One of the more intriguing aspects of the stock market in recent years has been the rehabilitation of cannabis, in the form of the burgeoning medicinal cannabis sector; and Australian Primary Hemp (ASX: APH) is driving a similar story for one of cannabis’ varieties, hemp.
Although hemp also contains the psychoactive components tetrahydrocannabinol (THC) and cannabidiol (CBD), it is a distinct strain of the cannabis plant, with unique phyto-chemical composition and uses, and can be used to make a wide range of products – particularly in food applications, where hemp has “superfood” attributes including protein, dietary fibre, polyunsaturated (omega-3 + 6) fats, magnesium and gamma linoleic acids. The Australian government recognised this when it approved the use of hemp in foodstuffs in 2017.
But perceptions can prove difficult to shift, says Neale Joseph, managing director and CEO of APH, who recognises that APH has to educate two markets – its customers, and investors.
He says APH is a plant-based nutrition story, not a medicinal cannabis story – the company is an integrated paddock-to-plate producer of Australian-grown plant-based nutrition products for humans and animals, and health and wellness products, growing hemp in Victoria and Tasmania, and delivering product into growing markets with huge commercial tailwinds behind them.
Established in Victoria as a hemp grower in 2018, APH moved onto the ASX in October 2019 through the reverse takeover of former biotechnology company Alchemia. Originally a supplier of hemp seeds as a food ingredient, in May 2020 the company launched a strategy to become an integrated, value-adding producer of premium plant-based nutrition products.
In August APH launched its Mt. Elephant brand – named after its first hemp farm, in western Victoria – brand, range of consumer focused, high-quality, plant-based “superfood” products containing hemp seeds. The first deal saw Mt. Elephant snack bars carried by 7-Eleven convenience stores nationally: subsequently the company has placed its Mt. Elephant-branded baking products and hemp-and-oat milk products – branded “mylk” – onto the shelves of Woolworths nationally, and will begin the roll-out this range in Coles in the third quarter.
The company has also placed its products in more than 125 independent convenience stores and fuel outlets nationally, and into the IGA supermarket network, owned by Metcash, as well as independent health-food stores.
The next move is into pet nutrition – a $12.2 billion market in Australia – and health & beauty. In the former, APH will shortly launch its pet nutrition brand, Field Day, which is built around hemp’s abilities to benefit dogs’ skin and coat, reduce inflammation, and improve heart, eye and gut health. Then the company plans to add hemp-infused health and beauty products – a range of skincare, serums and supplements – to harness hemp’s natural SPF and antioxidant properties in a market that APH says is worth $5.3 billion a year.
The company is getting traction – both commercially and on the stock market – but Joseph says this simply comes from diligently working to deliver on the strategy that APH outlined to the market last year.