Exclusive Interview with Fire & Flower CEO Trevor Fencott
As opposed to a organization pivoting into the cannabis space or a cannabis business’s retail arm, Fire & Flower (TSXV: FAF) (OTC: FFLWF) was goal-constructed from the ground up to be a cannabis retail business. CEO Trevor Fencott refers to the company’s model as “retail two..” He spoke with New Cannabis Ventures about the company’s Canadian footprint and how the Alimentation Couche-Tard deal will propel the business to an international platform.
Fencott has a background in technologies entrepreneurship, and he entered the cannabis space as a co-founder of Mettrum Well being. Soon after Mettrum was acquired by Canopy Development in 2017, he began searching for the highest element of the worth chain to participate in and saw a massive chance in retail.
Right now, his leadership is complemented by a group with a powerful background in retail. CFO Nadia Vattovaz previously worked with Holt Renfrew and Canadian Tire. COO Mike Vioncek previously worked for Liquor Retailers North America. President Matthew Hollingshead runs Hifyre, the technologies business Fire & Flower acquired in 2018.
Applying Technologies to Inform Development Approach
Technologies plays a massive element in Fire & Flower’s subsequent-generation strategy to retail. The business makes use of Hifyre’s digital platform to greater recognize its consumers and communicate with its vendor partners. The business has a lot more than 40,000 digital loyalty system members, which supply wealthy insight into what sorts of merchandise consumers want and do not want. Fire & Flower makes use of this information to inform their strategy to client knowledge and to enable their vendor partners make the sorts of merchandise consumers want to invest in.
Canadian Footprint and Beyond
Fire & Flower has 24 retail shops in Canada across 5 provinces and territories, and the business expects to have 65 shops open by July 2020.
The business has a 24-month execution program to max out the chance share in Canada, according to Fencott. The business will also be searching to other promising to markets that could come on the web for the duration of that period. The U.S., Australia, New Zealand, Mexico, and South Africa are all fascinating prospects for the business.
As the business moves forward, it will appear to a mixture of organic development and acquisition to fuel its expansion. Fencott understands organic development is much less costly than acquisitions, but it does have its limitations in terms of size and speed. When it comes to acquisitions, the business will concentrate on bargains that make industrial sense and provide shareholder worth, according to Fencott. For instance, the business was quite cautious not to chase costly bargains in Ontario with lottery winners, limiting its prospective acquisition expenses for its two shops to $1.five million every single.
The Couche-Tard Deal
Comfort retailer operator Alimentation Couche-Tard’s strategic investment in Fire & Flower is a transformational deal that Fencott likens to the Constellation Brands transaction. Fire & Flower was constructed to be receptive to these sorts of bargains, according to Fencott. Couche-Tard’s investment could give the business a lot more than $380 million in development capital and access to an international platform – Couche-Tard has 16,000 shops across 26 nations.
The deal will be executed in a series of tranches more than the subsequent couple of years. Couche-Tard will take a 9.9 % share of Fire & Flower in the initially tranche, then 19.9 %, 33.three %, and ultimately a 50.1 % controlling stake, according to Fencott. The stake will come with board representation.
The final tranche has 110 million shares with a $six per share cap, which signifies the final tranche has the prospective to attain $660 million, according to Fencott.
The Retail Chance
LPs may possibly be commanding a very good deal of investor focus, overshadowing retailers, but Fencott is optimistic that will modify. LPs are going to have to have to evolve to grow to be brand businesses, and some businesses will struggle with the transition. Fencott sees retail as a much less glamorous but powerful entry point for investors – especially as retail businesses provide on final results.
Fire & Flower is challenged to scale in uncertain regulatory markets as it grows, but Fencott sees his business as a lot more than up to the process. Hunting at “Canada as a microcosm of the international scene,” the business is effectively navigating markets like Ontario, Alberta, and Saskatchewan. “Each jurisdiction we operate in, we have managed to genuinely capitalize on each and every chance accessible there and reduce the quantity of drag every single jurisdiction,” he says. That knowledge will enable the business in every single new marketplace it pursues.
Fire & Flower is a client of New Cannabis Ventures. Listen to the complete interview:
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