A guide to surviving the pot apocalypse: An interview with Indelible’s Owen Reader
In his new book The Pot Apocalypse, Indelible’s CEO, Owen Reader predicts 80 percent of cannabis brands will go out of business in the next three years. That’s a pretty daunting statistic coming from a respected marketing consultancy specializing in business and marketing strategy for cannabis brands. We caught up with Owen to chat about his new book, the state of cannabis branding, cult brands, and how to survive the fiery blaze of the apocalypse.
ahm: What is Indelible?
Reader: Indelible is a cannabis marketing consultancy. We are hired to help our clients create a lasting impression on the world and to develop a position that allows them to form a sustainable competitive advantage for years to come. Where most agencies that focus on this industry try to differentiate their clients through visually attractive logos and packaging design, we are obsessed with catering everything — from brand, to product development, to customer experience, to culture — towards a narrowly defined audience.
We were born out of the engagement firm, Cult Collective, a business focused purely on working with and creating cult brands. Brands that boast irrationally loyal customers and fanatically passionate advocates like Nike, Apple, Zappos or Harley Davidson.
Cult’s work over the last decade to decode the behaviors of the world’s most loved brands has isolated 10 core principles that, when deployed properly, lead to a multitude of payoffs in consumers and employees. The same principles that cult brands consistently employ need to be leveraged by cannabis brands to be able to cut through the noise and create something with lasting value for consumers.
Our mission at Indelible is to help build brands that are remarkable enough to be around for 50 or 100 years, and to help the industry bring cannabis to the mainstream by influencing societal adoption.
ahm: What is the State of the Union in cannabis branding?
Reader: Cannabis is a contentious category so brands need to think about what they’re bringing to market and who it’s for. At Indelible, we have worked to develop an understanding of the predominant psychographic profiles of consumers relative to cannabis. We have used this understanding to model how cannabis will be adopted in a society that once deemed it illegal and even evil.
Once we understood the prevailing mindsets in the marketplace, we noticed a significant misalignment in the approaches brands were taking to bring their products to market. A lot of brands do not understand who is buying cannabis these days. They also aren’t thinking about who will be buying cannabis tomorrow. The market is unprepared for the next phase the industry will encounter — my book, The Pot Apocalypse, is about how 80 percent of cannabis brands will fail over the course of the next three years.
Don’t get me wrong, the cannabis industry will be fine but brands and investors will be unprepared to compete in the new realities of the next phase of the industry.
ahm: Why will more than half of cannabis brands fail?
Reader: Today, for the most part, the demand for legal cannabis outweighs the supply. More people are willing to buy it than there is weed to buy. If you have cannabis you’re producing or buying, and you have a place to distribute it, that’s your competitive advantage. But this competitive advantage only lasts while demand outweighs supply. Over the next two or three years, we predict the balance will turn and there will be far more cannabis available than there are customers who want to consume it. This prediction is based on capital invested, improvements in crop yield, etc.
When the balance turns, supply will blow right past demand. And I’m talking about cannabis as well as CBD and other wellness products. When that happens — when supply outweighs demand — the competitive advantage that props up all these unremarkable brands will topple.
There will be huge price pressure from the larger players. People will start to compete on price and we will start to see cannabis prices plummet. We already see that in more established markets like Colorado and Oregon. The result will be that 80 percent of brands will not be able to compete in this new reality.
ahm: How do you survive?
Reader: In the new reality, the primary competitive advantage will be scale. How big am I? How cheap can I create a product? Most of the market won’t have sufficient scale to withstand the margin compression that is coming.
The other possible advantage is establishing a strong emotional connection with a well-defined consumer group. You will either compete on scale or be forced to compete on brand attachment, much like a cult brand does today. Brand attachment in consumers is correlated to a willingness to pay a price premium for a commoditized product.
So cannabis brands need to ask themselves: can I compete at scale or should I start working to generate enough brand attachment to bypass the forces of the apocalypse? The third option is for producers to become farmers selling wholesale to effectively positioned brands — or simply go out of business.
ahm: Are there any cult brands in cannabis right now?
Reader: There are some that are doing a better job than others — these brands seem to be more aware of who they are and who they serve. The recreational brand Old Pal is one that comes to mind. They are positioned for a specific segment of the market and have intentionally crafted a product and price point, reinforced by a brand that celebrates the rituals of their target audience.
Most cannabis brands that exist right now are not positioned for a specific audience. If anything, they are loosely positioned for the first 10 to 15 percent of the marketplace audience — the audience most likely to leave. This accidental positioning for an existing consumer group will be difficult, if not impossible, to maintain through the apocalypse.
ahm: What should cannabis brands do to generate brand attachment?
Reader: Creating a lasting emotional bond with consumers requires a very focused and intentional decision to narrow the core target audience. It is more effective to be hyper relevant to a narrow slice of the market than to be barely relevant to the entire market. This is true in all consumer industries, not just cannabis.
Advocacy is even more critical in contentious categories because opportunity is increased by influencing societal adoption. Consumers don’t trust brands, they trust humans, so by creating irrational levels of attachment brands can leverage word of mouth to usher more consumers into the industry, and into a relationship with their brand.
The cult brand, Yeti, is a good example of this. They were a small brand that produced quality coolers for anglers — a small slice of the market. But their product was so good and the brand attachment was so strong that they appealed to a much broader audience. Today, Yeti is nearly an $800-million brand.
“Consumers don’t trust brands, they trust humans…”
ahm: What does the future of cannabis branding look like and what advice do you have for brands out there?
Reader: There is no doubt that cannabis will be mainstream. For the last hundred years, it has been underground and sold in parking lots. Adoption will happen in a couple of ways, but mostly through CBD as a non-psychoactive derivative of cannabis. This is the component of cannabis that will mainstream most rapidly.
For most organizations that want to position further down the adoption curve on the recreational side of the industry, it is in their best interest to define who they are outside of the context of cannabis. In other words, you shouldn’t think of your business as a cannabis brand — maybe you’re a meditation or mindfulness brand. Maybe you’re a stress-relief brand for parents. Or even a parenting brand. Who knows?
A good thought experiment is removing “cannabis” from your brand. If you do that well, you’ll stand a better chance of connecting with an audience and secure your place after the apocalypse.
To learn more about Indelible and The Pot Apocalypse, visit indelible.co. Find Owen at @owen_the_wild and LinkedIn.
