EXCLUSIVE: Cannabis Business Canopy Growth Acquires This Works

The Tengram Capital-backed beauty and wellness business is being acquired for 43 million pounds.

May 22, 2019 - Canopy Growth Corp. has acquired beauty business This Works for 43 million pounds. The London-based This Works makes a range of natural skin-care and sleep products, including Deep Sleep Pillow Spray, Morning Expert Hyaluronic Serum and Skin Deep Dry Leg Oil. This Works has been backed by private equity firm Tengram Capital Partners since 2015, and has grown its product line, expanded its geographic footprint in the U.S., Canada and China and honed positioning as a brand centered around body and skin needs at all hours of the day.

The business is said to have a loyal customer base, and is sold in 35 countries. Industry sources estimated it has between 10 million and $15 million pounds in sales. According to chief executive officer Anna Persaud, the business has posted a 39 percent compound annual growth rate over the past five years.

For Canopy, which focuses on medical, health and wellness, and recreational hemp and cannabis products, This Works furthers its reach into wellness.

“We’re framing up a line of business which, in part, will be driven by CBD as an active ingredient set, so we needed some party to work with that actually felt that science was important to getting it right, and having a brand and reputation based on outcome,” said Bruce Linton, chief executive officer of Canopy Growth. “With the number of countries [This Works is] operational in, this is not a single regional success…the brand and the product work across multiple markets, which means as you extend [them], that should also be the case.”

Under Canopy Growth, This Works plans to formulate and release CBD (cannabidiol) products, Linton and Persaud said.

“We believe that CBD represents a huge opportunity for us to go further in our wellness offering, so we will work with canopy to incorporate CBD into future product development,” said Persaud. This Works won’t change the formulations for products it already sells, but will “introduce CBD products as appropriate,” she noted.

The pair noted the potential for combining This Works’ leading position in sleep with CBD. Canopy Growth is running clinical trials related to sleep, Linton said.

“The interesting thing about This Works is its viewed much more as a wellness brand than a beauty brand because of its [success in] sleep.…This Works has never been just a skin-care brand — it’s about wellness,” said Rich Gersten, partner at Tengram.

CBD is perhaps the hottest ingredient in beauty and wellness at the moment, drawing interest from a wide swath of players. It’s something This Works considered getting into before talks with Canopy Growth started in August, Persaud said.

“We have certainly been looking at CBD just to understand the benefits of the oils within a skin-care and wellness brand,” she noted. “What became clear was making sure that your source is the highest quality with integrity and consistent in its quality.…there are a lot of questions around the sourcing of CBD.”

In addition to new CBD products, This Works plans to continue its regional expansion, and has historically used its e-commerce operations to test new markets, Persaud noted.

The company is also working to roll out its Morning Expert skin-care brand, aimed at helping people “wake up well,” into the U.S., Persaud said. It includes a fragrance that the company developed using FMRI [functional magnetic resonance imaging] brain imaging, she noted, to create a positive waking-up experience.

Canopy has been building out its product portfolio with acquisitions since it received a $4 billion investment from Constellation Brands, the owner of Corona and Robert Mondavi, in 2018.

The business has made more than 30 acquisitions, Linton noted. In April, the business invested in High Beauty, which makes skin care that contains hemp seed oil and is sold at Sephora.