Aphria Inc Selects Beverage Executive As Vice President of Sales

Aphria Inc (TSE:APH) (OTCMKTS:APHQF) (FRA:10E) has selected a new V.P. of sales, indicating that commercial sales are about to go into overdrive. Their choice is telling not just for the man himself, but the industry Aphria chose to headhunt from.

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The announcement comes via pre-market press release this morning. Aphria formally introduced the appointment of Joel Toguri as Vice President of Sales effective on June 18, 2018. Mr. Toguri joins the Company from Southern Glazer’s of Canada, where he was Vice President of Sales and Operations since 2013.

The big takeaway isn’t Mr. Toguri’s stellar track record as a top performer (he led a national sales team of more than 90 people and drove the company to become the #3 Agent/Broker in Canada in just three years)—that much is expected. It’s the fact that Aphria chose to select a candidate from the alcoholic beverage industry. Furthermore, Mr. Toguri held leadership roles at Molson Coors, Maxxium Wine & Spirits, and Beam Global Spirits & Wine.

For investors not aware, the alcoholic beverage industry is the next logical vanguard in terms of cannabis recreational exploitation. Drinking beverages offers are cleaner, healthier and more accepted ingestion profile than does smoking/vaping. Edible consumption is generally considered more discreet and socially acceptable than combustion method of inhalation.

Most importantly, beer and spirits conglomerates are clamoring to enter the space, as alcohol sales (specifically, beer sales) stagnates and declines globally.

For example, Molson Coors Brewing Co.’s stock recently plummeted by the most in over a decade (May 3, ↓15.40% to 4-year lows) on missed Q1 earnings expectations, exacerbated by low or declining growth in all regions. Perhaps this news shouldn’t have been a surprise: Molson Coors had previously identified the spread of legal cannabis as a risk to its business in its annual financial report filed with the Securities and Exchange Commission.

Of course, investors are well aware how Canopy Growth appreciated ↑59.49% over a seven day period in October 2017 after the Wall St. Journal broke the story on  Constellation Brands 10% investment in the company. They were the first big conglomerate to jump into the cannabis space, despite the plant’s illegal federal status in the United States. Since that time, the drumbeat towards legalization on the federal level has improved markedly, backed by inferred support from the president himself.

Whether the appointment of Joel Toguri foreshadows a deeper strategy by Aphria to borrow deeper into the alcoholic beverage market is unclear. But Aphria obtained someone who knows the ins & outs of the industry, and possesses extensive industry connections in a parallel market.

As such, I believe this appointment heightens the chances that Aphria eventually procures a partnership/distribution agreement with Big Alcohol to broaden it’s reach in the soon-to-be-booming recreational market.

Midas Letter visits Aphria’s Leamington grow operation, which is one of the largest facilities in Canada

After all, no appointment this high level is done by accident. As a multi-billion dollars global public company, the pool of prospective candidates and industries Aphria could have chosen from was virtually unlimited. While they could have simply wanted the best candidate for the position—irrespective of industry type—this move has a specifically targeted motive written all over it.

That last point might be obvious to many. But for investors not paying attention, Mr. Toguri’s appointment may yield positive outcomes which go well beyond his job title—in due course.

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