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Canopy Growth acquires This Works: Entry into skincare market will pay dividend

This Works was created in 2003 by Beauty Director of Vogue UK and International journalist Kathy Phillips, and has since established an international footprint and become a notable player within the health and beauty industry. The company is headquartered in London and develops products high-quality natural skincare and sleep solutions, which have garnered a loyal following over the years and propelled the company to success.

Canopy Growth purchased This Works for £43m ($57.3m) in an all-cash transaction, highlighting the value it sees in the brand. This Works is an ingenious acquisition for Canopy, with both players’ products and values aligning perfectly. The deal will see This Works launch a range of products infused with the cannabis ingredient CBD, to help customers improve their sleep and skin, which it hopes will disrupt the market. The two company’s expertise in each respective field will converge well, allowing them to create effective products which will shake up the skincare market.

The purchase of This Works marks the entry of Canopy into the lucrative skincare market, which had total revenues of $127.7b in 2018, representing a compound annual growth rate (CAGR) of 5.2% between 2014 and 2018. Increasing demand for premium products, such as organic with multiple benefits, rising disposable income, and the look good factor due to the rising selfie trend, are the major factors contributing to the growth of the global skincare market. CBD brings a wide variety of wellness claims, among them; the supposed ability to sooth inflamed skin and muscles and fight sleep deprivation, which aligns well with skincare products in particular, is one of the most important.

The acquisition couldn’t come at a better time, with the fascination around CBD only growing within the market. There is huge potential in the CBD beauty market, due to the wide range of products which can be sold without the need for a prescription, making them accessible to consumers. Canopy and This Works are not the only brands to have identified the industry potential of CBD, in 2018 a number of global brands ventured into this new and emerging segment. American cosmetics brand Kiehl’s, a subsidiary of L’Oreal, launched its Cannabis Sativa Seed Oil Herbal Concentrate which is formulated with 13 ingredients including 60% Cannabis Sativa Seed Oil.

The latest acquisition by Canopy fulfills another key aspect of its growth strategy: international expansion. This Works is a UK company therefore its purchase will enhance the company’s international footprint and operations, in a geographical location which it sees as lucrative. The CBD market is booming in the UK, with retail giants Tesco Plc, Sainsbury Plc and high-end Harrods all stocking products containing the compound.

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