The Chief Executive of Molson Coors Brewing Co. (T.TPX.A) said Thursday that the company expects to “secure a meaningful share” of the cannabis-infused beverage market once edibles are legalized in Canada next year.
"We will be in a ready-to-go position and, you know, one of the first on the playing field as the market opens up," said Mark R. Hunter in a conference call with analysts after the company released its third-quarter earnings report.
Recreational cannabis products such as dried flower and pre-rolled joints became available for legal purchase in Canada on October 17, but edibles won’t be legalized until next year (2019). Estimates suggest the cannabis market could be valued somewhere between $7 billion and $10 billion, he said, with about 20% to 30% of that coming from cannabis-infused, non-alcoholic beverages.
Even if one assumes the low end of both those projections, the beverages segment could be worth about $1.5 billion, said Hunter. Molson and Hexo Corp. launched Truss, a joint venture, earlier this month. Truss will develop the beverages for the Canadian market following legalization. The company is already exploring what beverages it plans to offer, said Hunter, and will be able to share more details early next year.
Molson Coors Canada shares rose $5.01 or 6.3 per cent to $84.50 in afternoon trading on the Toronto Stock Exchange. The shares of its holding company, Molson Coors Brewing, rose $4.72 U.S. or 8.1% to $63.93 U.S. on the New York Stock Exchange.
The company topped expectations as it reported its third-quarter profit increased compared with a year ago, helped by higher sales. The brewer, which keeps its books in U.S. dollars, earned $338.3 million U.S. or $1.56 per diluted share for the quarter ended September 30. That compared with a profit of $287.0 million or $1.33 per diluted share a year ago.
Net sales totaled $2.93 billion, up from $2.88 billion in the same quarter last year. The company said its underlying profit for the quarter amounted to $1.84 per diluted share, up from $1.37 per diluted share in the third quarter of 2017. Analysts, on average, had expected a profit of $1.59 per share, according to Thomson Reuters Eikon.
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