VANCOUVER, BRITISH COLUMBIA – March 15, 2021 – NEXE Innovations Inc., a leader in plant-based materials manufacturing, is pleased to announce its strategy to enhance vertical integration in its supply chain, in order to increase product margins, protect intellectual property (IP) and mitigate supply chain risk.
Using proven technologies developed by the company in collaboration with leading experts in plant-based materials, the company will now bring key manufacturing processes to commercial scale in-house.
“The COVID-19 pandemic has highlighted supply chain vulnerabilities around the globe, and by increasing vertical integration in our production, we can reduce or eliminate many uncertainties in production as NEXE scales up. NEXE also anticipates accelerated revenue growth, improved IP protection, and higher operating margins as a result of these initiatives,” said NEXE CEO, Darren Footz. “Over the last 5 years, we have built our IP by investing in every step of the production process, and now we are bringing this same forward-thinking to more aspects of our supply chain. Over the last six months, we have begun acquiring sophisticated machinery to mold our proprietary capsules and produce our plant-based materials in-house.”
NEXE has received substantial commercial interest for its single-serve beverage pods and anticipates that this interest will continue to grow, making manufacturing capacity and reliability of paramount importance. In addition to its current and planned high-speed assembly lines, the Company has begun upgrading its facility for the production of bio-based materials and bio-based parts.
The production of NEXE’s compostable single-serve pod can be broken down into three key processes:
1. Producing plant-based resin from readily renewable materials
2. Converting this resin into parts that are used for capsule assembly
3. Mechanical assembly of those parts into a finished capsule that can be filled with coffee and/or other ingredients
As numbered above, process 3 is currently handled in-house by NEXE, while 1 and 2 were previously handled by external partners. As of now, NEXE has commissioned equipment and personnel for all steps in this process for its facility.
The goals of this strategy are to:
- Increase operating margins: By reducing reliance on external suppliers, NEXE anticipates being able to achieve higher gross margins on every beverage pod sold.
- Strengthen IP portfolio: NEXE’s proprietary product designs and biopolymer formulations will remain in-house as the Company expands its extensive patent portfolio.
- Reduce supply chain risk: Vertical integration reduces the risk of supply chain disruptions at any one stage of manufacturing. Reduced shipping costs during the production process will also further improve margins.
- Accelerate research and development: The ability to test biopolymer formulations, manufacture them into parts, and rapidly evaluate their performance in-house in functional products will greatly accelerate product development cycles.
“By upgrading plant operations to produce plant-based resins and parts in-house using proven technology, NEXE will have greater control over product development from conception to manufacturing. NEXE’s upgraded facility will be fully devoted to the production of its compostable single-serve beverage pods including our upcoming XOMA Superfoods line, reducing the time needed to rapidly scale the technology,” said Ash Guglani, President of NEXE. “This in-house expertise will also provide us with additional opportunities to leverage licensing opportunities with best-in-breed manufacturers in other verticals to further monetize our IP in plant-based materials.”
The first example of interest in NEXE IP by third-party manufacturers was regarding the development of a compostable single-use mask (announced February 16, 2021). Further opportunities to license NEXE’s technology will be assessed as they arise, while the Company remains focused on execution in the single-serve beverage pod market.