The future for Derma?, page-38

I like your thinking Peter King! From an industry wide view point I am interested in where mxc sits and the lure of the cosmetics to another company.
Bear with me while I digress. New industrys generally go through fairly well defined phases, including the one we are in now where there is a proliferation of companies trying to cash in on the early movers.
The next phase is generally one of consolidation. Where either those who have been successful and grown to be the biggest, buy the smaller companies OR there is mergers between companies that complement each other.
Here is where the Derma line (but I actual think mxc European focus more so) makes mxc a particularly attractive take-over/merger proposition.
To diversify and have a “different” revenue stream would be attractive to a company who has all “their eggs in one basket.” And from mxc perspective, to grow that side of the business, a partner could provide the funds to do the marketing it will need to grow to significant levels. To put it in perspective L’Oréal spent 25 billion euro on advertising and marketing worldwide from 2012 to 2016!
Now to answer another posters query, L’Oreal sell their eye cream (non cbd) for $100 au for 15 ml. Mxc sell their cbd eye cream for £65 pound but it is 30 ml compared to 15. So do the maths and you find the mxc product goes for about 120 Australian but you get twice as much. I don’t use eye cream myself however L’Oreal obviously know their price point etc and know people are prepared to pay. Mxc seems to be priced appropriately. One additional point on L’Oreal is that I know nothing about cosmetics (except old spice) however I know L’Oréal, why? Because they spend billions on marketing!
What then is a cosmetics line worth to another MM company? What would they have that would complement mxc portfolio? Who knows but there is certainly potential. And what if one of the big cosmetics companies come knocking?
Just to elaborate on my earlier point about the European factor. It’s important for these companies to diversify risk. At the core of theseMM companies is an agricultural aspect. If your crop is located in one geographical location then the risk of disease, fire, government regulation changes goes up dramatically. But also transport costs and risks associated (for example imagine if a consignment destined for the Asian market was damaged in transit, crazy I know but just imagine) are greater the further away from a market your crop is located. A market place of almost a billion people is attractive. It’s more attractive if you have your agriculture located on the continent AND it is even more attractive if you have all regulatory approvals.
I hope MXC grows organically. However you can see the case for merger/acquisition/takeover. All good for the SP in the long run.
Oh and those criticising the SP, take a look at a graph of the SP from a longer time frame. Draw a line of best fit from where it was to where it is now and extrapolate it out. I think you’ll find we are heading in the right direction!