Branding & Regulations in CBD
From 0 to 1
Everyone agrees that building brands will be key in the next phase of the evolution of the industry. And everyone wants to build “a wellness brand”.
To connect with the end consumer, an entrepreneur can deploy a combination of 3 operations:
- Set up counters to serve customers
- Arrange financing to facilitate the purchasing of the product
- Collect data
What do we see in cannabis? There seem to be 2 schools on how to start:
- You first build a brand based on well-located stores
- You build a brand online, and then you leverage online to go offline
When the regulations are easier to figure out, the temptation is strong to fashion yourself after the luxury paradigm. Everyone wants to build the Chanel or the Apple of Cannabis. Serving an individual with world-class service from behind a counter is a powerful way to connect with them. While it might be hard to operate at a large scale, retail is a good way to inspire, educate, and engage with your consumers. This is the thesis followed by Dosist in California. “Dosist Wants to Build a ‘World-Class’ Cannabis Brand Around Wellness, Not Getting High.”
In a more ambiguous regulatory context, it’s all about making a virtue out of necessity. Instead of having a physical space, consumers’ first interaction with the brand is your website and your Instagram. Online touchpoints will convey the mission, the purpose and what you want people to feel.
How about distribution with mass-market retailers? It depends on your product category. If you’re creating a beverage, in the long-run, Direct-to-Consumer makes no sense. We are thirsty wherever we are. And if you’ve created a successful drink that people crave for, the goal is to be everywhere. When you build a brand, making people feel you’re big and inevitable is valuable. And so, the perfect plan is:
- Phase 0 — Regulation is uncertain: create buzz and build awareness. Get the initial distribution in the independent accounts in the main markets
- Phase 1 — Regulation is clear: you’re ready to scale. Your brand is obvious. When a distributor is looking to launch this category, you’re top of mind
How do you go from 0 to 1? It can take a lot of time. Brand development is an expensive and time-consuming process. Everyone wants to be creating brands that change perceptions of the product to create legitimacy. But without standards, it’s hard to move forward. Nothing is here to reassure mass retailers and the competent authorities.
Like in other new industries, a set of standards needs to be agreed on by the most serious players. Why? Standardization secures consumer confidence. Standardization (e.g testing) is critical to developing a specific and coherent legal and regulatory framework.
Meanwhile, many fast-moving consumer goods companies are lowering annual profit forecasts and anticipating turnarounds. Crises are opportunities. On both sides of the Atlantic, the shortage of talent is an overlooked topic. How do you convince someone to leave her job and come into an industry that’s still stigmatized and relatively under-regulated?
Here’s the opportunity — with the internal reorganization of several FMCG companies, many top people are now free to reflect on their next move. And building a wellness brand with CBD as a key ingredient is an attractive challenge.
Here are 3 cool people and brands. They are also investing in education and self-regulation:
- Valentina Milanova, Daye, CBD-infused and naked tampons delivered through your letterbox, in sync with your period
- Antonin Cohen, Harmony, a science-based approach to CBD and wellness that is developed and tested to make your life more awesome
- Benjamin Witte, Recess, a sparkling water infused with hemp extract and adaptogens for balance and clarity
Who else should be on my radar? Please let me know on laurene@tradeactive.org
