Creso Pharma Limited (ASX:CPH) has completed its acquisition of Sierra Sage Herbs LLC.
This highlights a major milestone for Creso Pharma providing a maiden entry into the US market, an established product suite of plant-based and CBD products, additional revenue channels, in-country supply chain and manufacturing, broadened distribution and relationships with major US retail groups.
Creso Pharma has already secured a number of non-binding agreements to distribute SSH’s products in Australia, Taiwan, Singapore and other territories, as well as advanced plans to considerably progress growth.
Near term opportunities and synergistic benefits
The US CBD market: The US is a large and addressable market for Creso Pharma, expected to grow to US$12Bn by 2026.
In recent years, Creso Pharma has developed a suite of CBD products that are underpinned by best-in-class intellectual property, which are currently sold across Europe. The acquisition of SSH allows the company to develop new products, under SSH’s established goodgoo brand.
Creso Pharma will immediately implement work undertaken to date to expedite the combination of its Swiss IP and SSH’s local manufacturing expertise. The company plans to accelerate the broader launch of goodgoo products in the US, leveraging the group’s existing in-house marketing expertise, brand recognition, US market knowledge and sales capability. It will utilise SSH’s relationships with established retail partners, alongside its existing direct to consumer customer base to scale operations.
Sale of non-CBD products outside the US
While Creso Pharma has built a range of international partners across the globe, some potential customers have witnessed barriers due to regulation around CBD. The acquisition of SSH provides Creso Pharma with a proven, non-CBD product range as well that the Company can leverage to drive additional sales growth.
This has been shown recently through various agreements which have underpinned the expansion of the Company’s international footprint.
Acceleration of ImpACTIVE’s operations
The acquisition provides a strong foundation to advance Creso Pharma’s sports focused CBD range, ImpACTIVE. ImpACTIVE products will be marketed and sold through SSH’s existing channels, which has the potential to result in sales uptake and relationships with large retailer groups.
The company anticipates the launch of ImpACTIVE’s products in the coming weeks. SSH also has an in-country manufacturing partner with a dedicated product line for the group. This has the potential to lead to lower order lead times and favourable minimum order volumes.
Ongoing product development: Both parties have a strong track record in product development and will collaborate to bring new ranges and delivery methods to market. Creso Pharma and SSH management are in discussions around a number of new opportunities, including the functional mushroom sector to drive growth.
Creso Pharma will also leverage SSH’s existing personnel and their expertise in consumer products to bring new products to market upon completion of the transaction.
Completion of this transaction highlight a major growth opportunity for Creso Pharma. In recent months, we have been working closely with SSH’s management team and delivered a number of agreements that can unlock value for shareholders,” CEO and Managing Director William Lay said.
“We plan to expedite similar opportunities in the near term to increase SSH’s existing revenue profile and utilise the group’s established footprint to benefit other business divisions.”
