Distell eyes CBD infused drinks market with acquisition of minority stake in South African CBD brand RETHINK

SOUTH AFRICA – South African wine, cider and spirits company Distell seeks to expand its product offering with the acquisition of 20% stake in RETHINK CBD brand formulated by Releaf Pharmaceuticals.

Releaf Pharmaceuticals is a South African pharmaceutical company dealing with Complementary and Alternative Medicines (CAMs) category of products such as cannabidiol (CBD).

The investment gives Distell access to RETHINK’s product range which include oils, capsules and teas infused with CBD.

Also the alcohol beverage company will soon be able to offer CBD-infused drinks and benefit from the increased demand of the products, reports Reuters.

“The cannabis sector is still in its infancy and primed for growth as legislation to control and legalise certain aspects of usage is developed.”

Distell CEO Richard Rushton

The global cannabidiol market was valued at US$ 4.6 billion globally in 2018 and is expected to grow at a compound annual growth rate (CAGR) of 22.2% from 2019 to 2025, according to a report by Grand View Reasearch.

The demand for the product is driven majorly by its medical and wellness benefits attached to it.

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Moreover, growing product adoption and utilization owing to government approvals is a major factor anticipated to drive the demand for cannabidiol infused products.

In South Africa the floodgates were opened in May 2019 when the minister of health enabled non-prescription access to certain cannabidiol (CBD) products with the publication of a 12-month “exemption notice” on these products. Further amendments were undertaken earlier in 2020 making CBD a legal product in the country.

“The cannabis sector is still in its infancy and primed for growth as legislation to control and legalise certain aspects of usage is developed,” Distell CEO Richard Rushton said.

He added that the investment was in line with its strategy to explore new expansion opportunities.

Invenfin, the venture capital arm of Distell’s largest shareholder, Remgro, also took a 20% share in RETHINK.

Distell and Invenfin said their partnership with Releaf Pharmaceuticals could produce a range of CBD brands and market leadership both in South Africa and other major markets.

Distell is currently grappling with the impact of a ban on alcohol in South Africa, the third to be implemented since March last year as part of coronavirus restrictions.

But hefty investments made in prior years have helped its recovery. For instance, the number of outlets selling the company’s products elsewhere in Africa is on course to hit 32,000 up from 12,000 a year ago, giving Distell greater growth prospects beyond its home market.

In other related news, GES Labs, a world-class active ingredient extraction company based South Africa recently completed the establishment of state-of-the-art pharmaceutical laboratory in Cape Town.

The new facility is targeting to serve domestic and international markets with plant extracts including cannabinoids for use in food, beverages and pharmaceuticals.

This is an addition to the company’s beneficial health products and ingredients based on Hemp CBD, Pelargonium and lion’s mane mushrooms.

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