Favourite Q&A from Carl so far Q: What is Aphria bringing to the table that is going to accelerate Tilrays topline revenue figure and make paying the 'cannabis premium' for Tilray worth it? Just doing some napkin math also and even with the 100M in synergies I believe Tilray would still not be profitable. A: I think this question is a key part of the acquisition for us. What we bring to the table to accelerate top line growth. Both parties bring things to the acquisition. Tilray brings additional 2.0 products that we haven’t focused on yet, thereby accelerating Aphria’s entry and growth rate in those categories, Tilray brings supply in Europe, something Aphria was capacity constrained with. Tilray brings new brands and new demand to Aphria, particularly during a time when brand growth has started to decline from its previous high levels (largely impacted by COVID).
But Aphria brings its operational execution, and sales and distribution infrastructure and industrial scale cultivation capabilities.
With that industrial scale cultivation capability, we take Tilray’s existing brands and existing sales level and make them more profitable for the combined company. We also take our sales and distribution infrastructure and apply to the Tilray brands. Right now, Tilray is over indexed in Quebec compared to Aphria and Aphria is over indexed in Ontario (and elsewhere) compared to Tilray. We are able to utilize our experience with retailers, with provincial boards to increase the demand for the Tilray brands, growing brands that already have a following (something that is generally accepted to be easier than developing a new brand from scratch). More importantly and something I think too many people fail to completely comprehend; we bring a distribution system to Tilray in Europe. Currently, Tilray pays a third party to distribute their product in Europe. That means they are only recording the sale of cannabis from the producer to the distributor and are incurring a cost to do it. By running the Tilray sale through CC Pharma, not only do we remove the distribution expense from Tilray’s operations, but the combined entity will now record the sale from the distributor to the pharmacy, effectively moving up market in our share of wallet with the consumer.