Elixinol Global Makes Hemp Play in $215 Million Vegan Food Sector

The health and wellness industry is now worth an estimated $4.2 trillion worldwide.

Consumers beginning to embrace vegan options, and are increasingly willing to pay more for healthier food. In fact, market research conducted by Euromonitor International has found that by 2020 Australia's packaged vegan food market alone could be worth more than $215 million.

The same study also confirmed that Australia has the third fastest growing vegan market in the world, behind China and the United Arab Emirates.

Australian consumers are also starting to pull back from sugar, according to a 2016 Nielsen Global Health and Ingredient Sentiment Survey, which found that approximately 44% of Australian consumers avoid it when making food purchasing decisions. This is 10% higher than the global average.

Author Sarah Wilson says that is because "Australians are quick to pick up on trends, particularly those that start online."

"This comes from our outward-looking focus. The Australian consumer is 3-4 years ahead of the UK consumer, and fruit juice is regarded as added sugar by many. With clean eating, we had the backlash that is now spreading across the UK a few years ago."

"But the pendulum appears to have swung back to a more reasonable, practical approach—Australians are embracing the notion of simply eating real food," Wilson said.

With more restaurants offering vegan-friendly options, and the building hype around organic eating, superfoods, and macrobiotic gut health, it seems likely that this trend will only continue. Australian consumers have already become comfortable with a variety of health food staples, including almond milk, kale, and quinoa.

But, if cannabis stock Elixinol Global Limited (ASX:EXL) has its way then the next big health industry superfood may end up being hemp.

Disclaimer: Past performance is not an indicator of future performance.

Elixinol operates in the industrial hemp industry and produces skincare, food and wellness products,  CBD based dietary supplements, and medicinal grade marijuana. The company first listed on the ASX in January 2018, and has been performing strongly, following an initial nine-month period where the share price remained relatively stable.

The pot stock was trading at 1.520 in early September, and by March this year it had powered to 3.450 a share, more than doubling its' value. This uncharacteristic growth was driven by strong sales from Elixinol's consumer products division, primarily hemp-based food and dietary supplements.

The company was one of the few ASX-listed pot stocks to make a profit in 2018, following a successful IPO that saw it raise $20 million in funding. The cannabis stock has been seeing a robust expansion in sales revenue over the last year, and in 2018 it reported $37.2 million in earnings, up 141% from the 2017 financial year.

That's Grow Biz

To date, the cannabis stock's performance has been well received by investors, and the company has already purchased a $2.6 million property in northern NSW for the development of a state-of-the-art manufacturing facility. According to the CEO of Elixinol Global, Paul Benhaim, the development of the cultivation site is an important step in developing its' medicinal cannabis business in Australia.

"We are confident that our expertise in creating high-quality cannabis formulations in the USA under our Elixinol brand will position Nunyara to take a leading role in the establishment of the Australian medical cannabis industry," Benhaim said.

"Our purchase of this unique property is simply another step in that process."

While the hemp food business has existed in Europe for decades, it was only legalised for sale in Australia in 2017. Following its legalisation several businesses are now attempting to jump on board, but Elixinol is well positioned to take on competitors thanks to its' pre-existing reputation in the US market.

The company intends to boost sales further in 2019 by focusing on the continued penetration of mainstream distribution channels in the US, as well as increasing its' digital marketing presence to grow direct-to-consumer online sales. Elixinol have big plans to expand, and the company is betting on hemp-based food products—such as hemp burgers, hemp flour, oil and seeds—becoming a mainstay of Australia's organic food industry.

Elixinol Global's Australian health food division—known as Hemp Foods Australia—also did particularly in 2018, with the company eventually reporting earnings of $4.9 million, a 51% revenue increase on the previous year. The company released a number of new products in 2018, including a range of snack bars under the Essential Hemp™ brand, and the SATIVA Skin Care line.

Speaking to Your Money Live, Elixinol Global CEO Paul Benham said that hemp-based food products are beginning to become more commonplace in Australia.

"People are recognising that [it] doesn't have to get you high, it doesn't need to be intoxicating," Benhaim said.

"Who wants to feed their child cannabis that gets them high? No one wants to do that. But who wants to put a healthy burger on the barbie—most people want to do that. [Most of our products] are great for young people, old people, you can use heavy machinery for example…In fact, it's healthy for you."

"The main reason that people get it now is because of the medical benefits. People are really finding that… they're really getting benefits from pain, anxiety, sleep… it's very exciting," he said.

Planting the Seed

Elixinol's next big move will be to launch a play in the in the frozen and ready meal food market, which has been forecast to see solid growth in 2019. The company has already launched a line of hemp burgers this year, and further branded products are expected to be launched into the plant-based ready-to-eat meal market in the near future.

The company's first-mover advantage will likely offer investors a competitive edge on other pot stocks operating in the same space, as it will allow Elixinol to firmly entrench itself in the Australian health food market before the sector becomes crowded with hemp food products.

While it is still unclear if Elixinol Global's bid for a worldwide "hempire" will eventually go up in smoke, it has a better chance than most at delving into the weeds of the increasingly profitable health food market.

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Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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