Flora Growth Corp. Launches THC-Infused Melo to Capture Booming $220 Million Beverage Market

Rhea-AI Summary

Flora Growth Corp. (NASDAQ: FLGC) has launched Melo, its first THC-infused beverage, entering the rapidly growing hemp beverage market. The product, developed through a joint venture with Peak, comes in four flavors and leverages Peak's emulsion technology. The U.S. hemp beverage market, valued at $220 million in 2023, is projected to exceed $1 billion by 2028, with a CAGR over 30%. Flora's distribution strategy includes traditional retail channels, liquor stores, and potential online sales across the United States. Recent data shows daily cannabis use (17.7 million users) now surpasses daily alcohol consumption (14.7 million users) in the U.S.

Positive

• Entry into fast-growing hemp beverage market valued at $220 million
• Strategic joint venture with Peak providing advanced emulsion technology
• Comprehensive distribution strategy across multiple channels
• Market projected to reach $1 billion by 2028 with 30% CAGR

Negative

• Entering highly competitive beverage market as a new player
• Success dependent on regulatory environment for hemp-based products

Insights

Market Research Analyst

The launch of Melo marks a strategic entry into the rapidly growing $220 million THC-infused beverage market, with significant growth potential as the sector is projected to reach $1 billion by 2028 at a 30% CAGR. The market dynamics are particularly favorable, with daily cannabis users (17.7 million) now exceeding daily alcohol consumers (14.7 million). Flora Growth's multi-channel distribution strategy, combining traditional retail with liquor store placement, positions them well to capture market share.

However, investors should note that Flora Growth's small market cap of $21.9 million indicates this is a speculative play in a highly competitive market. While the potential market opportunity is substantial, success will depend on effective execution, brand differentiation and the company's ability to scale distribution against larger competitors with deeper pockets.

Financial Analyst

The strategic importance of this launch extends beyond just product diversification. The THC-infused beverage market offers higher margins compared to traditional beverages and the joint venture with Peak provides important technological capabilities without significant R&D investment. The projected market CAGR of 30% through 2028 presents a substantial revenue growth opportunity for Flora, particularly important given their current market capitalization.

The comparison to the $252 billion U.S. alcohol market highlights the massive potential for market share capture. However, investors should carefully monitor initial sales traction and market penetration rates, as early performance will be important for this micro-cap company's valuation.

Fort Lauderdale, Florida--(Newsfile Corp. - October 24, 2024) - Flora Growth Corp. (NASDAQ: FLGC) (FSE: 7301) ("Flora" or the "Company") is excited to announce the launch of its first THC-infused beverage, Melo. This marks Flora's highly anticipated debut into the rapidly growing beverage market, an industry experiencing significant momentum in the Unites States.

Melo, a premium THC-infused beverage, is the result of a strategic joint venture between Flora Growth Corp. and Peak, a renowned provider of advanced cannabis-based products. The collaboration combines Flora's extensive marketing and distribution network with Peak's world-class emulsion technology, which ensures the seamless integration of hemp-derived ingredients into beverage formulations. Melo comes in four flavors - grapefruit, half & half lemonade iced tea, strawberry mango, and wild berries.

Flora's Beverage Approach

"Melo represents a forward-thinking approach to how we see the future of beverages. It's not just about entering a new market; it's about redefining what consumers expect from their drinks. We are combining the best of what nature offers with cutting-edge science to deliver a product that enhances everyday life, whether it's for relaxation after a long day or simply enjoying a moment of calm," noted Clifford Starke, Chief Executive Officer.

He added, "The beverage industry is ripe for disruption, and hemp offers a unique opportunity to innovate in ways that traditional beverages cannot. We see Melo as a catalyst for change. We believe this product will pave the way for a new category of beverages that resonate with consumers looking for more than just a drink - they're looking for an experience."

"Our entry into the beverage market is not just a business decision; it is a strategic move to align our brand with the growing consumer trends towards meaningful alternatives to alcohol. Melo is just the beginning of how Flora intends to influence this space, and we're excited to lead this transformation," concluded Mr. Starke.

The Beverage Market: A Burgeoning Opportunity

As the global beverage landscape evolves, the hemp-infused beverage segment has emerged as a significant growth area, particularly in the United States. Politico and Grand View Research, the U.S. hemp beverage market was valued at approximately $220 million in 2023 and is projected to surpass $1 billion by 2028, representing a compound annual growth rate (CAGR) of over 30%. This growth is driven by increasing consumer interest in natural and functional beverages, as well as the evolving regulatory environment that is gradually embracing hemp-based products.

According to the World Metrics Report, when compared to the established alcohol market, which reached $252 billion in the U.S. in 2022, the hemp beverage market may seem nascent. However, the potential for expansion is tremendous, particularly as more consumers seek alternatives to traditional alcoholic beverages. Hemp-infused beverages like Melo offer a unique value proposition, providing relaxation benefits without the psychoactive effects associated with THC or the health concerns linked to alcohol consumption. As the wellness trend continues to gain traction, the hemp beverage market is poised to capture a significant share of the overall beverage industry.

According to data analyzed by Carnegie Mellon University, daily or near-daily cannabis use is now more common than similar levels of alcohol consumption in the U.S. First-time daily cannabis use overtook alcohol, with roughly 17.7 million users compared to 14.7 million for alcohol.

Distribution Strategy: Reaching Consumers Across Multiple Channels

Flora Growth's comprehensive distribution strategy for Melo is designed to maximize the brand's reach and accessibility. Initially, Melo will be available through traditional distribution channels across the United States, targeting a broad demographic of consumers. Flora's established relationships with key U.S. distributors will play a crucial role in ensuring Melo's presence in major retail outlets and specialty stores nationwide.

In addition to traditional retail channels, Flora will strategically position Melo within liquor stores, tapping into an existing consumer base that is increasingly open to exploring non-alcoholic alternatives. This dual-channel approach will allow Melo to capture market share from both the traditional beverage sector and the evolving functional beverage space.

As part of its commitment to expanding Melo's footprint, Flora will also explore opportunities in online and direct-to-consumer sales, further enhancing the brand's accessibility and consumer engagement.

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About Flora Growth Corp.

Flora Growth Corp.'s mission is to become the leading NASDAQ small-cap international cannabis company. Flora is a cannabis-focused consumer-packaged goods leader and pharmaceutical distributor serving all 50 states and 28 countries with 20,000+ points of distribution around the world. For more information on Flora, visit www.floragrowth.com.

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Investor Relations:

Investor Relations ir@floragrowth.com

Clifford Starke Clifford.Starke@floragrowth.com

Media:

media@floragrowth.com

Cautionary Statement Concerning Forward-Looking Statements

This press release contains "forward-looking statements," as defined by U.S. federal securities laws. Forward-Looking statements reflect Flora's current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words "believe," "expect," "anticipate," "will," "could," "would," "should," "may," "plan," "estimate," "intend," "predict," "potential," "continue," and the negatives of these words and other similar expressions generally identify forward-looking statements. These forward-looking statements include, but are not limited to, statements about: Melo will be available through traditional distribution channels across the United States, targeting a broad demographic of consumers, Flora's established relationships with key U.S. distributors will play a crucial role in ensuring Melo's presence in major retail outlets and specialty stores nationwide, Flora will strategically position Melo within liquor stores, tapping into an existing consumer base that is increasingly open to exploring non-alcoholic alternatives, Melo to capture market share from both the traditional beverage sector and the evolving functional beverage space, Flora will also explore opportunities in online and direct-to-consumer sales, further enhancing the brand's accessibility and consumer engagement, and Melo will pave the way for a new category of beverages that resonate with consumers. Such forward-looking statements are subject to various and risks and uncertainties, including those described under section entitled "Risk Factors" in Flora's Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the "SEC") on March 28, 2024, as such factors may be updated from time to time in Flora's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov/edgar. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in Flora's filings with the SEC. While forward-looking statements reflect Flora's good faith beliefs, they are not guarantees of future performance. Flora disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based on information currently available to Flora (or to third parties making the forward-looking statements).

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/227657

FAQ

What is Flora Growth's (FLGC) new THC-infused beverage called?

Flora Growth's new THC-infused beverage is called Melo, available in four flavors: grapefruit, half & half lemonade iced tea, strawberry mango, and wild berries.

What is the projected market size for hemp beverages by 2028?

According to the press release, the U.S. hemp beverage market is projected to surpass $1 billion by 2028, growing from $220 million in 2023.

Who is Flora Growth (FLGC) partnering with for Melo's production?

Flora Growth Corp. (FLGC) is partnering with Peak, a provider of advanced cannabis-based products, through a strategic joint venture for Melo's production.

How will Flora Growth (FLGC) distribute Melo?

Flora Growth will distribute Melo through traditional retail channels, liquor stores, and potentially online and direct-to-consumer sales across the United States.