‘Robust demand’ for CBD boosts Eastside sales
Portland-based Eastside Distilling saw its sales increase to US$4.3 million in Q2 after demand for cannabidiol (CBD)-based beverages helped boost its co-packing revenue.
The US producer acquired packaging firm Craft Canning + Bottling in a deal worth US$5.2 million earlier this year and has so far seen its co-packing sales grow from US$0.6m in Q2 2018 to US$2.7m in the same period this year.
Owen Lingley, founder of Craft Canning and an Eastside board member, said: “We continue to experience robust demand for our production co-packing services across a number of key vertical markets, including wine, spirits, non-alcoholic products and more recently CBD-based beverages.
“We continue to add capacity and additional services, such as CBD, to take advantage of the demand and have exceeded our internal growth objectives.”
In June, Eastside Distilling also launched its own CBD-infused seltzer, Outlandish Seltzer, and has plans to expand the ready-to-drink range with the release of a new ginger and tonic-flavoured variant in the coming months.
The dramatic rise in co-packing sales helped boost the company’s gross sales, which increased by 154% in Q2. Branded and retail sales also grew, rising by 39% to US$1.5m.
Steve Shum, interim chief executive officer, said: “During the second quarter, branded case sales increased 57% while total gross sales increased 154% as our Craft Canning + Bottling acquisition continues to surpass expectations.
“Further, we improved efficiencies in our production operations where gross margins on net sales improved over the first quarter, helping to drive overall improvement in our adjusted earnings before interest, tax, depreciation and amortisation (EBITDA).”
Gross margins on net sales improved to 38% during Q2 2019, compared to 34% Q1. Operating expenses of US$4.3m were up slightly compared to US$4m in Q1 and compared to US$2.6m in the same period last year.
Shum added: “Our capabilities to create innovative products through our award-winning master distillers, develop attractive packaging and marketing around them through one of the industry’s most successful branding firms, produce in scale across a variety of packaging types, and sell through a national distribution framework with a network of tier-one distributors across 46 states is highly unique.
“It has taken considerable time, effort, and resources to create this platform which we are now beginning to recognise the true value of.”