Wine, cider and spirits group Distell, and Invenfin, the venture capital arm of its holding company Remgro, have made a new investment into a cannabis company to take advantage of the fast-growing sector.
The two companies paid undisclosed amounts to each buy a 20% stake in Releaf Pharmaceuticals, a new business that sells oils and tea infused with cannabis under the brand Rethink CBD.
The transaction was less than 30% of Distell’s R20bn market cap, so JSE listing rules do not require the value of the purchase to be disclosed. Distell said the move is to diversify its portfolio and branch into consumer wellness trends.
Venture capital firm Invenfin has invested in consumer brands before, including Amajoya sweets, and Bos iced tea.
The Rethink brand was launched in 2019 and includes a range of creams, oils, capsules and teas that contain cannabidiol (CBD) — part of the marijuana plant that has no psychoactive properties and that some claim helps with pain relief.
The companies plan to build a larger portfolio of cannabis-based brands across product categories.
Richard Rushton, Distell CEO, said the cannabis sector is primed for growth as legislation to control and legalise certain aspects of marijuana is developed.
“Our investment is a great fit with Distell’s strategy to explore new growth opportunities,” he said, adding it would bring its existing supply chain and marketing expertise to the company.
Distell’s decision is not related to alcohol bans and was “under consideration before liquor sale restrictions came into play”, said Distell spokesperson Frank Ford. Instead, the company is tapping into the wellness trend, he said.
There is a growing number of alcohol companies launching products that appeal to more health-conscious consumers. One example abroad is hard seltzers — carbonated water mixed with alcohol that strips away the calories of beer or wine, and can be perceived as better for consumers.
Martin Coetzer, Releaf MD, said the backing of Distell and Invenfin would enable it to develop new products.
Rethink advertises itself as the “first business cannabis wellness brand to be endorsed by the SA Cannabis Research Institute”. However, both the institute and Releaf are registered at the same business address, suggesting the endorsement is not independent.
Products with CBD are legal as long as the dose is lower than 20mg or the product contains less than 600mg of it. There is strict regulation around the type of health claims that can be made on goods containing CBD.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.