Everyone wants to be first-to-market with a cannabis-infused beverage. Keith Dolo and Sproutly may be winning the race.
Sproutly Canada, Inc. (CSE:SPR) (OTCMKTS:SRUTF) President and CEO Keith Dolo believes that most people recognize cannabis is transforming into a Consumer Packaged Goods industry, especially with the continued growth of the CBD market. According to him, as margins shrink and product bases grow wider, the industry will need people that understand how CPG companies operate.
“They operate in a different framework and a different mindset mentality,” he told PotNetwork in a recent telephone interview. “And, as much as the people that brought the majority of the cannabis companies to where they are today, they’re not the teams that will really launch these companies, I believe, on a global scale.”
To prepare for cannabis’ next phase, Dolo’s team looked outward to try and make Sproutly appear, in his own words, more like a beverage or edible CPG company.
In that vein, the company went out and made what could only be considered rock star hires. They picked up two of the largest names in Consumer Packaged Goods, capitalizing on a trend which has seen a slew of mainstream executives move into the cannabis industry.
In December, Brian Semkuley joined Sproutly as their President; a seasoned executive with over 30 years experience working for Fortune 200 companies such as Kimberly-Clark, Anheuser-Busch InBev, and Labatt. That same month the company brought on Melise Panetta to the senior leadership team as Vice President of Sales and Marketing. She’s a veteran of SC Johnson and PEPSICO, Inc. and will focus on company branding, according to a statement released earlier.
“They have done nothing but provide structure, capacity, and capability to our management team and it really pointed us in the direction of showing us where we need to be over the next five to 10 years,” Dolo told PotNetwork.
More importantly, their hires mark a shift in the company moving forward. “You’ll see their touch on the company as we move down the path to start to partner and become an actual true CPG company,” he continued.
“It’s a very unique ingredient…”
Sproutly’s water-soluble cannabis solution, Infuz2O, can be formulated into everything from coffee to tea to water, with some analysts calling it the Holy Grail of cannabis beverages. These days, Dolo told PotNetwork, the company is still working on their formulation product catalog to make sure that it continues to grow.
“It’s a very unique ingredient that has just a plethora of examples of these products that it can be introduced to,” said Dolo.
And with a recent Bought Deal Financing completed, Dolo noted that Sproutly’s next move is to focus on partnerships, both locally and on an international scale. Of course, that’s easier said than done sometimes. There’s a multitude of companies looking to break into the industry in some way right now, and choosing the right partner can be difficult, according to Dolo.
“If we wanted to roll down the path of having 10 to 15 different supply agreements with small little regionalized, provincial state-wide types of companies, we could probably already be on that path, but we really want to select our correct, true partner that has the ability to launch the best products under the best marketing and distribution channels that are out there,” said Dolo. “And, as a result, it takes a little bit longer to pick those good, solid partners because we want partners that are going to be here for 10 years, not ones that are trying to figure out their own way into the industry as well.”
Most recently, the company partnered with Global Canna Labs Limited, the Caribbean’s largest medical cannabis producer. Located in Montego Bay, they are the largest tier-3 producer of cannabis in Jamaica. It’s one of the geographies for which Sproutly acquired the infusion rights.
“We’re both excited to continue to move down the path to create Jamaican-branded beverages with our very unique water-soluble solution that, then, we can export directly from Jamaica,” said Dolo. According to him the product can be sold in Jamaica or exported to Europe or any other country Jamaica allows for export.
“A great global partner, a company that’s making waves of their own in the industry, but a true partner that wants to work with us on our product portfolio,” Dolo said of Global Canna Labs.
Outside of that deal, the company is taking its time and making decisions slowly. But, according to Dolo, an announcement should be forthcoming within the next 60 to 90 days regarding a Canadian partner.
He promised more announcements as the year goes on.
“We are wholeheartedly now just focused on the business from a water-soluble partnership standpoint,” he said.
“...we’ve actually done it…”
“There’s another piece that everybody always forgets about; we’re still a Licensed Producer, Dolo told PotNetwork the way a father a remembers to share all of his children’s achievements. “We are one of the few Licensed Producers here in Canada.”
At the time, he was awaiting their first harvest, which was set to come down in a few days. Dolo noted that Sproutly had the added advantage of being a grower who could supply themselves. In fact, their wholly-owned subsidiary, Toronto Herbal Remedies, which has a 16,600-square-foot state of the art production facility with an ACMPR License to cultivate is set up more like a pharmaceutical grade production house than a typical grow-warehouse.
It’s a technological marvel that helps Sproutly control both the quantity and quality of product, as Dolo mentioned in a previous interview with PotNetwork a few months back.
And as he said more recently, it’s just one of the many things that make Sproutly stand out from the crowd.
“The technology,” he said matter-of-factly, is where the company really shines. According to Dolo, where other companies are using nano-encapsulation technologies or emulsion technologies that are 40 or 50 years old, Sproutly is light years ahead of the game.
“When we sit down with CPG companies and companies that have been shopping around to figure out who their partners are going to be, everybody’s talking about different ways they can make a beverage, and everybody’s talking about different ways they can make the caramels and the chocolates,” said Dolo.
He continued: “We’re one of the few companies that we get the consistent feedback of showing up and being able to actually show these people the product formulation, the product catalog, and maybe even a sample testing of what these products look like. We’re one of the few companies that’s already actually solved the answers to the quick onset/offset and the formulation capabilities on cannabis getting into different beverages. So we’re heads and shoulders above the game versus just talking about what we think that we can do.”
With confidence, Dolo added, “we’ve actually done it, now we just have to figure out our partners to take it to market.”
“So, now people have another milestone to look forward to if you will.”
Last year was a rough one for the marijuana stock market, with many investors taking a significant hit. Still, it didn’t stop a number of companies, including Sproutly, from going public, striking while the proverbial iron was hot.
Dolo reminds people that cannabis stocks are driven by retail investors. He told PotNetwork that while institutional investors are out there, a lot of them are sitting on the sidelines.
“What that does is that causes volatility in the stock because you have to keep a retail investor happy with news releases and, as you get close to any bad news, a lot of retail investors take things off the table and shuffle the money around,” he said.
“It’s a different industry, he continued. “It’s not volatile because of cannabis; it’s volatile because of the type of investor that invests within the cannabis space, is what I’m going to say.”
The good news is that he sees the market stabilizing this year. At issue, according to Dolo, was the fact that October 17 rolled around, leaving many investors to go “what’s next?” But now that things are stabilizing, the answers have become more clear, as has the next milestone, according to Dolo.
“I think [the marijuana stock market] stabilized a little bit, it’s nice to see it kind of rebounding a little bit on a daily basis,” said Dolo. “I think we’re all now looking forward to the next launch of edibles and beverages kind of closer to the end of 2019 here. So, now people have another milestone to look forward to if you will.”
He continued: “And I think you’re going to start to see companies have to start to put out numbers. You can’t just say we’re going to be this company; you actually have to be that company and your quarterly earnings are going to be more important than anything out there, moving forward.”
“It will really be the consumer-facing year for us…”
The next 12 months for Sproutly are about partnerships and about continuing that transition to a CPG company. From partnerships come brands, along with marketing and distribution channels.
“It will really be the consumer-facing year for us to show them the partners that we’re partnering with are ones that they already know, they’re existing brands that are out there, so that they can look forward to ingesting our product later in 2019,” said Dolo when asked to peer into his crystal ball and predict the future. “That’s from a Canadian standpoint.”
Globally, Sproutly has big plans as well.
“From an international standpoint, you’ll see us partner and brand with companies like Global Canna Labs out of Jamaica and then obviously look into the European and potentially the country of Australia as well,” said Dolo.
One place they probably won’t be, however, is in the U.S.
“We’re going to continue to watch it very closely,” Dolo said of the U.S. cannabis and hemp markets. “Obviously, the U.S. being one of the largest if not the largest global market for the hemp-based products to be distributed within.”
“I’d be remiss to say I’m not looking at it, but we are not aggressively jumping into it at this point,” he continued.