Naturally Splendid Increases Vertical Integration and Expands International Footprint

The cannabis industry tends to capture a lot of headlines these days, but investors shouldn’t ignore the hemp industry’s massive potential. With hemp-based CBD oil growing in popularity, the market is projected to top $10 billion over the coming years, and there are only a handful of companies building strong brands in the space. Investors may want to take a look at these companies as potential opportunities.

Naturally Splendid Enterprises Ltd. (TSX-V: NSP) (OTC: NSPDF) is a vertically-integrated hemp company that offers a growing array of bulk, branded, and white-label hemp products. In addition to its network of 2,000 retail distribution points in North America, the company has been actively building an international presence in the U.S., Europe, and Australia. Investors may want to take a closer look at the stock given these catalysts.

Global $10 Billion Hemp Opportunity

The global hemp industry is projected to reach $10.6 billion by 2025, according to Grand View Research, representing a 14 percent compound annual growth rate over the forecast period. In addition to growing populations and rising incomes, there is a growing awareness of the dietary advantages of both hemp seed and hemp oil. These trends are especially prevalent when it comes to hemp-based cannabidiol, or CBD.

According to the Hemp Business Journal, hemp demand was driven primarily by hemp-based CBD (23%) and personal care (22%) applications— at least in the United States. The analyst expects hemp-based CBD sales to reach $646 million by 2022, while industrial applications are expected to see additional growth to reach $527 million over the forecast period. These trends are likely similar to those in Europe and other developed countries worldwide.

Naturally Splendid’s Expansion

Naturally Splendid has already established a strong footprint in Canada with NATERA® products appearing in major retail locations throughout British Columbia and Alberta and is expanding Nation-wide, having recently announced securing a national distributor. While this domestic market is important, management is also focused on expanding its footprint into international markets—both in the United States and around the world—to grow its presence beyond Canada’s borders thus creating additional brand equity and revenue.

In North America, the company has been focused on expanding its product lines beyond the 2,000 stores that they already appear in though their wholly owned The Bar Makers division (formerly Prosnack) private label clientele and their housebrand Elevate Me. The company has made several announcements recently securing private label opportunities in the nutritional bar category and this portion of their business continues to increase. To handle the increased business, the company has invested in additional manufacturing equipment and have built out a test kitchen that clients are able to access to create custom formulated products. When the addition of these recently announced new private label clients are taken into account, Naturally Splendid’s retail reach far exceeds the 2,000 retail outlets that the nutritional bars are currently in. In many cases, Naturally Splendid will be able to leverage these successes in the nutritional bar market to expand distribution of their NATERA® branded hemp products.

Building a strong brand across multiple categories in North America sets the foundation for international expansion. These efforts have been especially pronounced in Australia, where the company launched its NATERA® brand last year. The company recently announced that it received a third purchase order of NATERA® branded products valued at approximately C$100,000 from its Australian distributor. The first shipment successfully cleared customs and arrived at the distributor’s warehouse in late 2017. The second order was valued at approximately C$140,000 and was sent in a 40’ container for distribution throughout the growing Australian market.

Management has shifted strategy to replace some of the lost sales in South Korea stemming from that country’s oversupply of bulk hemp seed. Although open to bulk hemp seed business, the company is now more focused on delivering NATERA® branded or private labelled products to this region as well as new territories globally. By providing NATERA® or private label products, they separate themselves from competitors who supply bulk hemp seed only, while providing better profit margins than non-branded bulk hemp seed. The diversification and greater profit margins could be a win-win for investors.

In Europe the company has been actively marketing its NATERA® product line in Germany with eyes towards expanding their distribution network there. The addition of CBD fortified products with a growing brand presence such as NATERA currently has, has the potential to create significant new distribution opportunities throughout Europe as much of that region undergoes changes to cannabis and hemp regulations.

Vertically Integrated Operations

Naturally Splendid sets itself apart from many competitors with its vertically-integrated operations. Over the past year, the company has invested in bringing a lot of its production and processing in-house to help improve quality control, lower production costs, and ultimately enhance its profitability. The company’s pending Dealer’s License in Canada could be an especially important milestone since it would provide access to CBD oil derived from industrial hemp. It must be noted that under Canada’s new cannabis regulations coming into effect October 17, 2018, CBD will be legal to extract from industrial hemp for the first time thus opening up additional markets globally.

“Our vertical integration strategy creates a unique position for the company when measured against most other hemp companies,” said Naturally Splendid President Mr. Craig Goodwin. “The control over the value chain gained through vertical integration offers even more than just savings and increased margins. With industries like cannabis or hemp-based foods, quality control is of critical importance. Therefore, we have solidified our vertical integration to include our own hemp processing, expanded our bar manufacturing and test kitchen facility and have applied for our Dealer License allowing for the extraction of CBD from hemp amongst many other activities.”

By vertically-integrating its operations, the company is able to more quickly develop and launch new consumer products, including plant-derived, bioactive ingredients, nutrient dense foods, and related products. The company also has a growing patent portfolio to cover the commercial uses of industrial hemp and the broad spectrum of applications for cannabinoid compounds, including those derived from hemp and cannabis.

Looking Ahead

Naturally Splendid Enterprises Ltd. (TSX-V: NSP) (OTC: NSPDF) represents a unique investment opportunity in the burgeoning hemp industry. With its vertically-integrated operations, the company has been able to quickly develop and launch new products across a wide range of global markets. Investors may want to take a closer look at the stock as it expands its presence in Australia and beyond.

For more information, visit the company’s website at www.naturallysplendid.com.

Disclaimer

The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: http://www.cannabisfn.com/legal-disclaimer/

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.