Aphria Inc (NYSE:APHA) Q1 2020 Earnings Conference Call - Final Transcript
Oct 15, 2019 • 09:00 am ET
Thank you. [Operator Instructions] And your first question comes from the line of Owen Bennett with Jefferies. Your line is open.
Good morning, guys.
Irwin D. Simon
Good morning, Owen.
And -- yeah, just a couple of questions from me. First of all, on the guidance capacity and looks like -- coming online as expected and with Health Canada expediting Diamond now. I was just wondering, and what sort of industry growth do you need to see, or are you planning on those assumptions to hit that CAD650 million, CAD700 million? And then maybe if you could give a bit of color in terms of how you see the mix between flower and new derivative products in that CAD650 million to CAD700 million. And then my follow-up is just any more color around the US you briefly mentioned partnerships and alliances for growth, kind of, is -- we expected to hear something around the US any time soon? Thank you.
Okay. That's all I like the, the multi-part question. So we'll -- let's deal with it in steps. In terms of the split between dried flower and the new derivative products, we've been on record multiple times. We think that dried flower remains a predominant share of the market, going forward. But -- but the vapes category and the new derivative products start to take significant amount of market share fairly quickly. Our internal models are really based around 60% market share for dried cannabis, 20% to 30% for vapes, and the remainder being split between drinks, edibles, and the other new product formats.
In terms of growth within the industry itself and our ability to meet our guidance and we see a couple of different things; one, we see our ability over the last few quarters to steal significant amounts of share in this space driven by the strength of our brands. We are consistently hearing from the individual store owners more and more people come in and asking for our individual brands. And the sales capabilities we have today are really -- were really driven by the amount of supply we have and the supply frees up. We see being able to steal more space on the shelf and be able to steal more share. We do have some growth forecasted in our number for new store openings. We recently saw that Quebec has made an announcement. We see Ontario has got some new stores coming on. Obviously, the -- those new stores and their ultimate opening will impact that. But as of today the information we have, we believe those will help drive that number as well.
Irwin D. Simon
And just on that, our brands have only been around less than a year, and the awareness team is built, and this is an industry that's tough to build brands, because you're not allowed to advertise the brands, so it's getting the consumers to try and repeat sales. So I come back and say, just think of our brands are around for five years