Winning the Hemp THC Battle
I’ve written and spoken about the big opportunities AND huge risks in this emerging category.
If you are in it today or on the brink of jumping in, you better to be playing to win. There is no longer a ‘First Mover’ advantage.
The intoxicating hemp category is growing quickly, approaching $1B in 2025 retail sales.
These beverages – whatever you think of them - have achieved consumer and distributor footholds, which are not going away despite what happens on the regulatory front.
However, it's tough out there. There are at least 600 SKUs in market; States open and close for business on a regular basis and; the financial & strategic cost of entry is significant, even with an asset lite business model.
Most players aim to get to market quickly, focusing most of their time and money on regulations, product development, and branding.
Less attention, however, is paid to what really matters, namely distribution and consumer access.
New entrants must master 2 competencies to win in this space:
1. Getting Bev Alc distribution
To secure distribution with a high-performance distributor, you need to understand them. They were purpose-built for selling and distributing high volumes of booze at specific retailers. Your modest (for them) volume confusing hemp drink with a potentially short regulatory shelf-life is intriguing. However, it must fit in with their strategies and infrastructure – not to mention perform from a volume and margin perspective.
The pressure won’t relent after you seize a beachhead. You need to maximize distributor mind share and effort, and then retain them. That’s about being a great vendor (e.g., seamlessly integrating your supply chain with theirs), relationship management and understanding your vulnerability as a supplier.
Aaron Edelheit is the CEO of Mindset Capital and an active investor in hemp and cannabis beverages, including Uncle Arnie's and Trail Magic.
“The most successful brands we have invested in all have their own boots on ground and lots of support for their distributors and retail partners.”
2. Meeting the consumer where they are
This is a completely new, perplexing category for millions of potential buyers.
They are not your typical cannabis consumer. He/she are likely alcohol drinkers with varied demographics who often won’t visit weed dispensaries. They may even stigmatize cannabis and its community.
Retail accessibility and a differentiated in-store experience is critical. Your value proposition, pricing and packaging should be clear and distinctive, and focused on appealing to target segments where they shop.
“Knowing who your target customer is and focusing on that customer is critical. You may be lost if you try to be all things to all people.”
Call me. I help leadership teams launch hemp thc brands that break through the clutter and make money.
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