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This article is based on an interview with Jason Reposa, founder of Good Feels, an infused cannabis beverage brand based in Massachusetts.We talked about his manufacturing operations, his business challenges, and how he is building national brand awareness. He’s constantly tinkering in his R&D lab to produce the best beverages on the market and recently added beverage enhancers, syrups, and tinctures to his lineup.
Do Consumers Like Drinking Cannabis?
According to Headset, cannabis beverages are a small but growing category that only have 1-3% of sales in the overall market.High-dose products make-up over one-third of all beverage sales or 22% of total sales through the first ten months of 2022. And low-dose beverages account for over 22% of total sales.
Jason said that his Good Feel sales fall in line with Headset’s data, but he also sees consumer excitement building for cannabis beverages. Drinking cannabis is a new way to consume that people will eventually adapt to it because people like drinking things.
Research and Development
Good Feels conducted extensive consumer surveys that revealed most people don’t want to taste weed in their beverage and why they have taken great care to create a flavorful product to mask the taste.They started with forty-something flavors to test and narrowed it down to five for their launch.They also threw parties in the early days as part of their survey sample that resulted in products like the popular Good Vibes high-dose beverage enhancer.
Is The Public Ready For Strain-Specific Drinks?
There are a lot of things you can do with cannabis to create a nice high for people that is tasty and socially engaging but is not alcohol. But, it will take a little time to get there because everybody’s still trying to figure it out, like how to get these drinks in different places, never mind all the combinations, flavorings, strains, and other stuff you can concoct.
Jason is continuously testing new cannabinoid formulations, but strain-specific products are not on his list yet because it’s hard to manage consistency in the cannabinoid and terpene profile and adds too much risk to the business. And since seed breeding and strains are evolving, there is no guarantee a specific strain will be available in the market year after year.
In addition, the general public is not ready for strain-based drinks because they still have so much to learn about the plant and the new ways to consume it. For instance, hi-dose beverage enhancers are becoming very popular, but it takes increased marketing budgets for brands to educate the public on how to use and dose it. Compound that with consumers needing to understand terpenes and cannabinoids and how they might benefit from it. Why fight that uphill battle yet?
Low-Dose vs. Hi-Dose
Jason is a proponent of low-dose beverages as a way to drive new consumers into dispensaries. Good Feels also serves the high-dose consumer with syrups, beverage enhancers, and tinctures you can take sublingually or mix in a drink.
Manufacturing Pitfalls
One of the biggest problems manufacturing cannabis beverages is the can liners. Cans may be aluminum, but the liner is plastic and doesn’t mix with cannabis oil since plastic comes from petroleum oil. Many new entrepreneurs have made the mistake of using standard plastic liners and found that the THC disappeared from the can within six months because of a poor chemical reaction to the liner.
Finding manufacturing partners in other states as part of an expansion plan is a challenge you often hear from brands. Jason believes it’s crucial to find a manufacturing partner that will adhere to high standards since the quality of the product depends on a brand’s sustainability in the marketplace. A good partner will also care about your product as much as you do and contribute their know-how and creativity to product development.
Retail Challenges
Dispensaries are not embracing beverages and are creating a big roadblock for the brands since they are the only means for sales. The stores claim beverages don’t sell quickly enough and take up too much space. They also have to invest in cold beverage display cases. And even worse, it has a seasonality cycle because drinks do not sell well in the winter.
Market Competition
Theory Wellness just opened a cannabis beverage-only dispensary they are testing in Medford, Massachusetts, where Good Feels will be sold, along with Theory’s brand, Hi5 Energy, a blend of caffeine and cannabis. Levia, another brand in the North East, was developed by a local entrepreneur and eventually bought by AYR Wellness. Honeycat is another contender spawned from an employee of Levia and Ayr Wellness and boasts a line of hash rosin-infused beverages.And then there is Kelia, a non-carbonated drink.
New beverages are expected to enter the market with more white-label manufacturers becoming available, making it easier for entrepreneurs by eliminating the expensive startup costs of manufacturing yourself. Jason said this wasn’t an option when he started but might have taken that route if given the opportunity. Fortunately, the revenue they receive for co-packing other people’s products makes up for anything they could have done through white labeling in the Massachusetts market.
Hemp-Based Drinks As a Brand-Building Strategy
2023 saw a trend where brands added hemp to their product lineup to try and escalate national brand awareness since cannabis brands are restricted from engaging in eCommerce and interstate transactions and must rely on dispensaries for sales in siloed states.This scenario also makes it difficult to access and gather customer data. Adding a hemp brand to your product line removes these barriers and gives direct access to consumers to build relationships and first-party data for business intelligence and re-marketing efforts.
According to a press release by Straits Research, the global CBD-based beverages market size was valued at USD 4.52 billion in 2022 and is growing with a CAGR of 25.6% during the forecast period (2023–2031).
Jason recently adopted the hemp business strategy for Good Feels and partnered with a white-label manufacturer to enter new states. He is using the same flavor profile and recipes as his THC versions, but finding a trustworthy and capable manufacturer that will ensure product quality and consistency is challenging. Unfortunately, their nationwide rollout is being hampered by cash flow issues because dispensaries struggle to pay invoices, a problem plaguing the industry.
Laying The Groundwork For Interstate Commerce
The cannabis beverage sector is a slow build, and a brand needs other revenue streams to stay in the game. Good Feels is adding an extra 4,500 square feet to its manufacturing facility and including co-packing services to increase revenue since they have many requests for it. They are also forging partnerships with people or businesses that can expand their expertise, like state-of-the-art canning and commercial kitchen operations that will be their main hub for output.
Jason cautions about expanding to other states and says brands get approached frequently by white-label companies looking to partner. It may seem like an appealing business opportunity, but it is not a great strategy if you don’t have boots on the ground and funds to support it. Brands do not sell on shelves without a sales and marketing plan and dispensaries expect you to help sell your product- they are not there to build your brand. They are there to sell it.
Wise Words
Jason recommends looking at the hemp side before considering the licensed market if you want to develop an infused beverage because THC brands are so handcuffed and restricted in what you can do in the market. Jason reflects that if he could start again and hemp beverages were legal in Massachusetts, he would start on the hemp side.
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