress made on the business and product development of infused beverages. With Matthew's extensive leadership and experience in the beverage category, we are well down the path on branding and formulating beverages. APP technology has given us the ability to fast-track our beverage development process as we do not have the same technology and formulation challenges as processes that require chemical formulation on extracted cannabis oils," said Keith Dolo, Sproutly's chief executive officer. "We look forward to completing the remaining legal documents to implement the joint venture and to announcing the name of the joint venture."

Matthew Oland, one of Moosehead's senior executives and Oland family member, has relinquished his former responsibilities at Moosehead to assume the role of chief executive officer of the joint venture as of May 1, 2019. Moosehead has assigned additional staff and resources to support Mr. Oland in the development and operation of the joint venture.

The infused beverages will initially target the casual and canna-curious consumer with a premium beverage product that is a non-smokable cannabis alternative to traditional edibles and beverages that have inherent onset and offset challenges. With Sproutly's Infuz2O and Moosehead's adult beverage formulation expertise, the JV's infused beverages will deliver a great taste profile with little to no cannabis aroma or flavour impact. In addition to the desirable flavour and aroma characteristics, Infuz2O provides several other attractive formulation and experience benefits as compared with traditional oil-based beverage solutions, including:

  • Almost instant cannabis experience onset of five minutes or less (versus over 30 minutes for traditional oil-based emulsion and nano-encapsulation technologies);
  • Efficient and controllable cannabis experience offset of 60 to 90 minutes (versus over two hours for traditional oil-based emulsion and nano-encapsulation technologies);
  • All-natural water-soluble cannabis extract without the use of chemicals or detergents as used in emulsion and nano-encapsulation technologies;
  • Whole plant extract with strain-specific features, allowing the ability to create beverages and edibles that deliver the strain experience without smoking the flower;
  • When infused in beverages, the lack of pronounced cannabis taste, aroma or sediment.

Joint venture business development highlights

Sproutly and Moosehead, in its capacity as a branding, marketing and logistics partner, have significantly progressed the business of the joint venture since the signing of the JV agreement on April 30, 2019. Select joint venture business development highlights are outlined below.

Brand development

  • Leveraged Moosehead's existing relationship with an award-winning branding and design agency to develop a brand name, logo, identity and architecture as well as a strategy for positioning the joint venture in the market;
  • Created a corporate name and secured corresponding website domains and commenced website development.

Product development

  • Utilized Moosehead's product development experience and relationship with a leading global flavour and ingredient solutions company to lead the beverage base formulation;
  • Completed several rounds of product formulation testing, including:
    • Testing of beverage base to determine desired flavour profiles, sweetness, colour and calorie targets;
    • Exploring an array of tetrahydrocannabinol milligram dosages utilizing Infuz2O;
    • Utilizing both indica and sativa cannabis strains to determine desired strain-specific characteristics;
  • Evaluated numerous packaging (bottles and cans) and labelling options;
  • Engaged a third party market research firm to help refine product development and branding through consumer research and product concept testing to explore end-user preferences.

Go-to-market strategy

  • Completed an initial round of presentations to provincial cannabis regulatory agencies and a selection of private retailers to identify and assess initial launch markets;
  • Leveraging Moosehead and Sproutly in-house resources to develop a detailed go-to-market strategy including provincial market preferences, pricing and product positioning strategies;
  • In collaboration with a top-tier brand and marketing agency, commenced preliminary planning for a marketing strategy including a strategy for potential in-store activation, education, communication and merchandising.

Manufacturing, logistics and operations

  • Determined that THR will utilize third party contract manufacturers (co-packers) for the manufacturing of its initial products due to the Health Canada regulations requiring the segregation of cannabis-infused beverages from alcoholic beverage production;
  • Assessed potential co-packers for the manufacture of initial products and commenced discussions with preferred providers;
  • Initiated and continue discussion with provincial cannabis regulatory agencies to determine supply chain logistics to inform the go-to-market strategies including supply-chain and national product distribution;
  • Evaluated a number of third party distribution companies for shipping and logistics services.

Implementation of the joint venture

Following the signing of the binding definitive joint venture agreement on April 30, 2019, Moosehead and Sproutly commenced the process of preparing and settling of the various agreements required for the implementation of the joint venture. These implementation documents include, but are not limited to, a shareholders agreement, brand licensing agreements, supply agreement and co-packing agreement. The parties continue to work diligently to complete the implementation documents.

About Sproutly Canada Inc.

Sproutly's core mission is to become the leading supplier to the cannabis beverage and edibles market. The company's Toronto-based, Access to Cannabis for Medical Purposes Regulations-licensed facility was built to cultivate pharmaceutical grade cannabis to supply a technological breakthrough in producing and formulating the first natural, truly water-soluble cannabis solution. The company's water-soluble ingredients and its bionatural oils will deliver revolutionary brands to international markets that are clamouring for well-defined commercial products. Sproutly's business focus is to execute on partnerships with local and globally established consumer brands to leverage their existing customer bases, further expand brand loyalty, assist with marketing and support distribution networks to deliver this scientific breakthrough with speed and efficiency worldwide.

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