How MSOs & LPs can ward off the craft cannabis challenge
It won't be easy
A few weeks ago, I posited what craft cannabis could do to win against ‘Big Cannabis’ i.e. large MSOs and LPs. In several markets, BC is losing market share to more focused and nimble Craft Producers. If many BC firms are to survive into the medium-term they will need to up their game - and fast.
For a BC player, winning is about strategic focus and using their scale and capital to build world class capabilities. Specifically:
1. Know you consumer & retailer – CPs win by sticking to their knitting: delivering high quality, small batch product to a segment they know well: heavy cannabis users who understand quality weed. With their capital, talent and market experience, BC should have a superior understanding of all cannabis users across every market. They must go beyond the available (and spotty) market research and drill deeper into consumer need states and buying behaviors pre, during and post purchase, not to mention knowing the requirements of their channel partners.
Having a deep consumer and retailer understanding will enable BCs to achieve a tighter product/market fit with their current portfolio as well as identify unmet consumer needs and under-served consumer segments i.e. places where CPs are not looking.
2. Pick a lane to win – Regardless of the industry, no company can win in every market and category. Many BC firms have become strategically unfocused, leading to operational complexity, bad product performance and a misallocation of resources. Each BC player needs to choose the most appealing consumer segments and then aim for market leadership through leveraging their relevant strengths and assets. The goal is to deliver the best consumer & retailer experiences (at competitive pricing) with a focused portfolio of brands and SKUs.
CPs, with their higher cost structure and premium orientation are unable to compete everywhere as well as meet the requirements of most largest retailers and wholesalers.
3. Enhance Capabilities – Winners in cannabis will play the long game, with an objective of attaining superior margins and sustained brand differentiation. The only way to achieve this is by investing in and developing world class operational capabilities that can repeatably deliver your value proposition at the lowest cost.
Examples of these capabilities include: mining consumer insights, brand building, leveraging data in decision-making, and fostering innovation across the company. Unfortunately, many BC players maintain expensive and ineffective functional & operational groups that don’t deliver sufficient value.
This can be fixed through initiatives like: peer benchmarking; performing an ‘operate vs outsource’ assessment and; making strategic investments in areas like IT and product development. CPs, with their limited scale and capital, will be hard pressed to keep up.
BCs: Play your game not the craft game.
#craftcannabis #MSO #LP #strategy #products #consumers