Wildpack Beverage : Q2 2022 - Management Discussion and Analysis

WILDPACK BEVERAGE INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

SECOND QUARTER FISCAL 2022

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022, AND JUNE 30, 2021

(Expressed in thousands of United States Dollars)

Management's Discussion and Analysis

This Management's Discussion and Analysis ("MD&A") of Wildpack Beverage Inc. ("Wildpack", the "Company", "We", "Our" or "Us") provides information that Management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of the Company. This MD&A should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021, and for the nine‐months ended December 31, 2020, and our condensed consolidated interim financial statements (unaudited) for the three and six‐months ended June 30, 2022, and June 30, 2021, and related notes therein, as publicly filed in Canada on the System for Electronic Document Analysis and Retrieval ("SEDAR") website.

We have prepared the condensed consolidated interim financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS") applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting.

The Company's functional and presentation currency is the United States dollar, except for the parent company, Wildpack Beverage Inc., which has a functional currency of Canadian dollars. References to "$" or "USD" are to United States dollars, while references to "C$" are Canadian dollars. All dollar amounts in this MD&A are expressed in thousands of USD, with the exception of share and price, unless otherwise noted or the context otherwise provides.

This MD&A is prepared as of August 29, 2022. This MD&A includes certain statements that may be deemed "forward‐looking information", "forward‐looking statements", "future‐oriented financial information" and "financial outlook". We direct readers to the section "Statement Regarding Forward‐Looking Information" included within this MD&A.

The Company became a Reporting Issuer on May 17, 2021, when Ponderous Panda Capital Corporation completed the acquisition of all issued and outstanding equity of Wildpack Beverage Alberta Inc. ("Wildpack Alberta"). Ponderous Panda Capital Corporation subsequently changed its name to Wildpack Beverage Inc. The transaction was considered akin to a reverse acquisition as Wildpack Alberta's shareholders have the majority of the shareholding interest in Wildpack after the transaction, the continuing business is that of Wildpack and key management primarily consist of Wildpack Alberta's former key management.

Wildpack Beverage Inc. Second Quarter Fiscal 2022

Business Overview

The Company was incorporated on March 22, 2017, under the laws of British Columbia and is listed on the Toronto Stock Exchange Venture (CANS.TSXV) and the OTCQB Venture Market (WLDPF.OTC). The Company's primary business activities include filling, decorating, and brokering aluminum cans, along with brokering packaging materials and printing labels.

We operate six facilities, located in Baltimore, Maryland (the "Baltimore Facility"), Las Vegas, Nevada (the "Las Vegas Facility"), Sacramento, California (the "Sacramento Facility"), Marietta, Georgia (the "Marietta Facility"), Longmont, Colorado (the "Longmont Facility"), and Grand Rapids, Michigan (the "Grand Rapids Facility").

We are focused on driving to profitable operations and secondarily to expand our network of beverage manufacturing facilities across the United States through a combination of company acquisitions and facility construction. Our strategy is to leverage the fragmentation of the contract packaging industry, the shift toward sustainable beverage formats, and the expanding ready‐to‐drink beverage market into a sustaining business. We principally complete all production using the aluminum can format and primarily sell our contract packaging services to middle market beverage brands looking to expand their distribution nationally, while consolidating their supply chain into fewer vendors. Our customer base is diverse and includes both regional and national brands.

Service Lines

Wildpack operates four major service lines. Filling services involve receiving from our customer's or purchasing on their behalf, specified raw ingredients, then mixing, and packaging them in accordance with their formula and pack‐out specifications. The Company charges a tolling fee on a per can basis (normalized for can size on an ounce basis) for this service.

Decorating services include the application of a customer designed label to a blank aluminum can. Beverage cans have a large printable surface, which is customarily utilized by beverage brands to advertise manufacturer and product specific designs and information. The Company charges an application fee on a per can basis.

Brokering services include procurement of aluminum cans and can related items including can ends, carriers, cartons, and trays. Ancillary to our brokering services, Wildpack also offers graphic design, warehousing, packaging engineering support, logistics, and material selection consultation. The Company charges a percentage mark‐up on packaging goods for brokerage and consultation on a per unit basis.

Printing (labels and sleeves) services include receiving a customer's art, procuring ink and label materials, consulting on label type, size and design and printing the labels to customer specifications. Wildpack is often commissioned to print for customers utilizing other service lines; in these cases, we coordinate with the rest of their production needs. The Company charges a printing fee on a per label basis.

Service Line by Facility

Facility			Service Line
Filling	Decorating	Brokering	Printing
Baltimore			
Las Vegas				
Sacramento			
Marietta			
Longmont			
Grand Rapids			

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Wildpack Beverage Inc. Second Quarter Fiscal 2022

COVID-19 Pandemic

Among the Company's primary commitments is the safety and health of its employees and contractors.

The COVID‐19 pandemic has disrupted the economy and put unprecedented strains on governments, businesses, and individuals around the world. The COVID‐19 pandemic has caused, and is likely to result in further, significant disruption of global financial markets and economic uncertainty. The pandemic has resulted in authorities implementing measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place or total lock‐down orders, and business limitations and shutdowns. Such measures have contributed to rising unemployment and negatively impacted consumer and business spending. The extent to which COVID‐19 impacts the Company's financial results will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID‐19 and the actions taken by governments to curtail or treat its impact, including shelter in place directives, business limitations and shutdowns, travel bans and restrictions, loan payment deferrals (whether government‐mandated or voluntary), moratoriums on debt collection activities and other actions, which, if imposed or extended, may impact the economies in which the Company now, or may in the future, operate.

Adverse market conditions resulting from the spread of COVID‐19 could materially adversely affect the Company's business and the value of its shares. The Company established COVID‐19 management plans and implemented enhanced protocols and preventative measures to mitigate the spread of COVID‐19 at the onset of the pandemic to protect the well‐being of its employees, contractors, and their families. Wildpack continues to follow stringent COVID‐19 infection prevention guidance and directives of federal, state and county authorities. The Company implemented a Vaccine or Negative‐Test Policy, whereby employees must be vaccinated or provide routine negative COVID‐19 tests. The Company did not incur any additional significant costs in the three and six‐month period ended June 30, 2022, related to the COVID‐19 risk.

Throughout the COVID‐19 pandemic, the Company has operated continuously under the U.S. Cybersecurity and Infrastructure Security Agency classification of "essential business". The Company has been fortunate that any COVID‐19 outbreaks at its facilities have been appropriately managed and contained, and as a result did not significantly impact the Company's operations.

Demand for ready‐to‐drink aluminum can beverages increased immediately following closures of restaurants, bars, and other on‐premises locations. This increase in demand had the corresponding effect of putting stress on the aluminum can supply chain. Following re‐opening protocols in the jurisdictions that Wildpack operates within, supply chain strain and elevated demand remain. The Company realized a positive impact from these economic factors as it succeeded in securing adequate aluminum can purchases to meet its requirements by entering into agreements with international can manufactures prior to the market pivoting from domestic to international supply. The relaxation of COVID‐19 restrictions has seen on‐premises consumption trends increase, decreasing demand for ready‐to‐drink format products back to pre‐pandemic levels including traditional seasonality.

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Wildpack Beverage Inc. Second Quarter Fiscal 2022

Operating Results

The ready‐to‐drink beverage segment, representing packaged beverages sold in a format immediately available for consumption upon purchase, continues to grow with new entrants and the movement towards sustainable formats. Wildpack currently focuses on the entry and middle segments of this market which are growing at the fastest relative rate and benefit most from vertically integrated services. We are principally focused on the aluminum can as a format in the near term with future expansion opportunities into other environmentally sustainable containers.

Production Volume

The following table summarizes production volume by service line.

Service	Three months ended	Six months ended
(In thousands of cans, except printing volume)	June 30,	June 30,	June 30,	June 30,
	2022	2021	2022	2021
Filled2	3,993	5,141	6,601	8,576
Decorated3	11,941	13,077	19,562	25,598
Brokered4	26,376	Nmf6	58,605	Nmf6
Printing5	8,435	Nmf6	10,877	Nmf6
Total Volume	50,745	18,218	95,645	34,174

1. Filled volume was converted from U.S. Gallons (128oz) into 12oz standard equivalent cans. 1 U.S. Gallon represents 10.67 12oz standard equivalent cans.
2. Decorated cans include brokered units in 2021 as volume was insignificant. Decorated cans exclude brokered units in 2022, as volume is significant and reported separately.
3. Brokered cans include brokered units and tertiary packaging sales in a 12oz standard equivalent can. $1 of tertiary packaging = 6.25 12oz standard equivalent cans. Prior to 2022, volume for brokered cans was insignificant.
4. Printing services volume was insignificant in 2021, as operations began on December 23, 2021. Printing volume is measured in thousands of labels. One label is used to produce one decorated can.
5. Not Meaningful Figure ("Nmf").

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Wildpack Beverage Inc. Second Quarter Fiscal 2022