Company: CannaCraft | Location: Santa Rosa, California | Sector: Manufacturing and cultivation
Despite leading California’s marijuana market in the vape and beverage categories—and being among the top 10 sellers of topicals, according to Headset—CannaCraft is reluctant to paint too rosy of a picture.
“It’s certainly not been a hockey stick or a huge increase in growth. We are seeing good, steady growth as we go forward,” CEO Jim Hourigan said of the company, which was founded in 2014. “We feel confident about our business, but not over our skis.”
The caution isn’t surprising, given that CannaCraft laid off roughly 15% of its workforce in late 2019 and more staff in March. The company also has had to compete with counterfeiters usurping its name and stealing sales.
So how did CannaCraft bounce back to become a market leader?
- Data-driven consumer and market analyses.
- Bundling products to give greater value to consumers while not overly compromising on margins.
- A willingness to continue investing in major initiatives.
Forecasting can fine-tune your sales and marketing strategies
Sales forecasting represents a key strategy for CannaCraft.
“Every month, we’re re-forecasting our business, trying to best understand where the markets are going to be. We can then plan our production and distribution accordingly,” Hourigan said.
Looking ahead also allows CannaCraft to develop a portfolio “that includes a good, better, best type of strata,” Hourigan said. “And based on that forecast, we can either dial up or dial down some of our spending in marketing or other areas based on how we think the business is going to continue. … If there are consumers that are impacted by where the economy may be, we want to be able to provide them products in those various price ranges.”
Offer customers better deals on products
For example, while most vape cartridges are sold in half-gram sizes, CannaCraft began offering full-gram cartridges this year in a bid to provide more value to consumers. The company also moved from selling Hi-Fi Hops—a nonalcoholic, THC-infused beer produced through a joint venture with Lagunitas Brewing Co. in California—exclusively in single bottles to selling the product in four-packs and 10-packs at a reduced per-item rate. The company also put coolers in dispensaries to promote the idea of customers buying a cold drink as they would any other beer or soda.
“The idea of the 1-gram carts and multipack drinks was to offer these products at lower (per unit) price points for customers,” Hourigan said. “We were already planning to roll these products out, but COVID accelerated the rollout.”
Beware of ‘buyer fatigue’ and ‘sales fatigue’
While product variety is typically a good thing, it can also have downsides, including what Hourigan calls “buyer fatigue” and “sales fatigue.”
“You’ve got so many products that you need to talk about (when calling on customers), and if there are promotions going on, how much time does that buyer have?” Hourigan said.
“On the other side, is the buyer saying, ‘I bought (CannaCraft brands) ABX, Hi-Fi, Care By Design. I’m at my limit from a buy perspective.’ We have to balance on our side that we’re bringing relevant products, products that sell,” he said. “We have to ensure that we’re relevant … and covering all of the products that we think make sense for that particular dispensary.”
Grow your own cannabis to shore up your supply chain
Despite the buyer-seller fatigue concerns, CannaCraft is rolling out a new flower brand, Farmer and the Felon, inspired by company founders Ned Fussell and Dennis Hunter.
The company used to buy biomass for its products on the spot market, Hourigan said. But it has since built an outdoor grow to bolster its supply chain of biomass.
“This summer, it became extremely tight in all supply. Having our own cultivation allows us to ensure that we can continue to develop that brand,” Hourigan said of Farmer and the Felon. CannaCraft currently has a 4-acre outdoor grow with plans to expand to
8 to 10 acres next year.
Invest in events that can generate sales
Despite the current ban on events because of COVID-19, CannaCraft expects concerts and other events will eventually return. So the company renewed its California events license, which allows it to sell its products at larger gatherings.
“We saw that not so much as a sales driver, but more as a big piece of our marketing for products like Hi-Fi, where people could buy them and test them and then go back to the dispensary to purchase them,” Hourigan said.