Hill Street Beverage Co.’s interim co-CEOs, Craig Binkley and Lori Senecal.
It has been a busy year for Hill Street Beverage Company.
The Toronto-based manufacturer of alcohol-free beverages named Craig Binkley and Lori Senecal as interim co-CEOs in February, and the pair brought extensive, global experience to the business “at a time in the company’s history when it was looking to make a fairly significant pivot,” says Senecal.
Hill Street has drawn on that international expertise in an aggressive expansion that has seen it enter new lines of business and new markets simultaneously.
The company acquired the global rights to Lexaria Bioscience’s Dehydratech technology late last year, opening up a B2B channel where it can license the technology to others who use it to infuse cannabis into higher-quality edibles and topicals.
It has also pursued the hot cannabis-infused beverage business in Canada, while expanding its alcohol-free business into the United States via partnerships with companies like New York’s Boisson.
The U.S. is a major growth opportunity for Hill Street. With Connecticut, New Mexico, Virginia and New York legalizing cannabis this year, more than half of the U.S. population now lives in a state where it is or soon will be legal to consume edibles. Last year, in states where it is already legal, edibles and beverages made up 22% of legal cannabis sales, and according to analytics firm Headset, sales grew by 60% year-over-year, outpacing the 54% overall growth of the cannabis market. That’s on top of its home market, where Canadians spent $87 million on cannabis edibles last year.
And when it comes to non-alcoholic beverages, Fior Markets has projected the category will go from $923.06 million USD in global sales last year to $1.73 billion USD by 2028, growing at a CAGR of over 8%.
“We started this fiscal year as a Canadian company with one line of business,” says Senecal. “We’re ending it with three business lines: alcohol-free, cannabis-infused and the Dehydratech IP business. And we’ve gone from the Canadian into the U.S. market. It’s been quite a trajectory.”
Senecal and Binkley joined strategy to discuss what Binkley calls the company’s “growth agenda.”
What has been driving Hill Street’s expansion in recent months?
L.S.: At the start of the year, we had just acquired the usage rights from Lexaria for Dehydratech, so we were looking at the ability to take our alcohol-free beverages and expand into both cannabis-infused beverages and Dehydratech IP licensing. That meant going from one line of business to three lines and going from B2C to B2B. When we took these roles [in February], it was really about trying to architect that growth strategy of moving from B2B to B2C, from alcohol-free into the cannabis space, and from Canada to global.
C.B.: Both Lori and I are coming from global backgrounds. And when you look at the business from that angle, it was easy to see, very quickly, how we could expand the alcohol-free business to have a more global footprint. And from the cannabis standpoint, we could see how important the U.S. market was, particularly for Dehydratech.
Why was now the right time to pursue this growth and expansion?
L.S.: When we got the global usage rights for Dehydratech, that opened our purview and the opportunity to monetize it as new states and countries become legal. With that, we were looking at operating in other places, and it made us think about our other lines of business and what potential there is with those as well.
C.B.: We’ve been on the board at Hill Street for a while, and there were discussions around this but no real actions behind it. Now is the time because there is actually an escalating need and growing customer base in the world. There are age and societal demographics that go with it, but the trend is toward low- and no-alcohol overall.
How did the partnership with Boisson come about, and what was Hill Street hoping to achieve there?
C.B.: We choose our partners wisely. In the alcohol-free business, we want to partner with people who are doing the right things toward consumer trends. We want the associative imagery that these brands bring to challenge the existing assumptions of what alcohol-free should look like. Boisson matches that for alcohol-free – it challenges the perception that this isn’t a high-class alternative, because it really is.
L.S.: The partnership reaches influencers, so we’re able to tap into those cultural trends where alcohol-free isn’t a compromise choice, it’s very much a mindful and positive lifestyle choice. We want to tap into communities who are real advocates for that and Boisson is very much a company celebrating that point of view. To be part of that with our brand elevates its profile within the right cultural environment, where we see Hill Street being able to grow and thrive. It’s not only for people who can’t have alcohol, but also those who choose not to.
Why is that broader scope and premium positioning so important for Hill Street?
C.B.: It’s not about selling a product because it’s alcohol-free, it’s about selling a product that has the additional benefit of being alcohol-free. We live in a world where technology can still give you a high-level product experience in terms of taste and profile without the additional burden of alcohol. The roots of this company have a lot to do with people who can’t have alcohol, but that’s not our core target. We want everybody to drink this.
L.S.: When you talk about our overall strategy or mission, it’s really about trying to pioneer that premium space where craft meets bioscience. With alcohol-free, it’s in the superior dealcoholization process of the wine. On the cannabis side, it’s the Dehydratech technology. We’re aiming for products that are better in terms of flavour delivery and functionality, but also better for you. When you think about the alcohol-free category, it used to be a compromise. Today, it’s so different.
C.B.: It’s all about being more. Alcohol-free wine is more than alcoholic wine for a certain segment of consumers on a certain set of occasions. It may even be the third occasion of the night. It may be after they’ve already had a bottle of wine, but want to continue enjoying a great-tasting merlot without having any more alcohol. This is the better choice for that consumer. It’s the most positive choice they can make at that moment in time.
This interview has been edited for length and clarity. It is part of a series for Strategy C-Suite, a weekly briefing on how Canada’s brand leaders are responding to market challenges and acting on new opportunities.