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Nov 8, 2019

New name, new strategy as Second Cup looks beyond its coffee roots with Aegis re-brand

We're not looking for 'global domination' yet: Second Cup CEO

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The Second Cup Ltd. is changing its name and looking for friends.

The coffee purveyor announced Friday it is re-branding as Aegis Brands Inc. and will be pivoting to acquisition mode in both the food service and cannabis industries.

Second Cup chief executive officer Steven Pelton told BNN Bloomberg in a Friday interview the company will be employing different tactics with potential partners in the two industries.

“With cannabis we need a joint-venture partner that really knows cannabis, because we’re more of a real estate play in allowing them to use our real estate,” he told BNN Bloomberg.

“In the food service (industry) we really want to be involving ourselves with companies that are in a space [where] we know how to help them.”

This is not Second Cup’s first foray into cannabis. The company entered into a ‘strategic alliance’ with National Access Cannabis – which has since re-branded to Meta Growth – in April of 2018, hoping to convert underperforming coffee houses into Meta-branded dispensaries.

Second Cup dips into cannabis market

Second Cup is diving into the cannabis market, and it is doing so first by changing its name. The Second Cup Ltd. intends to change its name to Aegis Brands Inc. as part of a plan to diversify beyond coffee shops. By next year, they will have two new cannabis retail stores in Calgary, with plans to expand to Ontario. BNN Bloomberg's Jon Erlichman and Amber Kanwar discuss.

Ontario’s rollout of cannabis retail, which has begun with a pair of licence lotteries, has thus far prevented that partnership from bearing fruit in the province. Meta operates 35 licensed stores across Canada.

The province’s zoning regulations also prevent cannabis and food service operations to occupy the same space, so the company has thus far been prevented from any potential moves to open up a coffee-and-a-joint hybrid location between the two brands.

The re-brand announcement comes the same day the company announced a $762,000 third-quarter loss amid a 2.9-per-cent dip in same-store-sales year-over-year.

Pelton said Second Cup’s ambitions will start on a smaller scale as it enters acquisition mode.

“We’re not going out to [achieve] global domination in year one,” he told BNN Bloomberg. “We’re trying to buy some smaller companies that we can afford and that could use our expertise.”

It’s a plan that pre-dates Pelton taking over as Second Cup CEO in May.

“The board had this plan for a long time and when I came aboard it was very apparent that they wanted to see it happen,” he said. “And, I really enjoy this part. I get to meet great entrepreneurs and great businesses all over the country and hear about all the great things they’re doing.”

“I think it was time to talk about a different structure so that we’re not caught off-guard when it is time to actually announce an acquisition.”