Creso Pharma Ltd (ASX:CPH, OTCQB:COPHF) has made significant progress across a number of cross-selling opportunities and contract manufacturing initiatives between its subsidiaries and proposed acquisition target, Sierra Sage Herbs LLC (SSH).
The company will shortly send 35,000 CannaQIX 50 lozenge products from Creso Pharma Switzerland to SSH in the US which will be made available for e-commerce sales through its leading Good Goo brand.
In addition, both companies have completed sample contract manufacturing of a suite of sport CBD-based products through SSH’s existing contract manufacturer in the US
Looking ahead, these developments have the potential to increase Creso’s sales footprint in the US, as well as expedite new product launches.
“Value accretive initiatives”
Cresco CEO and managing director William Lay said: “Our work with the team at Sierra Sage Herbs has continued to progress significantly ahead of the completion of the proposed acquisition.
“Over the last few weeks, we have been working with Jodi and her management team to progress initiatives that will allow Creso Pharma to commence a number of value accretive initiatives on closing of the transaction.
“The initial shipment of Creso Pharma Switzerland products marks an important milestone and will allow us to test the market, as well as learn how consumers will engage with the company’s product suite.
“This will build an important foundation for us as we progress towards larger product launches upon closing of the transaction."
Potential cross-selling opportunities
CannaQIX is Creso’s unique, standardised nutraceutical product containing hemp oil, vitamins and zinc, delivered in a sugar-free lozenge formulation
The product is expected to initially launch through SSH’s e-commerce channels with the group having an established online customer base of more than 150,000 consumers.
Creso is confident that this initial product launch will provide insight into consumer demand for its Swiss-manufactured product in the US and build a strong foundation for future product launches through SSH’s e-commerce channels.
Online presence
SSH’s online sales have continued to grow in recent weeks with e-commerce sales up 69% since February 3, 2022.
In addition, the company generated more than 3.1 million online impressions between February 6, 2022, and March 7, 2022 – highlighting a strong online presence ahead of the sale of Creso Pharma products.
Sales are anticipated to commence shortly, to test consumer demand and preferences before the closing of the SSH and Creso transaction which is expected in the June quarter, after which larger-scale sales and manufacturing will begin.
Contract manufacturing of ImpACTIVE
To progress product development and lower overheads associated with manufacturing, SSH’s US-based contract manufacturer has been able to prepare samples of ImpACTIVE products for review in the US.
The products are now being shipped to ImpACTIVE in Canada, ahead of a proposed launch in the June quarter of 2022.
SSH’s contract manufacturer has a dedicated product line set up for the group, which Creso Pharma plans to utilise for ImpACTIVE products which have the potential to lead to lower lead times on orders and more favourable order quantities compared to the company’s existing manufacturers.
Creso Pharma and SSH continue to collaborate on opportunities to launch the ImpACTIVE brand across SSH’s established e-commerce channels and through key retail relationships over the coming months.
Lay adds: “We are also very pleased with the completion of an initial ImpACTIVE product line through the group’s contract manufacturer.
“By leveraging SSH’s manufacturing relationships, as well as marketing, branding, e-commerce and big box retailer expertise and networks, we expect to significantly accelerate impACTIVE’s route to market.
“We anticipate launching these products to consumers in the coming months, which will provide another revenue stream for the company.”