Harvest One Cannabis Inc is seeing its transition to a global health and wellness company gaining momentum.
By offering a broad range of products under its two leading subsidiaries Dream Water and LivRelief, the Vancouver, British Columbia-based company is helping its customers to sleep better and live healthier.
“Our team is focused on making people's lives better,” said Gord Davey, CEO of Harvest One. “We want our customers to have a better night's sleep so that they have a great next day.”
A great night's sleep helps in better digestion, anxiety, and overall performance the next day, Davey told Proactive. “Our products are meant to help people's lives better take away problems with sleep, pain, and anxiety.”
READ: Harvest One says its Dream Water and LivRelief brands reach agreement with Flat River Group to increase e-commerce distribution in the US
Harvest One was established on values of being humble, happy, and better performing. “Those are the values that our team lives by each day,” Davey said. “We're about sustainability, and providing all-natural products.”
Davey has led teams through transitions and restructuring for companies like Coca-Cola and Red Bull, placing them successfully in the retail and e-commerce markets.
“One of the reasons why I got into the cannabis space is because I believe that the cannabis plant is medicinal. I believe in the products that we carry,” he said.
Davey’s experiences in CPG products have led him to gracefully pivot from being a strictly cannabis-oriented production facility to that of a health and wellness consumer packaged goods company.
He sat down with Proactive to talk about Harvest One’s plans for 2022 and its successful business model.
Proactive: What led to the transition from being a cannabis-focused brand to a health and wellness company?
Gord Davey: We have two extremely strong brands LivRelief, and Dream Water, and both are CPG brands that are in a marketplace to help people. When we first started Harvest One, we had a plan to be fully integrated. The plan was to produce, cultivate, manufacture cannabis, and be in that type of market, as well as develop consumer packaged goods brands, and infuse them with cannabis. In that plan, there's a lot of capital involved.
Because there were so many people cultivating, processing, and developing cannabis, we took the approach to be a health and wellness company that is uniquely positioned in the cannabis space. We sell our products in retail and e-commerce markets. Then, as markets are regulated, we can infuse it with cannabis in various aspects.
We have a very strong team, and we focus on sales, marketing, distribution, and innovation. With that in mind, we have established our commercial plan around those deliverables rather than having high-risk operational facilities.
Can you tell us more about the product line under the two subsidiaries, LivRelief and Dream Water, capturing a market share in pain relief, sleep and anxiety? What are you offering to consumers and what else is lined up for this year?
There are two brands. Dream Water has been in the marketplace in North America for the past 11 years. We have taken that product and expanded its distribution in the US and Canada and global markets.
Our products are available in about 55,000 retail outlets across North America. We distribute to seven different countries, and have a footprint in more countries than that. Amazon is our largest customer for Dream Water. Our LivRelief brand are non-infused products are sold over the counter (OTC), primarily in Canada in about 4,500 stores across the country.
LivRelief also has a line of products infused with cannabis, sold in seven provinces across Canada. We are the number one and number three best-selling SKUs (stock keeping units) in Ontario for our infused LivRelief topicals. Moreover, we're continuing to pick up market share, distribution, and retail outlets.
For 2022, we have innovation lined up for both Dream Water and LivRelief as we continue to extend our flavors, as well as consumption methods.
We will launch new ways to take Dream Water. For instance, we've just launched Dream Water sleep gummies in the United States, and it's going very well. Other concepts like Dream Water immunity and Dream Water beauty are also in the pipeline. Dream Water will also be infused with cannabinoids.
With our LivRelief brand, there will be innovation like infusing heat in it, or a LivRelief that may have cooling effects. There will be a global expansion of LivRelief this year. We are planning a launch of our LivRelief products into the United States, into Europe, and in other countries as well around the globe.
The company reported strong revenue in 1Q 2022, alongside other strong numbers like a 62% decrease in liabilities and improved EBITDA (earnings before interest, tax, depreciation, and amortization). What have been the driving factors for the growth both in the US and internationally?
We've been very focused on sales, marketing, distribution, and innovation, alongside strong commercial plans. We have channel strategies in groceries, in mass stores, in drugstores, along with an e-commerce strategy.
We have been able to execute specific deals with specific programs, for instance, programs with Publix, Circle K, Loblaws, Shoppers Drug Mart, Kroger, and Wegmans. We have grown our products exponentially inside those stores, and have invested in a more robust marketing and awareness program. When you are investing in that, more people know about your product. What we found out is that our products have high customer retention.
We have influencers like Post Malone, Demi Moore, and the Kardashians who use our product. We don't pay them anything, they just post for us. In addition, Besides, increasing our channel strategies and our customers within those channels strategies has really led to that growth. I will say it's sustainable growth and sustainable margin growth with our customer base. We've been able to add value to those products and maintain a healthy margin as we go forward.
Does Harvest One have a strong balance sheet to carry plans this year as the company looks to expand its footprint globally?
We have a clean, strong balance sheet. We are extremely focused on fiscal responsibility, thanks to chief financial officer Jack Tasse. Our expenses have come down and they continue to come down because we watch every dollar that goes out. We do a return on investment (ROI) for every dollar that we're spending, and expect a certain amount of revenue back. These are sustainable growth patterns that were in 1Q and 2Q.
Like many other companies, we were adversely affected by the coronavirus (COVID-19). We haven't lost sales, we've just deferred those sales into 3Q and 4Q because we couldn't get deliveries out to certain global partners due to COVID. But our margins in 2Q continue to be strong. Our EBITDA continues to be strong, and our expenses continue to come down.
Harvest One recently adopted the ‘lean assets model’ to scale its future profitability. How has this model helped the company so far?
We've been following this model for the past 18 months, and have been pivoting from a high capital intensive company.
We have de-risked and removed costs through a lean model where we have contract manufacturers to produce our products. We own, control, and coordinate our intellectual properties inside our company. We own the formulations, trademarks, and brands. We just have a lean model where contract manufacturing partners produce for us.
Dream Water is made with a fantastic partner out of Dallas. All of our LivRelief products are made by a company in Quebec. All our infused products are made by a company out in the west. All partners are GMP-certified, and have high standards in production. We don't carry assets that cost us money to run, and put all our efforts into sales, marketing, innovation, and distribution.
Contact Ritika at ritika@proactiveinvestors.com