One of Our Canadian competitors...Bring it!!! During the June investor call, Canopy said it had shipped 530,000 beverage units to date and was boosting production to meet demand and end stockouts in stores.
It’s still unclear whether those early sales numbers represent sustained demand from new cannabis consumers, experimentation by existing consumers or a mix of both.
Canopy’s strategy of attracting brand-new marijuana consumers into the space is risky, Fowler said, “because their customer, currently, is not a cannabis customer.”
“So you need to convert people not only to your brand and your product, but to cannabis, full stop,” he added.
That requires enticing new consumers to shop at cannabis retailers, which have rolled out unevenly across different Canadian provinces.
Once shoppers get to those stores, Canadian cannabis equivalency rules prevent shoppers from buying large numbers of precanned cannabis drinks – for example, Canadians can buy only five cans of Canopy’s Grapefruit beverage at once before exceeding legal limits on public marijuana possession.
“What we require is a change to the equivalency table within the federal regulations,” Kovacevic said.
Canopy’s beverage pricing strategy is also unproven in the long term.
On the Ontario Cannabis Store website, Canopy’s Tweed drinks with 2 milligrams of THC retail for CA$3.95 per can ($2.90).
The 2.5-milligram THC Grapefruit beverage sells for CA$5.20, and the potent Deep Space beverage costs CA$9.20.
Kovacevic said the drinks’ value proposition offers “the same effect as beverage alcohol, but with health benefits such as not being negative for your liver and not causing a hangover, that traditionally beverage alcohol’s associated with.”
“And so, through that and our research, we believe consumers will pay a modest premium for beverage cannabis as an alternative but that we still need to be within an appropriate range of a craft beer purchase, for example,” he added.
For experienced cannabis consumers who might want Canopy’s heady Deep Space beverage, CPG consultant McPherson believes the price point is high.
“This isn’t the away-from-home, on-premise bar drink – I’m paying almost 10 bucks to be able to drink this at home,” he said.
The company expects to have enough data to determine whether Canadian consumers are repurchasing cannabis beverages and turning them into a habit by the end of fall.
Blaise’s Fowler is optimistic for the beverage category in Canada and believes Canopy’s plan to bring new consumers to cannabis could benefit the entire sector.
But adult-use legalization in Canada didn’t bring “that flock of new consumers that many brands had hoped for,” he said.
“Will Canopy do it? Maybe they will.
“Are they probably one of the best-suited companies in the space to try to do that, based on their financial backing and their support from Constellation (Brands)? Arguably yes,” he continued.
“But, there is a different risk profile in the success of their drinks business, as compared to other parts of their business.”
Solomon Israel can be reached at solomon.israel@mjbizdaily.com