Ecofibre will launch a new CBD brand next month as it looks to compete with low-cost competitors and occupy more shelf space in US pharmacies.
The ASX-listed firm said the new brand, myeveryday CBD, will target “value conscious” customers and be sold alongside its premium Ananda Professional range.
As well as competing with “cheaper” brands stocked by pharmacies, Ecofibre said a second CBD line will provide it with a greater presence in shops.
News of the launch came as the firm posted a $14.7 million loss in the 2022 financial year, more than double the deficit a year ago.
Revenue climbed 5% to $30m, but sharply declining profit margins – partially caused by unsold CBD products reaching their expiry date – impacted the bottom line.
Chief executive Eric Wang said the business has operated in “challenging conditions”.
Shares in Ecofibre initially climbed from $0.30c to $0.32c per share before falling back to $0.29c.
One of the initiatives to revive its Ananda Health division, which reported a pre-tax loss of $8.3m following a $0.3m profit in FY21, is to expand its presence on pharmacy shelves, Wang said.
The introduction of myeveryday CBD will help it achieve that goal, he said in an investor briefing, adding that FY22 sales through its core independent pharmacy channel had started to rebound from the ravages of Covid, with revenue up 13% to $9.2m.
But it is still way below the $37m generated by pharmacies in FY20, with the pandemic and the cluttered, discount-driven CBD market blamed for the collapse in sales.
Overall revenue for Ananda Health in FY22 fell 9% to $12.9m. Sales of its medicinal cannabis products through the Special Access Scheme contributed $700,000, the company said.
“The challenge we have is that a typical pharmacy will carry Ananda Professional, it will carry the local brand, but also in many cases it has to carry a more affordable brand, at a cheaper level,” Wang said.
“On September 1 we will launch myeveryday CBD that will offer a smaller and more affordable product range, but most importantly it will expand our shelf space to target the value-conscious segment.”
While predicting that sales of the new products would provide “solid growth” for Ananda Health, he admitted the division would not deliver a profit in FY23.
A return to the black was more likely in FY24, Wang said, with an over-the-counter CBD product in Australia “key to profitability”.
Ecofibre’s sleep study to underpin its OTC registration with the Therapeutic Goods Administration (TGA) is due to finish next month with a dossier expected to be lodged with the regulator before the end of the year.
Wang told Cannabiz earlier this month that the schedule 3 OTC market in Australia represented the biggest CBD sales opportunity “for years”.
“Our goal is to be the first mover in the S3 registration process,” he said. “We have invested $1.4m with Southern Cross University to complete this study with 350 patients… the final patients will complete their 10-week treatment period by the middle of September.
“It is a very important initiative and an exciting one.”
Meanwhile, its Australia-focused Ananda Food division has entered the animal sector with a horse-feed product, while product innovation is also being pursued through Ecofibre’s Soul Seeds brand which it acquired in April.
Ananda Food generated revenue of $3.6m in the year to June 30, up from $2.6m in FY21. Losses remained steady at $1.6m.
Ecofibre’s third division, Hemp Black, reported revenue of $13.9m, up from $11.9m, although higher operating expenses were partially blamed for deeper losses of $4.5m, compared to $1m in FY21.
The company said it has $27.3m in available funds, made up of cash, US grants and undrawn credit. It has a net debt of $11.5m.