Cali Cannabis Brands May Take Over but Maybe Not Cali Firms Californian (and BC) weed brands have a well-earned image and mojo – which will soon come under serious attack. The foe is in plain sight: shrewd MSOs & LPs who will use marketing precepts to beat the West Coasters at their own game. In cannabis few brand values count more than pedigree, exclusivity, and authenticity. West coast brands have this in spades backed up by plenty of expertise and genetics. However, right now any MSO or LP can freely copy (with slight modifications) or create their own ‘Cali’ style brands. As I type, I can sense the outrage and pushback by some. Read on. Yes, true authenticity and community is not easily replicable to a connoisseur. But for much of the current market as well as most future consumers, it’s a different story. According to research, they care far less about the 'real thing' if their other needs are being satisfied. The producer payoffs are great if you get it right. To wit, the supply of Louis Vuitton handbags is small and exclusive. Conversely, the market for fast-fashion Chinese knock offs is much bigger. We’ve already seen Cali-inspired brands (e.g., Aurora’s San Rafael '71). However, these were early efforts, launched without deep consumer knowledge and constrained by onerous branding regulations. This track record should not breed complacency. Consider what’s going in the UK beer industry. Madri, a fake Spanish lager is eating share leader Carlsberg’s business. Madri has been criticized for marketing itself as “the soul of Madrid” despite being brewed in Yorkshire by Molson Coors. The boss of Estrella Galicia, which has brewed beer in the Spanish region of Galicia for more than 100 years accused Madri of a “lack of transparency” over its heritage. This spat is part of a larger row around other so-called world beers that are actually brewed in the UK for British drinkers. The Italian lager Birra Moretti, for instance, is brewed by Heineken in Manchester, while San Miguel, which was founded in the Philippines but is based in Spain, is made by Carlsberg in Northampton. Brand cooption is widespread in consumer goods. For example, Haagen Daz is not a craft European brand; it was invented in the Bronx in 1960. Fashion accessories Parfois (French for "sometimes") is actually a Portuguese company. Importantly, copycat brands don’t have to be great or authentic but rather skillfully created and able to create strong product-market fit. Countering this threat requires proactive effort including: 1. Establishing/meeting regional appellation programs & quality standards; 2. Creating IP-driven differentiation and; 3. Sustained, effective investments in brand building not only to protect but also build on home field advantages. Let’s talk. I help firms address these threats and capitalize on growth opportunities. #cannabis #brands #cannabisindustry #MSOs #beer #alcohol #LPs #California #BC
I know this BC craft expert, Velvet Kavanagh has a POV on the topic. What say you?
Mitchell Osak really depends what you are selling and to who. I used to buy a lot of liquid death for my partner however when it was out of stock it was easy to switch to Lacroix and then a Signature brand that I later found out was owned by Vons/Albertsons where I shopped. Made me curious if Albertsons intentionally throttled Liquid death & Lacroix inventory to push their higher margin house brand. Regardless, no matter how authentic Liquid Death may be to me it's just soda water & it doesn't matter which brand I buy as long as it's quality is the same. However, when you get into higher quality and craft products they're not as easily replicated. Now for the price conscious consumer they may not mind buying an inauthentic brand just to save a few bucks. However, to the disciplined shopper, who has more disposable income, they not only want to buy the authentic brand they will scrutinize the product to ensure the value is there for the price. Ultimately, if you're product is not differentiated enough you will be subjected to distribution and pricing wars. However, if you're product is authentic & differentiated, the consumers who care and aren't price sensitive, will seek out that more authentic higher quality brand/product.
There will always be market for knockoffs. However, the brands they are knocking off they are doing so for a reason. They have connected to a target audience in a meaningful way. The term authentic is tossed around a lot these days but you can't fake the connection. In all of your examples given I'd much rather be the original brand. Feel the same about cannabis. In technical terms: "You can't fake the funk!"
Mitchell Osak it is ALL about the authenticity....and I would tell you not to sleep on Cali....I am generally in agreement with your thesis here, but think there are 10 - 20 firms out of Cali which can survive strive and become the drivers of M&A
It's really difficult to create a brand that genuinely excites people in one state. It takes unique perspectives, an accurate pulse on a consumer set, and a ton of budget for content/storytelling. The MSOs have between 5-12 brands. These are vehicles for the biomass they produce. They try to hit every lucrative opportunity on the board (edibles, good-better-best flower, vapes, med etc.) across 5-15 markets, without offending regulators. If consistency is a vital component of a great national brand, imagine how challenging it is to find consistency between CA, PA and NJ without stripping out the soul of the brand. Increasingly MSOs are establishing partnerships with CA brands to capture that cool factor that is very difficult to create and maintain internally. I think this is the future. MSOs are manufacturing and sales partners to asset light brands who can pour their resources into marketing. Everyone focuses on what they're good at.
I feel like we are too early in our industry's evolution for copy-cat culture brands to have staying power. In the case of the Spanish Lager, those are well-established, ubiquitous, and ginormous distribution networks that companies like Molsen can plug into under consumers' noses without much brand-building needed. Sure, a large MSO could execute a similar playbook, but I've always said that MSOs aren't building brands, they're building vertical supply chains and that brand moat will erode over time as the state walls start to come down. I am a believer in the continued rise of Neo-consumerism and that it will continue to be a driver in incremental discretionary spending levels. These types of consumers can smell through the bullshit. As we continue to build these supply chains and expand distribution points, we need to invest in this consumer segment which means being authentic! I am biased of course, but I hope to god I am right because this industry will be WAY more fun.
I guess the knock-offs are inevitable. In the wine world and perhaps cannabis too, brands are in a way, a substitute for putting in the work as a consumer to learn about the product. My favourite example is Champagne where brands such as Veuve Clicquot are very popular, despite the C$80+ price tag for a meh product. Compare this wine, made from dozens of vineyards to achieve a consistent House style which to my palate is BORING. It’s massive mixture is the opposite of terroir—which expresses attributes of the site including exposure, microclimate, etc.. Compare with Tarlant’s entry-level Champagne which is made from a few family vineyards in the same area by one grower, often spending many years on its lees to impart extra character… for less than C$50! It’s a no-brainer but you need to use your brain to know the difference.
Consultant & Coach to Cannabis Firms | Speaker | Publisher of the Cannabis Management Review at mitchellosak.substack.com
2moI'm waiting with bated breadth to hear what these experts think of my premise: Scott Jennings Ross Gardiner David Kram ⚡️Michael Bowen Max Rudsten Seth Yakatan Willie McKenzie There are many more (so apologies) but I got tired of typing.