Dixie Brands Delivers 2018 Results and Opportunities Lie Ahead

Denver-based edibles and beverages producer Dixie Brands Inc. has reported that revenue increased 73% to $5.8 million in 2018.

Net loss widened from $4.3 million in 2017 to $21.2 million last year and the firm attributed that to various takeovers, listing charges and operational costs. Gross profit increased 92% to $3 million, while margins improved due to improved productivity and increasing sales in product lines carrying a better margin.

Dixie received gross proceeds of $25 million from an oversubscribed, non-brokered private placement completed on Oct. 1. It had a cash balance of $18.4 million on Dec. 31, 2018, and it believes this has set the stage for strong growth in 2019.

“We expect to generate growth across all areas of our business in 2019 as the market for cannabis-infused products continues to increase and we take advantage of our leadership position in the space,” said president and chief executive Chuck Smith.

It plans to invest its capital into strengthening its distribution network and bolstering its market presence.

A Broad Portfolio

Dixie’s strategy involves either taking over existing brands or serving as a distributor for interesting smaller producers that want to go national.

Dixie began life in Colorado nine years ago, serving the medicinal marijuana market there. It now sells recreational and medicinal products in Colorado, California, and Nevada, and medicinal products in Maryland and Michigan.

Its range spans from CBD wellness products through to THC-based adult-use lines, covering edibles, beverages, and topicals. It has a portfolio of more than 100 commercialized products and that list is constantly expanding.

Its strategy involves either taking over existing brands or serving as a distributor for interesting smaller producers that want to go national.

Its share price was $0.78 when trading closed on Wednesday, May 1, with a market cap of $98.6 million.

Opportunities Ahead

There are significant opportunities ahead for Dixie Brands. It is working with Canadian partner Auxly to secure Health Canada approval on its products for distribution when the market opens up for edibles and other concentrates later this year.

It also has an exciting joint venture with Colombian cannabis firm Khiron Life Sciences that is launching Dixie’s portfolio into the Latin American market.

Khiron has infrastructure and distribution channels in place in various Latin American countries, while it has a strong understanding of the regulatory processes in the region, which accounts for 620 million people. It has first-mover advantage in Latin America, but it does not have formulated edibles and beverages, so it believes it has found the perfect fit in Dixie.

Its US-focused brands may not resonate in Latin America, but Dixie believes it already has a competitive advantage over regional rivals due to the proprietary formulas it has perfected. From these formulas, they can create new brands as they deem fit, replicating their success in other countries.

Last month Khiron announced that it had put together a management team to look after the Dixie distribution. Luis Chavas, a former Pfizer and Wyeth executive, will head up Mexico, while pharmaceutical industry veteran Rodrigo Azocar will manage operations in Chile.

John Cooke is the vice president of corporate development and Rodrigo Durán is the joint venture lead.

Dixie will also be the exclusive U.S. distributor for Khiron’s Kuida cosmetic line, Kuida, when applicable regulatory approvals are secured.

After launching in Michigan earlier this year, Dixie aims to begin supplying between three and five more new states in 2019. It also pledged to maintain a pipeline of innovation and new product development.

Overall, it appears the future is bright for Dixie Brands.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live.

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