On 17th April 2019, MGC Pharmaceuticals Ltd (ASX: MXC) has signed an agreement with Chinese e-commerce import platform YuShop Global (YuShop) to market and distribute its nutraceuticals CBD based products in the Chinese health products market. Marketing of such products will take place through a tailored campaign designed by YuShop, a trading name for the US registered company NYC 6 Sixty Madison LLC. YuShop is dedicated in the import and commercialisation of innovative health and wellness consumables. This is a B2C services agreement, under which YuShop will be collecting and transferring sales proceeds to MXC immediately after completing the transaction. The agreement does not specify minimum contract amounts or volumes.
Inner health and wellbeing is promoted by Nutraceuticals. MXC’s product range includes multiple premium products, including supplements and food grade products in natural flavours, such as Vanilla, Toffee and Coconut Milk. MXC’s nutraceutical product line comprises BCAA CBD capsules, CBD Hemp Protein Powder, CBD Water Soluble Solution and CBD Herbal V-Pen. These nutraceutical products encompass high-grade phytocannabinoids. Under MXC’s quality control guidelines, these cannabinoids are carefully grown, extracted and processed. Phytocannabinoids are formulated along with the natural vegan proteins and vitamins. The company intends to target the Chinese consumers through an online platform with a network of 1,500 retail channel partners. The platform will access and target the existing customers - over 350 million middle-class Chinese vitamin and supplements users with the expected purchase of Vitamins and Supplements worth more than US$20 billion in 2020. For the purpose, MXC recently launched its new e-commerce website #/.
The services provided by YuShop will be a complete “turn-key” solution to MXC and will be accountable for all sales, marketing, logistics and customer service in China.
The turn-key solution will include other marketing aspects also, such as market research, product and brand positioning, translation of marketing materials and instructions, training and support to sales teams, product placement, logistics from MXC’s manufacturing facility to customers in China, channel partner management, paid traffic and conversion campaigns, product sales, and customer care. The company expects a complete marketing and sales campaign scheduled to be launched in June 2019. YuShop has already started an eight-week market test campaign.
The management of MXC expressed their focus on a growth strategy to become a leading global player in the field of phytocannabanoid products. The nutraceutical product range is on top of MXC’s leading medicinal products. Management considers this step as a significant move towards commercialising its nutraceutical range. Earlier announced permit approval for the UK, and first formal sales orders received from the UK and Australia for CannEpil™ validates delivery on and commitment to this strategy.
YuShop’s management accolade this opportunity with MXC and of the view that MXC’s current product-line, along with the product roadmap is going to lead a technology-backed CBD product demand flow in China. Here the differentiation comes as most CBD brands are limited to CBD oil tinctures and gel capsules. MXC expands the product line to CBD-infused protein powders and multi-purpose vitamins. Also, nutraceuticals are advanced for the UK and North American markets with a category of their own currently in China.
On the price-performance front, at market close on 17th April 2019, the stock of MXC was trading at $0.053 up by 23.81% as compared to its previous closing price, with a market cap of $50.94 million. It has generated a positive YTD return of 2.44%.
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