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ALTHEA GROUP HOLDINGS LTD (AGH) - Inside Althea's THC Beverage Revolution

• Andrew Musgrave

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The social drinking landscape is on the verge of a revolution, and Althea Group Holdings Limited (AGH) is positioning itself at the forefront of this transformation. Joining us on ASX Briefs, CEO Josh Fegan reveals how the company has evolved from its medical cannabis origins to become a focused manufacturer of THC-infused beverages across North America.

What makes Althea's approach unique is their proprietary Envision technology - a patent-pending emulsion platform that creates superior THC beverages ranging from seltzers and sodas to waters and mocktails. As Josh explains, "We believe in liquid on the lips," emphasizing that taste experience is crucial for attracting traditional alcohol consumers. This philosophy has already led to impressive results, with over 14 million cans produced in Canada since 2021 and a strong US launch delivering 550,000 units within weeks of operations beginning.

The timing couldn't be better for this strategic shift. Modern consumers are increasingly seeking alcohol alternatives that provide similar social experiences without the negative health impacts. "THC beverages are definitely going to be the future of social drinking," Josh confidently states, highlighting that these products offer intoxication without hangovers, organ damage, or high addiction potential. This positioning has attracted attention from major alcohol companies who recognize both the competitive threat and enormous market potential of cannabis-infused drinks.

With a strengthened balance sheet following a recent capital raise and a clear vision for growth across North America, Althea represents an intriguing case study in how cannabis companies are evolving to meet changing consumer preferences. 

Subscribe to ASX Briefs for more conversations with leaders of innovative companies shaping the future of their industries and creating new growth opportunities on the ASX.

Andrew Musgrave Host

Welcome back to ASX Briefs, where we bring you the latest from leaders shaping the next generation of growth companies on the ASX. And today we're joined by Josh Fegan, the Chief Executive Officer and Managing Director of Althea Group Holdings Limited, a company that is fast transforming itself into a global leader in the rapidly expanding THC-infused beverage market. 
 Josh, thanks for joining me today and welcome to the ASX Briefs podcast. 

Joshua Fegan Guest

Thank you for having me, Andrew. 

Andrew Musgrave Host

Now, Josh. For investors that may be unfamiliar with AGH, can you just provide a brief overview of the company? 

Joshua Fegan Guest

Yes, certainly we're an FMCG business and essentially, we develop and manufacture THC beverages. Right now that's contained to North America, so the biggest consumer market in the world, the US, and also Canada. 

Andrew Musgrave Host

Okay and Josh, the strategic shift into the THC beverage segment is now fully underway. So, what was the core reasoning behind pivoting Althea entirely toward Peak Processing Solutions? 

Joshua Fegan Guest

I would say evolution, so we were around very early on in the whole cannabis industry formation. I think it's taken a while for quite a few companies to really understand their purpose and their identity, and it's the same thing for AGH. We definitely had a good footprint in the medical cannabis side of things for many years. We've since divested those assets to focus purely on THC beverages just because we think it's a perfect timing. It's a confluence of people looking for an alternative to alcohol and we now have some really useful technology and we know how to apply THC as an ingredient and we feel that beverage is just an awesome format for people to experience what it's got to offer. 

Andrew Musgrave Host

Okay, and with Peak Canada and Peak USA now operational, how would you describe Althea's position within this rapidly evolving THC beverage sector? 

Joshua Fegan Guest

We're certainly the most progressive in terms of innovation. Part of Peak's expertise lies within its technology and patent pending emulsion platform, which we call Envision. So, I don't think there's anyone better in the world that can actually design, develop a THC beverage, and that's from sodas to seltzers, to waters to mocktails, you name it. Basically, Peak can develop it from scratch and all comes down to consumer experience. So, we believe in liquid on the lips, which basically means that the best tasting of these beverages are likely to have the most success into the future and also, you know, be really attractive to existing consumers of alcohol. It needs to taste akin to them so that they essentially move over from an alcohol-based beverage to a THC-based beverage. 

Andrew Musgrave Host

Okay, and Peak USA seems to have hit the ground running, with over 550,000 units produced or shipped just weeks after the commercial launch. So, what's driving this early momentum? 

Joshua Fegan Guest

Well, the US business is fairly new, but we do have a long tail of experience from Canada. So Peak Processing Solutions has been operating in Canada since about 2021, so we do have great experience. We've produced well over 13 or 14 million cans in that particular regulated environment. It is a little bit different to the US, which is definitely FMCG, where the products are available in liquor stores, so places like Dan Murphy's and things, so it definitely will be a higher volume proposition than Canada but nonetheless, our experience is directly applicable and that knowledge and expertise has meant that we've had a pretty successful launch thus far in the US and also have a lot of potential customers that have utilised our services in Canada and want to expand into America as well. 

Andrew Musgrave Host

Okay, and on the Canadian side you've made significant investments in pre-purchasing raw materials to lock in margin and ensure capacity ahead of peak season. So, can you walk us through how this strategy strengthens your financial outlook heading into FY26? 

Joshua Fegan Guest

It really boils down to buying power. Contract manufacturing is all about margins, so anything we can do to increase our margins and stay competitively priced is what we look at, and I guess the accumulation of core materials is definitely one way of doing that. Just making sure that you have enough of everything on hand to execute on the business that you have, but also to make sure that you're getting the best possible pricing, therefore increasing your profitability. So, you know, from a cash flow standpoint, that's very important. 

Andrew Musgrave Host

Okay, and at a macro level, how do you see the THC beverage segment evolving globally, especially as more jurisdictions move towards legalization or liberalization? 

Joshua Fegan Guest

It's definitely going to be the future of social drinking. In my opinion. In this day and age, more and more people are actually moving away from alcohol, not because they don't like the, the taste and how you feel, but the, the, the health implications. You know, people don't like the hangovers because they like to lead a healthier lifestyle where they do a lot of, you know, fitness and that type of thing. Also, people are more aware now the long-term damage alcohol can do to your body. But you know, let's face this, non-alcohol beverage sales have been pretty strong, but people still want to want to feel intoxicated. You know, they want to be able to relax and THC as an ingredient is intoxicating in the same way that alcohol is. However, you won't get hung over. It doesn't do any internal damage to your organs. It's less addictive than caffeine. So, it's just one of those things that is evolution. In one word, it's just, it's just going to take place of alcohol, and you know, help people stay really healthy in their lifestyle. 

Andrew Musgrave Host

Okay, and what differentiates Althea's Peak Processing Solutions platform from competitors who may be trying to enter this space? 

Joshua Fegan Guest

It's a combination of that patent-pending emulsion technology I was talking about. So, we think we've got probably the best cannabis ingredient that can go into a liquid and that's years' worth of research and development, and that investment obviously means a lot development and that investment obviously means a lot. But it's also how we conduct ourselves in the supply chain and manufacturing process, so we obviously accumulate and only use the best materials. We have the best standard operating procedures, which leads to, you know, the strongest formulations and ability to deliver a high-quality finished product. With all those things combined again, it just translates into the best experience possible for consumers and we think the liquid's going to win the day and believe we make the best cans in the business. 

Andrew Musgrave Host

Okay, and touching on market conditions, you've highlighted that Peak USA's fully domestic production shields it from international tariff risks. So how important is this domestic production model in terms of resilience and scalability? 

Joshua Fegan Guest

Yeah, I mean there's a little bit of disruption at the moment, I guess, with the tariffs, but certainly not to our business, just based on regulations alone. We actually have to produce the drinks in the respective territories. So, in Canada, under the license regime there, we actually have to make the product and sell and distribute the product only in Canada, and that is the same with the US. We have to make the product in Canada sorry, in the US, and it can only be sold and distributed in the US. So, it's pretty straightforward for us actually. 

Andrew Musgrave Host

Yeah, okay, and you've just recently raised $4 million and some debt converted to equity. So how comfortable are you with the company's current funding position as you push into this growth phase? 

Joshua Fegan Guest

Yeah, I mean we've done a lot of work leading up to this to know exactly who we are, so we know what we've got to do to win and obviously having the healthiest possible balance sheet really helps to support that execution process. Obviously, this whole industry and where we got to now started from nothing. There was no blueprint for success, no grand plan. We obviously did have to get to where we are now by trial and error and making investments and things, but we know more about ourselves and our business than we ever have before. That's a big advantage. 

Andrew Musgrave Host

Okay, now finally, if we look forward 12 to 18 months, what are some of the catalysts that investors should be watching out for that could significantly move the needle for Althea? 

Joshua Fegan Guest

Yeah, I think we've got a lot to prove in the Canadian business because it is quite mature now. You know we see this category growing and growing very well compared to the other areas. So, I think we are going to demonstrate some pretty positive results that investors should be happy about. And then, when it comes to the US, the milestones are really progress-based, you know, because it is quite early. But you know people want to see lots of cans going into production, lots of cans rolling out the facility and hitting shelves. We're talking to a lot of different firms that are investing or plan to invest quite heavily in this space. Particularly big alcohol, you know, not only see it as a threat to their alcohol-based beverage business but they also see it as extremely lucrative. So, you know, I think there's going to be lots of moves and lots of cool things developing, and we just hope to power a majority of those really strong brands that build that market out and we'll grow with them. 

Andrew Musgrave Host

Okay, Josh. Well, it's been great to chat today, so thanks for your time and we look forward to the next update from Althea Group Holdings in the upcoming months. 

Joshua Fegan Guest

Awesome. Thanks for having me, Andrew. 

Andrew Musgrave Host

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.