Flora Growth Corp. (NASDAQ: FLGC) Building Portfolio of Brands that Resonates with End Consumers as It Targets Margins and Profitability

  • Flora Growth is a global cannabis company building a connected, design-led collective of plant-based wellness and lifestyle brands
  • The company’s portfolio of brands is designed to deliver the most compelling customer experiences in the world
  • Through its M&A strategy, Flora Growth has brought on board brands like JustCBD, Vessel Brands Inc., Masaya, No Cap Hemp Co., and Mambe
  • Flora hopes to establish meaningful connections with consumers through these brands, which will enable it to increase its margins and profitability 

The cannabis industry has gone global, undergoing a sea change in commercialization, normalization, and liberalization. According to a report by New Frontier Data, this global expansion of legal access to marijuana has been driven by the “growing acceptance of the plant’s therapeutic value and the recognition of the industry’s potential as a catalyst for economic growth.” As a result, the report projects that global cannabis sales will grow from $23.7 billion in 2020 to an estimated $51.0 billion by 2025, representing a 16.6% legal market CAGR (https://ibn.fm/kwOi8).

In a May interview with Benzinga (https://ibn.fm/KXZzQ), Luis Merchan, Chair and CEO of global cannabis company Flora Growth (NASDAQ: FLGC), agreed that the cannabis trade will foundationally become international, presenting a massive opportunity for companies that wish to capture as much market share as possible. According to Merchan, however, only cultivators and companies that can achieve low production costs while maintaining high quality levels will be able to take up substantial market share. Through its licensed 100-hectare cultivation facility located on the outskirts of Bucaramanga, Colombia, Flora Growth is looking to achieve precisely this.

Located close to the equator, the facility receives about 13 hours of sunshine for most of the year, allowing the plants to grow in a natural and efficient setting sans the use of expensive greenhouses. This, coupled with the area’s fertile soils, favorable wind conditions, and skilled workforce, has enabled the company to achieve one of the lowest production costs relative to competitors located in North America (https://ibn.fm/UiBRl). But according to Merchan, these conditions only provide a “commodity gain.”

“In order for cannabis companies to take advantage of meaningful margins and profitability, you have to establish connections with the end consumer, and the only way to do that is through a brand that is well positioned that resonates with the end consumers,” explained Merchan. “At Flora, we have been able to build a portfolio of brands that is able to do that.”

Merchan’s statement underscores the company’s M&A strategy, which has brought several brands into its portfolio, including JustCBD, Vessel Brand Inc., Masaya, No Cap Hemp Co., and Mambe (owned by the company’s majority-owned Kasa Wholefoods Company). Combined, these brands provide direct access to about 500,000 consumers.

The acquisitions, which earned the Best M&A Deal award at Benzinga’s Cannabis Capital Conference held last month, have also brought in human capital that benefits Flora Growth as a house of brands. Singling out the advantages accompanying the late 2021 purchase of Vessel Brands Inc. as an example, Merchan, who was speaking in an interview with Rich TV Live (https://ibn.fm/oEDp7), underlined how the team at Vessel understands the cannabis consumer and brands as well as how to bring products to market and build relationships with consumers and communities. The acquisition, therefore, brought “that incredible know-how, including their experience on direct-to-consumer [relationships] across the entire portfolio of brands at Flora Growth.”

With the emergence and increased popularity of the ‘Experience Economy’ in which consumers now seek experiences above and beyond products and services, companies have had to incorporate redefined industry standards and best practices to differentiate themselves in their ultra-competitive spaces (https://ibn.fm/9ue0T). On its part, Flora Growth has sought to differentiate itself by leveraging the strengths of the brands in its portfolio to provide rich experiences and connections to consumers.

For more information, visit the company’s website at www.FloraGrowth.com.

NOTE TO INVESTORS: The latest news and updates relating to FLGC are available in the company’s newsroom at https://ibn.fm/FLGC

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