Infused beverages haven’t yet taken off in Canada, but that doesn’t concern Paul Weaver, head of cannabis at Boston Beer Co., the well-known U.S. craft brewer.
Weaver espouses a go-slow approach in the infused beverage business.
“This is a small category,” he told MJBizDaily. “It’s an emerging category within an emerging category.”
In May, Boston Beer Co. – which makes Samuel Adams beer and Truly Hard Seltzer – announced plans to launch its nonalcoholic, THC-infused TeaPot teas in Canada by July.
The Boston-based brewer – which trades as SAM on the New York Stock Exchange – is one of a handful of U.S. businesses that have expanded into Canada’s adult-use cannabis industry.
Canadians purchased about 54.3 million Canadian dollars ($42.5 million) worth of cannabis beverages in 2021 – a far cry from the half-a-billion-dollar market predicted by Deloitte in 2019.
Weaver and Boston Beer hope to avoid the mistakes made by Canada’s largest cannabis producers – overproduction and owning the entire supply chain.
“This is our only cannabis play right now,” Weaver said. “What this allows us to do is maintain maximum flexibility.
“We didn’t build a facility. We didn’t buy a grow. We have strategic partners in Canada.”
Some headwinds, meanwhile, might be easing.
New federal regulations are in the pipe that could effectively increase the public purchase limit from five standard-sized cans to 48.
MJBizDaily spoke with Weaver about Boston Beer’s strategy and what it might take to breathe life into the struggling category.
What are your business objectives in Canada?
We’re trying to build a global brand out of Canada.
For us, our success is about the health of the TeaPot brand – awareness, hype, really trying to get this to be among the most loved brands in the cannabis space.
Our success is really about how we build our product, making a great tasting drink and a good brand around it.
And preparing for scale – once we have a little bit more clarity (on U.S. federal law and regulations) on what route to take.
The cannabis beverage category has never met expectations, so what are reasonable expectations in your view?
This is a long-term play.
This is a small category. It’s an emerging category within an emerging category.
It’s one that we had to set the right expectations for in terms of our business, our forecasting – how we build that over time.
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It’s just having the patience to allow the cannabis category to normalize and then getting our products into the hands of the right consumers.
So, I think it’s just having patience.
We all share the same vision, which is the future state of the cannabis industry that is not about smoking.
It’s about inclusive group occasions and consuming beverages with your friends and family.
How have cannabis business models adapted to the maturing industry?
If this was two years ago, we’d be talking about vertical integration and building a facility, and we’re going to dominate for total ownership of that supply chain.
In 2022, we are in a three-tier, multifaceted supply-chain partnership – all with the same vision of bringing a brand like TeaPot to market.
I think it’s just a reflection of how the whole industry has matured and tried to find more sustainable ways toward spreading out the risk, spreading out the costs and kind of sharing the supply chain.
It’s a very unique (partnership) between ourselves (and) a company called Peak Processing Solutions, which is in Windsor, Ontario. And then Entourage Health Corp., who is our grower and distributor, also based in Ontario.
Is the planned equivalency change enough to breathe some life into this category?
To me, there are two things that are going to break open the cannabis beverage category:
- Better products. And I think TeaPot is a good example of what can happen when you have a company like ours, with our product development resources, in the cannabis beverage category.
- Better distribution. By that, I mean getting it in the periphery of the beverage alcohol consumer and where they would ordinarily buy products. So marketing restrictions, gram equivalencies, on-premise sales – these are certainly ways of promoting our product line.
But better products and better distribution are really the catalyst for growing the category.
A hypothesis exists that says cannabis beverage sales suffered during the COVID-19 pandemic because people couldn’t get together. Did COVID help or hurt beverage sales?
We (Canada) rolled out cannabis beverages right at the beginning of the pandemic, around January, February of 2020, and the pandemic started in March.
I do think you can’t help but see what could have been had we not gone into global lockdown.
But your hypothesis of cannabis beverages being inherently social has been proven unequivocally in terms of the consumption data.
When we poll consumers on when and where they’re consuming cannabis beverages, they’re 10 times more likely to be consumed in groups of five or more people than any other form factor.
So, these are built for social consumption.
As social consumption took a hit because of COVID, absolutely, we’re not nearly as communal and group-oriented as we used to be. But things are opening back up.
What does Boston Beer Co. bring to the cannabis industry besides fresh capital?
The way they (Boston Beer Co.) approached all of their products was a real slow, methodical, patient approach in terms of establishing a great product, helping promote the category and kind of playing the long term of building both a brand and a category at the same time.
It’s that philosophy that we’re taking to cannabis beverages.
It’s still a very small category, but one that we believe is a growth frontier for us for the long term.
For now, we’re starting slow.
We’re starting here in Canada, which is a new market for us, building out what we believe is a best-in-class product and learning how to really execute that product in Canada.
So that one day, when we do have the permission to enter the U.S. market, which is our home market, or other global cannabis markets, we’ve got a pretty good, well-oiled product pipeline that we can execute.
This interview was edited for length and clarity.
Matt Lamers can be reached at email@example.com.