Proactiveinvestors USA & Canada Hill Street Beverage Company Inc. https://www.proactiveinvestors.com Proactiveinvestors USA & Canada Hill Street Beverage Company Inc. RSS feed en Sat, 15 Jun 2019 19:49:18 -0400 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[News - Hill Street makes big bet on cannabis-infused drinks ]]> https://www.proactiveinvestors.com/companies/news/221588/hill-street-makes-big-bet-on-cannabis-infused-drinks-221588.html Hill Street Beverage Co. (CVE:BEER) is a Canadian company that makes alcohol-free beer and wine as well adult-format beverages.

Thee company offers red, white, sparkling, and rose wines under the Vin(Zero) and Vintense brands. It sells beer under the Hill Street Craft, Designated Draft and MADD virgin craft brand names.

Hill Street’s beer and wine lineup have won numerous medals and accolades in North America, 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.

CEO Terry Donnelly said about 90% of the company’s revenue comes from wine sales, even though ironically its stock ticker symbol is BEER. He also says its products can be found in about 4,000 grocery and retail stores in Canada and the US as well as through its website.

But Toronto-based Hill Street sees big growth opportunities beyond non-alcoholic wine and beer. The 14-year-old company wants to expand its business model to include the production and the sale of potentially lucrative cannabis-infused beverages -- and it is willing to pay big bucks to get a foothold.

Inflection Points

The Canadian government is expected to legalize cannabis edibles, including infused drinks for adults, by October 17 -- a year after the country legalized medical and recreational marijuana.

And High Street has laid the groundwork to start cashing in once the government gives the greenlight on cannabis edibles and beverages.

In late May, the company announced it is set to pay C$16 million for Saskatchewan-based OneLeaf Cannabis Corp as well its assets and debt. But what High Street really wants is OneLeaf’s 4,478 square-metre, indoor-growing facility near Regina.

In addition to cultivating cannabis, the production plant is built to European Union standards and will house Hill Street's bottling, canning and infusing lines.

"We needed to find a licensed producer to produce our future cannabis-infused beverages, in order to address the impact of Health Canada's edible regulations," Donnelly said. “Combined with our continued brand-building activities and media partnerships, we're optimistic about expanding our award-winning non-alcoholic beverages to become award-winning cannabis-infused beverages."

The TrueLeaf acquisition isn’t a done deal, however. Hill Street is proposing a non-brokered private placement of units to raise up to C$5 Million, at a price of C$0.20 per unit.

Donnelly has said that he hopes their cannabis-infused products will be on the shelves by February 2020 -- but that depends on how the Canadian government rolls out edible legalization.

Currently, Hill Street and other companies in the edible space have no idea what the final regulations will be nor do they know if the government will allow sales to commence immediately following legalization or will delay sales months later. “It takes months to build a bottling line,” Donnelly said.

In the meantime as it prepares for edible legalization, the company has co-founded the Cannabis Beverage Produces Alliance, a not-for-profit industry coalition to address Canada's edible regulations. And the company has started shipping its alcohol-free drinks to Quebec.

Outlook

According to Hill Street’s fiscal third-quarter results released in late May, the company had gross revenue of C$603,854, a 66% increase year-over-year, and net revenue of C$428,355, a 73% increase year-over-year.

The company as of March 31 had working capital of $1.2 million and a cash position of $442,970. And no debt. However, Hill Street saw a net loss of $1.1 million, compared to a net loss of C$600,000 in the prior-year quarter.

"Hill Street's third quarter was largely focused on the expansion and marketing of the alcohol-free product line, coupled with preparations, analysis, and planning for the launch of cannabis-infused beverages upon legalization," Donnelly said.

Contact the author: patrick@proactiveinvestors.com

Follow him on Twitter @PatrickMGraham

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Wed, 05 Jun 2019 15:51:00 -0400 https://www.proactiveinvestors.com/companies/news/221588/hill-street-makes-big-bet-on-cannabis-infused-drinks-221588.html
<![CDATA[News - Hill Street Beverage CEO sees opportunity as beer industry reels after latest tariffs strike Mexican goods ]]> https://www.proactiveinvestors.com/companies/news/221324/hill-street-beverage-ceo-sees-opportunity-as-beer-industry-reels-after-latest-tariffs-strike-mexican-goods-221324.html President Trump announced a plan Thursday to slap Mexico with a 5% tariff, a move that has markets reeling and is already having an effect on the American beverage industry.

In a series of tweets Thursday and Friday, Trump said that tariffs would be placed on all Mexican goods starting on June 10 and gradually increase as a penalty for not preventing illegal immigrants from entering the United States.

On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,..

— Donald J. Trump (@realDonaldTrump) May 30, 2019

According to a White House statement, tariffs will increase by 5% each month up to 25% on October 1 until the administration decides the issue is resolved. Last year, the US imported about $350 billion in Mexican goods. 

The market has reacted swiftly. The Dow industrials have fallen nearly 1% to below 25,000, and beverage companies that import products from Mexico are dropping.

For US consumers, Mexican beer and liquor is likely to get more expensive if the tariffs go into effect. That would hurt companies such as New York-based Constellation Brands Inc (NYSE:STZ), which produces Corona and Modelo beer brands in Mexico. Its shares were down 6.5% mid-Friday to $175.11.

On the other hand, smaller North American craft brewers could see a benefit. Terry Donnelly, CEO of Vancouver-based Hill Street Beverage Co (CVE:BEER) (OTCMKTS:HSEEF) believes that beverage industry players that don’t import from Mexico may see an uptick.

“The big players who import beverages from Mexico will be hit hard,” Donnelly said. “The little guys have an opportunity to take up the market share that’s offered to them as a result."

WATCH: Hill Street Beverage preparing to navigate the waters of cannabis infused beverages

Among those concerned for Constellation is Bank of America Merrill Lynch analyst Bryan Spillane.

"A majority of its beer revenues and profits are derived from Mexican imports (excluding Ballast Point and Funky Buddha)," Spillane wrote in an analyst note, according to a published report. "We estimate ~65% of STZ beer [cost of goods sold] are Mexico based. Assuming no mitigation (e.g. cost reductions, peso devaluation, price increases) we estimate a 5% tariff would be a 4% headwind to [earnings per share] and 25% tariff would result in a 20% headwind."

Dutch brewer Heineken NV (OTCMKTS:HEINY), which owns Dos Equis and Tecate, dropped 2.8% to $52.34. Diageo plc (NYSE:DEO), the Don Julio tequila producer, is down 0.8% to $167.96.

Molson Coors Brewing Company (TAP), which doesn’t operate any Mexican brands, managed to climb 0.8% to $54.77. The Boston Beer Company Inc (NYSE:SAM) slipped almost 1% to $314.98, and New Age Beverages Corporation (NASDAQ:NBEV) lost 3.1% to $5.14.

Hill Street produces alcohol-free beer and wine, and is preparing cannabis-infused products which will debut when edibles become legal in Canada. Its stock edged up 0.3% to US$ on OTC markets and receded 6.5% to C$0.22 on the TSXV.

Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com

Follow him on Twitter @andrew_kessel

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Fri, 31 May 2019 12:08:00 -0400 https://www.proactiveinvestors.com/companies/news/221324/hill-street-beverage-ceo-sees-opportunity-as-beer-industry-reels-after-latest-tariffs-strike-mexican-goods-221324.html
<![CDATA[Media files - Hill Street Beverage preparing to navigate the waters of cannabis infused beverages ]]> https://www.proactiveinvestors.com/companies/stocktube/13021/hill-street-beverage-preparing-to-navigate-the-waters-of-cannabis-infused-beverages-13021.html Tue, 16 Apr 2019 10:10:00 -0400 https://www.proactiveinvestors.com/companies/stocktube/13021/hill-street-beverage-preparing-to-navigate-the-waters-of-cannabis-infused-beverages-13021.html <![CDATA[Media files - Hill Street Beverage Company's products to be in 7,000 stores by March 2019 ]]> https://www.proactiveinvestors.com/companies/stocktube/11474/hill-street-beverage-company-s-products-to-be-in-7000-stores-by-march-2019-11474.html Wed, 05 Dec 2018 15:32:00 -0500 https://www.proactiveinvestors.com/companies/stocktube/11474/hill-street-beverage-company-s-products-to-be-in-7000-stores-by-march-2019-11474.html