Matt Bottomley: Good morning, everyone. I just wanted to follow up with some of Irwin’s comments with respect to when you’re asked about further value proposition out of Canada, and specifically with respect to ultimate market share, at least in the medium term. I know on the back of the sort of Tilray Aphria combination, there was a hope of maybe getting as high as 30%. So, given the fact that you’re 500 basis points ahead in terms of market share, who’s number two? How much of sort of increased market share is things that are in your control, whether it’s through innovative products versus just continuing to wait for this market shakeout, which seems to be taking longer than everyone had anticipated?
Irwin Simon: Listen, great question. As I look at it and say, we have a 12.5%, 13% market share and I look at everybody else, there is about another 10% market share. And then I look at the other 800 LPs with 1%, 0.5%, there’s a lot — there’s just a lot of growers out there. I think what we’re seeing is either a lot of consolidation or a lot of small LPs going away. Originally, I’d come out there and said I wanted high double digits or in the 20%s or 25% market share. You got to remember, we’re number one in Canada — number one in Ontario, number one in Quebec, and number one in British Columbia, which represents 60% — over 60% of the population. So, I think there’s good opportunities to grow market share. But on the other hand, where I look at big opportunities is in the beverage category, the edibles category.
I think there are some big opportunities in vaping going forward. And you heard what I said before, more and more consumers — the market is growing in Canada. The problem is there’s still way too many LPs, there’s still high costs with exercise tax. And from a standpoint here, I think as we can got to grow in other categories and that’s the big thing and how do we become that low-cost producer. The other big thing in the Canadian market which we have to focus on is building brands. And it’s hard to build brands when the government doesn’t allow you to advertise. So, how do we advertise within the marketplace and ultimately be within the guidelines of what Health Canada does. You heard what I said before, I think we have a great infrastructure and great leadership team in Canada.
We now have a Belleville facility, which we acquired from Molson’s that can do non-alcoholic drinks, that can do energy drinks, can do water drinks and can do other drinks. So with that, do we expand into other categories and other adjacencies to our cannabis business? But I’m looking for some conditional major growth coming from the beverage category, which I think, from a size standpoint, and I think there’s still a big opportunity in vapes and edibles category in Canada.
Matt Bottomley: Okay. Thanks for that.
Irwin Simon: Thank you.
Operator: Our next question is from the line of Michael Lavery with Piper Sandler. Please proceed with your question.
Michael Lavery: Thank you. Good morning. Just wanted to come back to the beverage alcohol segment and focus on the recently acquired brands. I know you gave some of the gross margin drivers of just how you’ve got line of sight on improvement there, but it sounds like you’re really expecting to turn the top-line around as well. It looks like those are running down close to 10% or so. Can you just get us a little more confident that you’ve got some plans that can make that happen? And we’ve seen the U.S. consumer be pretty fickle sometimes in craft beer especially. So, what is it that would excite them and get these brands back to growth?
Irwin Simon: Good question. I think, again, let’s come back and look at our legacy brands of SweetWater, Montauk, Alpine, Nelson and Green Flash. You heard what I said, we grew 10% in our legacy beer businesses in the last quarter. So, we’re growing our current legacy businesses, which is important. If you come back and look at the brands we acquired from ABI, there is some great brands in there. I mean, Shock Top, we talked to people about Shock Top, we talked to people some of the stuff in Blue Point here in the Northeast, Breckenridge Brewery, 10 Barrel. So, we really have some great brands that from a regional standpoint, that may be only sold in certain parts of the country and where do we expand. Our distributor base is excited about it.
Our retail base is excited about it. Our convenience stores excited. So that’s what makes me feel good as we’ve been out there making presentations and talking to our customer base right now. There’s a lot of interest. The second thing is we have a pipeline of innovation that we have moved on very quickly. And these brands have not had innovation done with them in the last couple of years. So, I feel good about the innovation. I feel good about the distribution. I feel good about getting the distributors excited. And now as we bring this together and there’s a real focus on it with a dedicated sales team, a dedicated national accounts team, we’re putting pressures on our distributors. I feel we can really get the growth. The next thing is, as we bring these into our facilities and we look at some of the cost synergies, we can get our margins back to where our traditional margins are with our current brands.
