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In a latest analyst notice, Pablo Zuanic from Cantor Fitzgerald provided an replace on the efficiency of Canada’s hashish Licensed Producers within the August quarter, primarily based on information obtained by the market scanner Hifyre.
For Canadian leisure publicity, Zuanic recommends OW-rated hashish corporations OrganiGram Holdings Inc. OGI and Village Farms International VFF.
“Up to now in calendar 3Q (Jul/Aug common each day gross sales), Organigram and VFF’s Pure Solar Farms (gross sales up 8% and 12%, respectively, vs. market development of 5%) proceed to outperform the Canadian leisure market,” Zuanic stated. “There may be actually a tie between the High 3 gamers, with Hexo HEXO at 8.3% share within the August month, Organigram at 8.2%, and Tilray TLRY at 8.2%.”
Highlights: Gross sales Progress Tendencies In Canada
- Based mostly on Hifyre and StatCan information, Zuanic famous that leisure retail gross sales in Canada are up 21% YTD by means of August, “forward of most U.S. states”, though when it comes to per capita leisure spending (within the ~$95 vary), “Canada lags most U.S. leisure states.”
- Canadian leisure gross sales fell 1% in Aug MoM after 7% MoM development in July. Every day common gross sales in July and August are 5% above 2Q22.
- When it comes to the main codecs, flower represented 40% of August gross sales, pre-rolls 31%, vape 14%, edibles 5%, concentrates 4%, oils 3%, drinks 2%.
- Flower gross sales are down 3%, after 2% seq development within the second quarter of 2022; pre-rolls are up 19%, after 27% development in 2Q; vapes are up 7%, after 4% development in 2Q; and edibles are up 4%, after 9% in 2Q.
“Common flower costs in Canada have dropped from CA$10.14/gram in 2019 to CA$5.14 in August 2022 (US$3.96/gram),” Zuanic stated. His mannequin assumes 18% YoY development for all of 2022 (from +23% in 1Q22 to +14% by 4Q22), regardless of the slower YoY Aug development (+15% vs. +22% Jan-Aug).
“We don’t see a must revise our full-year projections,” Zuanic added.
Relating to the main LPs, Organigram is +8% (vs. +13% in calendar 2Q) and Tilray +5% (vs. -3%); PSF +12% (flat).
Organigram: ‘Will Not Shy Away From The Worth Section’
OGI leisure retail gross sales for the August quarter elevated to a brand new excessive of $97.7 million, up 15% sequentially and 41% yearly. OGI “Flower” class accounts for 64% of gross sales ($62.6 million), adopted by pre-roll 17% ($16.3 million), edibles 13% ($13.1 million), vapes 3% ($3.2 million), and concentrates 3% ($2.6 million).
“Throughout the quarter, all of OGI’s fundamental classes elevated gross sales QoQ: flower +9%, pre-roll +19%, edibles +17%, vapes +54%, and concentrates +18%,” Zuanic defined.
Administration defined the corporate “is not going to draw back from the worth section the place there may be most quantity.”
The corporate’s common value per gram of $4.43 is priced at 14% under the Canadian common value of $5.14. OGI’s worth flower manufacturers account for 71% and 17% of flower gross sales.
Roughly 90% of OGI’s flower gross sales are derived from bigger format packages (72% 7g packs, 17% 28g packs). OGI pre-roll class elevated gross sales by 19% sequentially, partly “influenced by seasonality,” administration informed Zuanic.
The class “Edibles” has emerged as a big contributor to gross sales, rising from greater than $1 million within the Aug 2021 qtr to $13.1 million within the Aug 2022 quarter. Administration attributed this development to “the corporate’s distinctive skill to promote 100mg THC edible merchandise, which efficiently navigates Canadian laws of 10mg on account of them being categorized as ingestible extracts.”
Tilray: Concentrates Up
After three sequential quarters of detrimental development, TLRY leisure retail gross sales for the August quarter elevated 11% to $97.9 million, down 37% yearly in comparison with $156.2 million within the August quarter of 2021.
“Flower” stays the most important class, accounting for 41% of gross sales ($39.8 million), adopted by pre-roll 35% ($34.1 million), vapes 14% ($14.1 million), concentrates 5% ($4.9 million), oils 2% ($2.3 million), edibles 2% ($1.7 million), and drinks and topicals over 1%, respectively (over $1 million respectively).
Concentrates accounted for essentially the most sequential development, growing gross sales by 32% QoQ., adopted by topicals +26%, flowers +19%, and pre-rolls +7%. “All different classes skilled detrimental development,” Zuanic stated.
TLRY’s common flower value per gram decreased 10% QoQ from $4.63/g to $4.20/g, at the moment priced 18% under the Canadian common value of $5.14/g.
“Aside from macro developments, the primary purpose for value deflation is the class mixture of manufacturers,” Zuanic defined.
“Premium flower model, Damaged Price ($9.33/g), decreased share of its portfolio from 19% within the Could quarter to 13% this quarter, and Good Provide ($3.74/g) elevated share from 57% within the Could quarter to 70%. Massive codecs (7g+) now account for 70% of flower gross sales in comparison with 60% within the prior quarter, and 28g packages accounted for 62% of flower gross sales (54% within the prior quarter). When it comes to strains TLRY, continues to have essentially the most numerous portfolio with 77 distinctive strains, of which the High 5 account for 51% of gross sales,” concluded the analyst.
Picture by Edge2Edge Media on Unsplash.
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