What is Brand Value in Cannabis?

Most MSOs and LPs profess to being brand-driven companies.  Encouraging them on is an army of consultants (including me) and talking heads promoting the importance of brands for long term corporate success.  

Yet, few define what they mean by a strong brand, or the value said brand delivers.

I will.

Let’s start with first principles.  According to the financial web site, Investopedia, “BV is the value premium that a company generates from a product with a recognizable name when compared to a generic [peer] equivalent.”

Truth be told, there are only a handful of cannabis brands that are generating important financial yardsticks (mentioned below), and can be compared to the likes of Red Bull, Levis or Tesla.

Cannabis marketers will frequently cite brand awareness, celebrity endorsements, or creative packaging as evidence of BV.  While these may help drive value, they are not by themselves an outcome.

What matters in brand development is the value that the band delivers, not its ingredient parts. 

A harsh but necessary truth:  most cannabis marketers fly blind, dropping the ball on brand strategy and even worse wasting lots of money and effort in brand building [sic] activities.  

This checkered track record begs a fair question:  why invest in brands if you can’t explain the value they generate or create compelling marketing plans that will further your business objectives?  

This is not an academic issue.  Brands matters to producers, resellers, and retailers not to mention investors, equity analysts and consumers. Fundamentally, products that are not effectively branded or contain unique IP are essentially commodities residing at the bottom of the food chain.  Conversely, powerful brands are strongly correlated with industry-leading margins and market capitalizations.

  It stands to reason that brand investments must be linked to financial goals (in addition to marketing ones).  

I have helped investment bankers estimate the value premium of various global brands.   A strong brand consistently delivers economic value, such as…

1. High purchase loyalty or some other relevant brand equity metric (e.g., high Net Promoter Scores);

2. Sustained price premiums versus the competition;

3. The power to secure and keep distribution without listing or co-op marketing fees and;

4. An ability to spend less on marketing than your peers to achieve the same results. 

Conversely, you don’t automatically have a strong brand if your product has…

> Been in market a long time;

> Widespread distribution;

> Sales results that are overly dependent on discounting. 

Now you know. Go out and build real BV.  How you attain that holy grail is a topic for another day.  

Let me know if I can help your firm create differentiated, authentic and consumer-relevant brands that drive real financial benefit.

#brandvalue #brands #marketing