Hemp Foods Australia (HFA) was the driving force behind a 9% revenue boost for Elixinol Wellness in Q2 FY21, paving the way for a refocus on the Australian and Americas markets.
HFA revenue was up 19% on Q1 ($1,037,000 compared to $871,000), driven by new national distribution channels, export sales growth and a ‘solid’ e-commerce performance.
Overall, the company wrote A$2.5 million in revenue for the period, up from $2.3m in the previous quarter.
While Elixinol Americas reported an improved performance, with revenue up 4% for the quarter, the European market proved more challenging, with the company blaming Covid-19 for impacting footfall in physical venues.
Global CEO Oliver Horn said CBD continues to be “a high-priced novel purchase and UK consumers have curtailed discretionary spending in favour of essential staples”.
Meanwhile, UK retailers remain reluctant to engage with the category until the Food Safety Authority publishes a list of CBD products supported by valid novel foods applications, according to Horn.
“As a result of these long-suppressed UK trading periods and the lack of regulatory clarity, a glut of competitor product is now available at clearance pricing,” he added.
In June, the company announced it had pulled out of a deal to buy German CBD company CannaCare Health after due diligence revealed the German market had become too competitive for the acquisition to be viable.
Horn said the $5.5m cash that would otherwise have been used for the transaction is now available to invest in new growth drivers.
He added: “Going forward and based on improved fundamentals in the Americas and Australia, we will shift our focus to driving growth in these markets while we continue to optimise our cost base and assess the dynamic regulatory and market landscape in the UK.”