Tilray buys hemp food maker Manitoba Harvest for $317M
Tilray is buying Manitoba Harvest, the world’s largest hemp foods manufacturer, for CA$419 million ($317 million), according to a joint statement from the companies.
“Tilray’s acquisition of Manitoba Harvest is a milestone for the cannabis industry. It builds on the strategic partnerships we have formed with consumer brand industry leaders and demonstrates our track record of disrupting the global pharmaceutical, alcohol, CPG, and functional food and beverage categories,” Tilray President and CEO Brendan Kennedy said in the statement. “We’re excited to work with Manitoba Harvest to develop and distribute a diverse portfolio of branded hemp-derived CBD food and wellness products in the U.S. and Canada.”
Manitoba Harvest makes and distributes several products — including Hemp Hearts, Hemp Oil, Hemp Yeah!-branded granola and protein powder and Hemp Bliss milk — that are sold in more than 16,000 stores in the U.S. and Canada. The company plans to launch CBD-containing extracts and Hemp Yeah!-branded wellness bars this summer.
With hemp's removal from the Food and Drug Association’s list of controlled substances, the cannabis plant — and the CBD derived from it — are shaping up to be the most trendy items in food and beverage. Canada-based Tilray is already one of the world's leading cannabis companies. According to an explanatory statement Tilray CEO Brendan Kennedy emailed Food Dive, the company is acquiring Manitoba Harvest in order to gain more expertise and a stronger foothold in hemp and CBD in the food space.
"We’re combining critical expertise in a rapid-growth space," he said. "Those of us that have recognized the power of cannabis and hemp to transform consumer health for ages are enthusiastic about this evolution. After years of hard work, we’re seeing accelerated legitimization of the plant in which we so firmly believe."
Experts have said hemp is one of the healthiest ingredients to add to food. It is a complete source of protein that is rich in nutrients, including vitamin E, phosphorus, potassium, sodium, magnesium, sulfur, calcium, iron and zinc. In an opinion piece for Food Dive, Manitoba Harvest co-founder Mike Fata wrote that he first got involved in hemp foods because he overhauled his diet to focus on nutrition, and hemp played a major role.
But while hemp-based foods produced in Canada and other countries have been available for sale in the U.S. since 2004, they have been slow to be adopted. Representatives from Manitoba Harvest told Food Dive in spring 2017 they estimated less than 1% of the population had tried hemp products.
As momentum has gathered for cannabis legalization in the United States, sales of hemp foods have skyrocketed. According to Hemp Business Journal, total U.S. sales of hemp in 2017 were $820 million, with $137 million of that for food. SPINS data reported by Food Navigator showed the segment grew about 5% between early 2017 and early 2018. It's forecast to grow even more, especially if CBD — which is known for its relaxation and wellness effects — is allowed in food and beverage. Currently, CBD is only allowed in some states with the FDA set to explore "potential regulatory pathways" for interstate commerce of the ingredient. Retail sales of products with CBD derived from hemp could exceed $646 million by 2022, according to Vote Hemp.
And as cannabis as a whole becomes more accepted as a functional ingredient, the profile of hemp is growing. Kennedy said that made now the right time to acquire Manitoba Harvest.
"Partnering with established leaders such as Manitoba Harvest will help us get closer to a world that fully accepts what we already know: there are nutritional benefits of hemp and CBD," he wrote in the statement.
Tilray, which is known for its cannabis extracts and research capabilities, has been working hard in recent months to position itself in new and lucrative areas of the market. In December, the company entered into a joint venture worth $100 million with AB InBev to develop non-alcoholic drinks with CBD and THC. And just this week, Tilray closed on a deal to acquire a 662,000-square-foot cultivation facility from Natura.
Once this acquisition is final, Manitoba Harvest will be a wholly-owned subsidiary of Tilray. It will continue its supply chain process and retail partnerships, but will work with Tilray to develop CBD wellness products and new food products. Certainly with this sort of powerhouse team, Tilray will have an upper hand in the hemp and CBD food market. But with so many other cannabis and food and beverage partnerships — including Constellation Brands' 38% stake in Canopy Growth and Molson Coors' controlling interest in HEXO, it's anyone's guess who will emerge the true winner.
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