Hill Street Beverage Co. Investor Deck - May 2018 TSX-V: BEER (pending)
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Hill Street Beverage Co. Investor Deck May 2018 TSX-V: BEER (pending)
Forward Looking Statements, blah blah blah.
Certain statements included or incorporated by reference in this presentation constitute forward-looking statements or forward-looking information under applicable securities legislation.
Such forward–looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers
are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking statements or information typically contain
statements with words such as "anticipate", "believe", "expect“, "plan", "intend", "estimate", "propose", "project“, “seek”, “continue”, “forecast”, “may”, “will”, “potential”, “could”, “should”
or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this presentation include, but are not limited to, statements
or information with respect to: business strategy and objectives; acquisition plans and the timing thereof; capital expenditures; net revenue; operating and other costs; and taxes.
Forward-looking statements or information are based on a number of factors and assumptions that have been used to develop such statements and information but which may prove to be
incorrect. Although Hill Street Marketing Inc. (the “Company”) believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance
should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. If you read this far, let our CEO know and he
will give you a free bottle of Brut. In addition to other factors and assumptions which may be identified in this presentation, assumptions have been made regarding, among other things: the
impact of increasing competition; the general stability of the economic and political environment in which the Company operates or plans to operate; and the ability of the Company to obtain
qualified staff, inventory and equipment in a timely and cost-efficient manner.
Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to
differ materially from those anticipated by the Company and described in the forward-looking statements or information.
The forward-looking statements or information contained in this presentation are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward-looking statements
or information contained in this presentation are expressly qualified by this cautionary statement.
Our lawyer said this stuff is “Important”.
And really, how can you disagree? It’s a disclaimer. It’s for our protection!
2
The Market
Hill Street is planning to compete in both “Alcohol Free”
and “Cannabis-Infused” market segments.
This is a similar strategy employed by the big brewers in
Europe following prohibition.
They advertised alcohol-free beer because it remained
illegal to advertise beer with alcohol for the next 50 years.
Think “Pokerstars.net” vs. “Pokerstars.com”
3
$7B in Canada by 2020*** - $55B in USA****
2016 High Times Survey : Beverages are the #1 preferred Delivery format
…but availability of appealing options is the biggest barrier.
$12.7B - 13%
29% $22.6B
25%
# of Canadians who Size of Ancillary 2017 Growth in Drop in Alcohol
want to try edibles market Edible Sales in US Sales
Deloitte** Bloomberg **** Econ. Prof. Alberto Chong,
Ipsos*
Georgetown U.
“ … edibles, concentrates and beverages will soon transform into primary consumer products
m o r e t h a n t h e c a n n a b i s b u d i t s e l f .” - Euromonitor
*https://globalnews.ca/news/3767729/women-non-smokers-millennials-edible-marijuana/ **Source: Deloitte, 2016, Recreational Marijuana – Insights and Opportunities
***Source: FinancialPost.com, May 8, 2018, Cannabis Sales to Top Hard Liquor by 2020
****Source: https://www.bloomberg.com/news/articles/2016-09-12/cannabis-industry-to-expand-to-50-billion-by-2026-analysts-say 4
An “Unserved" Market
US Federal Gov’t stats show 44% or
119MM Adult Americans on a
prescription drug regimen.
Statistics Canada indicates that
42% of Adults Aged 40-72
take prescription medication.
All of the top brewers
(Diageo, AB Inbev, Carlsberg, Heineken, Sapporo, Molson Coors, etc.)
expect alcohol free to be up to
20% of sales
by 2025*.
*Beverage Daily Feb 2015 5
(And doesn’t taste
Competition is very good either!)
extremely limited
Few of these brands do any visible marketing,
and there are no craft or vintage brands.
Largest non-alcoholic wine brand is Fre (Sutter Home Estates).
Volume annually in N. America is 3,000,000 cases. (Not pictured.)
MolsonCoors’ Exel sells avg. 750,000 cases per year in Canada.
The market leader is O’Doul’s (AB Inbev).
Annual volume in North America is >15,000,000 cases.
The biggest news in 20 years is Budweiser Prohibition Brew.
They spent >$20,000,000 in media and sold about 600,000 cases
in year one.
A rising tide lifts all boats…
6
An exploding category
Beer
Domestic production =
Alcohol Free
- 2.4%
+19% yoy Domestic sales =
yoy
Category Growth
*(alcohol free beer, wine, cocktails, mixers, and cider)
Vs.
- 0.7% yoy
55% vs. 34% Total national sales =
AF Beer % of total sales yoy -0.4% yoy
Sales per capita over 10 years
+27%yoy -10%
Growth in AF beer sales
According to Beer Canada
According to Nielsen
Alcohol free beer and wine, if produced properly and infused with cannabis, are the
ideal adult alternative to alcohol 7
Why Invest in Hill Street?
• Pure-play, low-cost option in burgeoning market with lots of
torque (anticipate post-raise market cap of
Our Strategy Pre-Cannabis legalization: Enhance the Alcohol-Free experience through beer and wine brands that take Alcohol-Free seriously for those not wishing to drink alcohol. Post-Cannabis legalization: Distribute these same brands with “infusion” labels. No change to taste/calories/appearance. Brand building like Pokerstars.net Driving volume during the Pre-Cannabis Legalization phase: 1) Traditional retail and foodservice: target of 14,000 stores by 2020, creating a new category for fine vintage alcohol-free wine and craft beer, invest $500K annually in listing fees, 100% growth annually in revenues at 60% gross margin. 2) Ecommerce via Highly targeted online marketing campaigns with Health Promotion partners whose audience are under doctor’s orders not to drink: Canadian Liver Foundation, March of Dimes, Arthritis Society, Prostate Cancer Canada, Movember, Canadian Cancer Society, ZoomerMedia, and others. 9 14
Health& CharityPartners Media Partners
Our expanding portfolio of strategic partners will help build our brand! 20Endorsement
WeightWatchers has endorsed our full product line. The program launched February 8,
2018 with an email announcement to 460,000 subscribers.
Initial results were extremely positive with open rates of 47.3%, compared to the
average range of 30-50%. Click thru rate was 1.6%, vs our target of 0.12%.
Conversion rate was 5%, as predicted, with over 40% of customers purchasing a $720 value subscription.
Weight Watchers Canada has over 230,000 monthly attendees to meetings at their centres across the
country.
Their SmartPoints logo will appear on all of our products.
21Craft Beer Strategy Our Craft Brewed Lager is the world’s first alcohol free craft beer, and the flagship of a complete line of craft brewed alcohol-free beer launching in 2017. Our Lager won Gold Medals 2017, 2015 and 2014 at the US Open Beer Championship, and Silver in 2016. It won the Retail Council of Canada’s Grand Prix Award for Best New Product of 2014. We are planning production of over 40 styles of alcohol free craft beer, enough to meet the most demanding taste profile. 10
Macro Beer Strategy Our Designated Draft beer is the 2017 winner of a Silver Medal and a 2016 winner of a Bronze Medal at the US Open Beer Championship. It is designed for everyday beer drinkers, representing 82% of the beer market, with a flavour profile of a great American Pilsner. We expect this brand, and others like it, to become upwards of forty percent of our total sales. The new packaging on the right will be launched Spring 2018. 11
Wine Strategy Vin(Zero) is currently listed in nearly 4,000 retail stores in Canada. We are also importing a new line of varietals under the Vintense brand name, bringing our portfolio to over 20 brands, more than any other marketer of non- alcoholic wines. We have seven varietals of Vin(Zero) brand wine including Merlot, Cabernet Sauvignon, Shiraz, Chardonnay, Sauvignon Blanc, and Sparkling Rose and Brut. We also have over 30 new products under exclusive import license from Neobulles SA, including Vintense, Origin, Oena0, and Chapelle Ste-Anne. President’s Choice De-Alcoholized Wine is now available in all Loblaws and related stores. Current forecasts for this brand are in excess of 700,000 units per year. 12
Progress in Licensing and Production
Hill Street has retained
Cannabis Compliance Inc.
and
David Hyde & Associates,
two the world’s leading experts in licensing and
security with nearly ¾ of all successful licenses
issued through their services,
to assist us with our application
to Health Canada to become a
licensed processor of cannabis
Non Binding LOI provides rights for Canada and an option infused beverages.
for the US Market, while we pursue our cannabis licenses.
Hill Street’s infused beverages taste virtually identical to their alcohol free counterparts.
13Our Facility
VinFirst Innovative Packaging
is our Shareholder / Partner
for producing cannabis Established relationships
infused and alcohol free wine with local and
and beer. international producers.
This is an existing facility Existing 15,000 sq ft
which is being licensed as a facility.
processor of cannabis under
Hill Street Beverage Co.
This facility has capacity for 3.8MM cases of wine. 1l of wine every 0.6sec.
This represents over $100MM revenue potential without requiring expansion
14Financial Projections
HSBevCo Capital Raise $5M HSBevCo Capital Raise $10M HSBevCo Capital Raise $30M
100,000 100,000 100,000
80,000 80,000 80,000
60,000 60,000 60,000
000 CAD $
000 CAD $
000 CAD $
40,000 40,000 40,000
20,000 20,000 20,000
0 0 0
-20,000 -20,000 -20,000
FY19 FY20 FY21 FY19 FY20 FY21 FY19 FY20 FY21
Gross Revenue 7,000 20,038 44,802 Gross Revenue 10,000 35,800 59,872 Gross Revenue 30,000 63,361 90,191
Gross Profit 4,614 12,243 25,925 Gross Profit 6,591 16,640 30,899 Gross Profit 19,772 36,631 52,889
Expenses 6,830 9,827 14,942 Expenses 8,934 12,981 18,249 Expenses 33,909 31,136 37,751
EBITDA -2,216 2,416 10,983 EBITDA -2,343 3,660 12,650 EBITDA -14,137 5,494 15,138Capitalization Table
Issued and Outstanding
Basic Shares 51,635,093
Warrants* 8,674,800
Total Outstanding 60,309,893
Use of Proceeds
Facility
Marketing, Promotion & Advertising
New Listings
US Expansion for AF beverages
*All warrants outstanding strike at $0.30 and expire between December 2019 and February 2020
16TTM 2018E 2019E
2018E 2019E
Comparables Ticker
Market Cap TTM Revenue
($MM) ($MM)
Revenue
($MM)
Revenue
($MM)
Price/Sales Price/Sales Price/Sales
Edibles and Non-Inhalables
Tinley Beverage Company TNY $74.10 $0.10 -- -- 1025.4x -- --
Koios Beverage Corporation KBEV $6.44 $0.00
Friday Night, Inc. TGIF $135.30 $6.50 -- -- 21.0x -- --
Gabriella's Kitchen -- $15.90 $1.80 $6.40 $25.00 9.1x 2.5x 0.6x
Nutritional High International EAT $116.50 $1.20 -- -- 99.9x -- --
Average $69.65 $1.92 $6.40 $25.00 288.85x 2.5x 0.6x
Median $74.10 $1.20 $6.40 $25.00 60.45x 2.5x 0.6x
Licensed Producers
Canopy Growth Corporation WEED $5,974.10 $69.80 $271.90 $772.10 85.6x 22.0x 7.7x
Aurora Cannabis, Inc ACB $4,830.30 $31.10 $208.80 $509.40 155.5x 23.1x 9.5x
Aphria, Inc. APH $2,214.60 $30.60 $120.90 $434.60 72.4x 18.3x 5.1x
MedMen -- $2,135.90 -- $157.70 $576.40 -- 13.5x 3.7x
Average $3,788.73 $43.83 $189.83 $573.13 104.5x 19.2x 6.5x
Median $3,522.45 $31.10 $183.25 $542.90 85.6x 20.2x 6.4x
Hill Street Beverage Co. BEER $9.00 $2.10 $2.01 $7.00 4.3x 4.5x 1.3x
The Company produces cannabis and Tinley Beverage is the parent The Company operates several brands, MedMen is a large-scale cannabis
hemp-infused products such as the company to three brands ofcannabis- and has a range of flower, vaporizer holding company in the United
FLÏ Edibles, FLÏ Concentrates, and the infused drinks. Hempify offers non- and other direct THCproducts, along States with current operations in
Stone Free line of hemp-based, non- psychoactive CBDdrinks in prominent with a range of CBD-infused topicals, four states across cultivation,
psychoactive health products. retail chains across all fifty states. tinctures and capsules. production and retail lines. 17Executive Team
Terry has 30 years experience in
Marketing and Advertising, serving
most recently as Chief Marketing
Officer for MDC Partners
(NASDAQ:MDCA), the largest
Canadian marketing services company
with $1.3Bn in revenues and over Our Brand Pedigree
17,000 employees. He was the co-
founder of Adcentricity; EVP, Digital
at Mandrake; and a board
member/investor in six private and six
Terence M. Donnelly public corporations, including two TSX
Chief Executive Officer listed companies
Hinta Chambers Doug Taylor Bruce Anderson June Nicholson David Pullara Brian Bolshin
Chief Financial Vice President, Chief Information Vice President, Chief Marketing Co-Founder &
Officer Sales Officer Strategic Officer President
Partnerships
18Board of Directors & Advisors
Chuck Porter Craig Binkley Kevin Ruddle
Creative & Brand Advisor CEO, Northstar Research Vice President,
Founder, Crispin Porter + Bogusky Former President, Zyman Consulting Vinfirst Packaging
AdAge Agency of the Year 5 times President, Minute Maid USA Lead Investor in Hill Street
Sole winner of AdAge Agency of the CMO, Coke Mexico
Decade
YouTube Campaign of the Decade
Paul Rosen Jack Fraser Rudy Sawatzky
CEO, Breakwater Capital VP Finance SSense Founder & CEO
CEO, Pharmacan Capital (Now Cronos CFO/COO iTravel2000, TravelZest PLC Grey Forest Homes & Vinfirst
Group) Packaging
19Summary
Alcohol free beverage segment one of fastest
growing verticals globally.
Hill Street’s pre-eminent position verified by
awards and major contracts.
Cannabis licensing process under way.
Current Retail Distribution partners have
potential for $100 million/year.
Health Industry Marketing Partners have
potential for $100 million / year.
Current valuation factors in only limited
penetration.
20Thank you.
For more information,
Contact our CEO, Terry Donnelly.
He will be happy to buy you an ice cold alcohol-free beer.
terry@hillstreetbevco.com
+1-416-543-4904
21You can also read
