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Canopy Aims To Premiumize Portfolio Amid Entry-Level Price Pressure

August 9, 2022

Smiths Falls, Ontario-based Canopy Growth also reported earnings for the quarter ended June 30, in which net revenue was down 1.5% to C$110.1 million ($86m), with adjusted EBITDA showing a loss of C$75 million ($58m). The company faced headwinds in the Canadian recreational market, where revenue fell to C$39 million in the quarter, down 35% from the same period last year. Canadian medical sales fared similarly, dropping 29% to C$52.4 million. Global cannabis net revenue was also down 29% to C$66.2 million. Among Canopy’s other consumer products, revenue from Storz & Bickel vaporizers fell 35% to C$15.6 million but sports drink BioSteel did well, rising to C$18 million in revenue.

Canopy Growth attributed the losses to “the continuing impacts of price compression resulting from increased competition and lower sales in the value-priced dried flower category.” Those headwinds were partially offset by a product mix that’s tilting more toward premium offerings—Canopy launched 11 new premium flower and pre-roll products in the quarter. The company’s drinks portfolio was also a highlight, with strong consumer demand for Tweed Iced Tea and Fizz lineups as well as the recent additions to the Deep Space brand.

“Through advancements in our North American brand led strategy we delivered a record quarter from BioSteel and maintained #1 share in the premium flower and pre-rolled joint segment, while driving growth of our premium Doja and mainstream Tweed brands,” said CEO David Klein. “As our U.S. THC ecosystem continues to strengthen with Acreage operating in the recreational cannabis market in New Jersey, along with the expansion of Wana across North America, we remain focused on delivering a robust pipeline of innovation aligned to what consumers are looking for—premium, infused, and ready to enjoy.”—Danny Sullivan

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