- Dixie Khiron JV Corp. formally established to bring
Dixie Brands portfolio of
cannabis-infused products to Latin
America
- Dixie and Khiron are 50/50 JV co-owners
- JV introduces Khiron's Kuida® brand to the U.S. market, with
special focus on the Hispanic population of almost 60 million
- JV has full access to Dixie's portfolio of more than 100 SKUs
sold over the past 9 years in world's most mature cannabis
markets
- Dixie-Khiron to enjoy first-mover advantage in Latin American
market of 620 million people
- LatAm cannabis market estimated to reach $12 billion by 2028 (source: Prohibition
Partners)
DENVER and TORONTO, March 14,
2019 /CNW/ - Dixie Brands Inc. ("Dixie") (CSE:
DIXI.U), (Frankfurt: 0QV), (OTC:
DXBRF), one of the cannabis industry's leading consumer
packaged goods ("CPG") companies, and Khiron Life Sciences
Corp. ("Khiron") (TSXV: KHRN), (OTCQB: KHRNF), (Frankfurt: A2JMZC), a vertically integrated
cannabis leader with core operations in Latin America, have signed a definitive
agreement (the "Agreement") relating to the joint venture
(the "JV") the companies announced on January 30, 2019. With the execution of the
Agreement, a new company called Dixie Khiron JV Corp.
("Dixie-Khiron") has been established, 50% owned by each of
Dixie and Khiron.
Dixie-Khiron will take advantage of the complementary strengths
of both companies to manufacture and distribute cannabis-infused
products to the Latin American market. By combining Dixie's
portfolio of more than 100 cannabis-infused products with Khiron's
established footprint throughout Latin
America, the companies aim to capture first-mover advantage
and establish leadership in the region of 620 million people.
In accordance with the Agreement, Dixie will also manufacture
and distribute Khiron's Kuida® brand of cannabidiol (CBD)-based
cosmeceuticals in the United
States. Kuida is expected to be broadly distributed and is
expected to have particular appeal to the growing U.S. Hispanic
population, estimated at nearly 60 million.
Chuck Smith, President and CEO of
Dixie Brands, stated, "In the weeks
since we announced this partnership it has become even more clear
that the strengths of our two companies are perfectly aligned to
lead in Latin America. Our
marketing and regulatory teams have analyzed the opportunities and
requirements across the region, and we are completing detailed
business plans to secure 'first mover' advantage. By leveraging our
existing infrastructure, intellectual property, expertise and
distribution channels, we are moving quickly to introduce products
to selected markets."
Latin American Market
Latin America is among the
world's fastest-growing cannabis markets. According to Prohibition
Partners, cannabis spending in the region is expected to reach
US$12 billion by 2028, and Quintiles
IMS estimates that there are approximately 68 million potential
patients in Latin America that
could benefit from medical cannabis. With six megacities of 10
million or more located in Latin
America (UN Data Booklet: The World's Cities in 2018), the
market offers an attractive, super-urban and informed consumer base
for cannabis-infused consumer products, with an awareness of
recognized global brands and access to a vast retail network that
has seen five-year retail revenue growth averaging 10.6% per year
(Deloitte Touche Tohmatsu: Global Powers of Retailing 2018).
Alvaro Torres, Co-founder and CEO
of Khiron Life Sciences, stated, "Our timing for launching this
joint venture is ideal. Latin
America is poised to become one of the world's largest
cannabis markets, due to continuing legalization across the region
and the increasing affluence of the population, particularly in
urban areas. Despite these attractive dynamics, there are
relatively few significant competitors, as many companies have
targeted other global regions. We believe we have an opportunity to
establish ourselves as a dominant player in this market."
Khiron operates in the Colombian market and has incorporated
entities and obtained certain licenses with an objective to enter
the Peru, Chile and Mexico markets. The Company has announced
plans to enter Brazil and
Uruguay through its proposed
acquisition of NettaGrowth International Inc. ("NettaGro").
Upon completion of the NettaGro transaction, Khiron will be
positioned in markets which collectively represent more than 430
million of the total Latin American population of 620 million
people.
Country
|
Population
(millions)
|
Brazil
1
|
208
|
Mexico
|
124
|
Colombia
|
48
|
Peru
|
32
|
Chile
|
18
|
Uruguay
1
|
3
|
1. Subject to
completion of proposed acquisition of NettaGrowth International
Inc.
|
Cannabis-Infused Product Portfolio
Dixie's extensive portfolio of intellectual property, developed
and successfully commercialized over the past nine years, includes
SKUs in each of the major categories of cannabis-infused
products. Dixie and Khiron anticipate that the majority of
these products can be introduced to the Latin American market in
their current formulations or with minor adaptations to reflect
local preferences. The following table lists a sample of
Dixie's existing products corresponding to several mainstream
consumer categories, along with Euromonitor International estimates
of the total Latin American market size in 2018.
Category
|
Latin American
Market Size in 2018 (US$ billions) 2
|
Existing Dixie
Products
|
Health &
Wellness
Beverages and Soft Drinks
|
$105.01
|
Carbonated and still
flavored drinks including: Lemonade, Fruit Punch, and Root
Beer
|
Health &
Wellness
Packaged Food
|
$39.74
|
Gummies, Soft Taffy
Chews, Chocolate Bars, Fruit Tarts
|
Skin Care
|
$9.63
|
Mild pain-relieving
lotions, balms and bath soaks
|
Human
Supplements
|
$4.36
|
Effervescent drink
mixes, dissolvable tablets, nutrient- enriched aqueous wellness
sprays
|
Pet Food and
Products
|
$14.96
|
Canine and feline
food toppers and soft chews
|
|
2. Source:
Euromonitor International
|
Hillcrest Merchant Partners Inc. acted as advisor on the JV
and, upon completion of the JV, will receive an advisory fee
payable equally by the parties in shares of Dixie and Khiron.
Completion of the JV and the commencement of operations is
subject to the receipt of all required regulatory approvals,
including final acceptance of the TSXV.
About Dixie Brands,
Inc.
Dixie Brands Inc., through its licensed partners, has been
formulating award-winning THC and CBD-infused products since 2009.
Currently operating in five U.S. states, it is expecting to double
its manufacturing and distribution capabilities in 2019 in the U.S.
as well as expand internationally, including Canada and Latin
America. Dixie leads the global industry in the development,
packaging design, product innovation and quality control for the
commercial production of cannabis infused products. While Dixie
started with a single flagship product, the Dixie Elixir (a
THC-infused soda), it is now one of the industry's most recognized
consumer brands, expanding to over 100 products across more than 15
different product categories representing the industry's finest
edibles, tinctures, topicals and connoisseur grade extractions, as
well as world-class CBD-infused wellness products and pet dietary
supplements. Dixie's executive team has been instrumental in the
formation of the cannabis industry for recreational and medicinal
use, serving as founding members on several national
regulatory and business-oriented industry organizations. To
find out more about Dixie's innovative products, or about how Dixie
is building the future of cannabis, visit www.dixiebrands.com.
About Khiron
Khiron Life Sciences Corp. is positioned to be the
dominant integrated cannabis company in Latin America. Khiron has core operations in
Colombia and is fully licensed in
the country for the cultivation, production, domestic distribution,
and international export of both THC (tetrahydrocannabinol) and CBD
(cannabidiol) medical cannabis. In May
2018, Khiron listed on the TSX Venture Exchange, becoming
one of the first Colombian-based medical cannabis companies to
trade on any exchange globally. Khiron is led by Co-founder and
Chief Executive Officer, Alvaro
Torres, together with an experienced executive team,
and a knowledgeable Board of Directors that includes former
President of Mexico, Vicente Fox.
Further information on Khiron can be found
at https://investors.khiron.ca/
CAUTIONARY NOTES
Market and Industry Data
This news release contains market and industry data and
forecasts that were obtained from third-party sources, industry
publications and publicly available information. Third-party
sources generally state that the information contained therein has
been obtained from sources believed to be reliable, but there can
be no assurance as to the accuracy or completeness of included
information. Although management of Dixie and Khiron believes it to
be reliable, neither independently verified any of the data from
third-party sources referred to in this news release, or analyzed
or verified the underlying studies or surveys relied upon or
referred to by such sources, or ascertained the underlying economic
assumptions relied upon by such sources.
Forward-Looking Information
Certain statements in this news release may constitute
"forward-looking information" and "forward-looking statements"
within the meaning of applicable securities laws. These statements
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
Khiron or Dixie and its subsidiary entities or the industry in
which they operate, to be materially different from any future
results, performance or achievements expressed or implied by such
forward looking statements. When used in this news release, such
statements use words such as "may", "will", "expect", "believe",
"plan" and other similar terminology. These statements reflect the
current expectations of Dixie and Khiron management regarding
future events and operating performance and speak only as of the
date of this news release. These forward-looking statements involve
a number of risks and uncertainties. Forward-looking statements
herein include, but are not limited to, statements regarding the
receipt of required regulatory approvals, including from the TSXV,
the proposed production, distribution and sale of cannabis-infused
products in Latin America, and the
proposed manufacture and sale by Dixie of Kuida® products in the
U.S. Neither Dixie nor Khiron undertake any obligation to comment
on analyses, expectations or statements made by third-parties in
respect of Dixie or Khiron, their respective securities, or
financial or operating results (as applicable). Although each of
Dixie and Khiron believe that the expectations reflected in
forward-looking statements in this news release are reasonable,
such forward-looking statements are based on expectations, factors
and assumptions concerning future events which may prove to be
inaccurate and are subject to numerous risks and uncertainties,
certain of which are beyond both Dixie's and Khiron's control.
These risk factors are discussed in detail under the heading "Risk
Factors" in Dixie's listing statement and Khiron's Annual
Information Form, both filed on SEDAR. New risk factors may arise
from time to time and it is not possible for the management of
Dixie or Khiron to predict all of those risk factors or the extent
to which any factor or combination of factors may cause actual
results, performance or achievements of Dixie or Khiron to be
materially different from those contained in forward-looking
statements. Given these risks and uncertainties, investors should
not place undue reliance on forward-looking statements as a
prediction of actual results, as actual results may differ
materially from those contemplated by these statements.
The forward-looking statements contained herein are based on
certain key expectations and assumptions, including that: (i) there
will be no material adverse competitive or technological change in
condition of either Dixie's or Khiron's business; (ii) there will
be a demand for Dixie's and Khiron's products that both Dixie and
Khiron have accurately forecast; (iii) there will be no material
adverse change in Dixie's or Khiron's operations, business or in
any governmental regulation affecting Dixie, Khiron or their
suppliers; and (iv) entering into certain agreements contemplated
by the Agreement, including a license agreement for Dixie-Khiron's
use of Dixie intellectual property in Latin America and a manufacturing and
distribution agreement for Dixie's sale of Kuida® products in the
U.S.
These forward-looking statements are made as of the date of this
news release. Neither Dixie nor Khiron undertake any obligation,
except as required by law, to update or revise any forward-looking
statements contained in this news release, whether as a result of
new information, future events or otherwise, other than as required
under applicable securities legislation.
The CSE has neither approved nor disapproved the contents
of this news release.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this press
release.
SOURCE Dixie Brands, Inc.