CBIZ’s David Oksenhorn spoke with a pioneer in the adult beverage category, Gina Collins, Chief Marketing Officer of Truelieve, which distributes THC cocktail and energy brands Upward and Onward, respectively.
David and Gina covered the growing market for THC beverages, related consumer trends, the challenges and opportunities of working in a highly regulated industry, and the competitive landscape of the infused beverage category.
David Oksenhorn: Thanks for joining me, Gina. I wanted to talk about the THC infused beverage industry and how your company is expanding rapidly in that space. It’s highly competitive and fast growing, so what does it take for a company like yours to differentiate itself?
Gina Collins: Thanks for having me. We feel that we know THC better than anybody. We have an average of 4 million square feet of grow annually and watch the space closely. Within THC, the beverage sector is fascinating and has been for a long time. In a span of roughly 18 months the sector exploded from a handful of brands to a few hundred. Now it’s hard to keep track, there are probably close to 500 brands and counting trying to participate. Seeing that happen, in combination with wellness trends driven by the younger demographic moving away from alcohol, we saw the opportunity to take our knowledge of THC and explore revenue channels outside of traditional dispensaries. We are blessed to have an incredible infrastructure for research and development, so the conversation started with “how can we address the demand through our knowledge and insights to provide a better product?”
DO Can you speak more about the advantages of having this sophisticated business with R&D capabilities?
GC Absolutely. This country celebrates entrepreneurship and that’s great. In the context of powerful ingredients like THC, how you handle it matters, the effects of the THC matter, and the other ingredients matter as well. We’re meeting the health-conscious market where it already exists with respect to making healthier choices and offering them a new product that meets their standards, and their specific needs with respect to something like THC. Drilling down further, we have the scientific capabilities to really appreciate the emulsion process and the molecular idiosyncrasies of a product like this. So that extends to how it affects the person consuming it, as well as how it is impacted in the production and delivery process.
DO Great. What about your approach to marketing this product? What are your brand’s driving principles, or what do you feel is most important to communicate to potential customers?
GC We’re passionate about quality and THC education. There is a common misconception that it’s better value or more worthwhile to start on the strong side. We encourage low and slow. For someone new to THC, starting with a 10 milligram product may not be the best experience for most people. Imagine your first sip of alcohol on the day you turn 21 – most of us go for the beer, not the grain alcohol. The wellness mindset we operate with demands that we help customers make educated decisions that are grounded in their health. For a new product like ours, that means educating them on what this means for their bodies and their experience of the product, which might very well be their first with THC.
DO That’s interesting. Brands usually focus on standing out. Is it harder to bake in that educational element?
GC It’s really important we get that message across. Even the common method of understanding THC strength, milligrams, is not universal. Everyone’s different and is affected differently. The lowest THC level we offer is where we think the bullseye is for most people having their first experience – about 3 milligrams. It will help you see how it’s going to affect your body. Some will find it very light, while others will never seek out anything stronger. We want our messaging to encourage our consumers to be patient, not make major leaps from a 3 milligram product to a 10 milligram product and just explore gradually. That’s informed by our passion and desire for consumers to have an enjoyable experience with the product. Low and slow means taking the time to find what really works for you.
DO Do you feel that the growth in this sector is driven by people gravitating away from alcohol? Is the expectation that consumers are less experienced with THC? If so, how does that affect your approach to retention?
GC Our industry is highly regulated and still in the process of opening up. So we feel it’s really important to educate consumers on the product and how to have the best experience with it. We also want to reinforce the benefits of THC and lead with our wisdom and experience in the category. Furthermore, every state has different laws with respect to what can and can not be said. Then, there are even discrepancies from traditional THC vs. hemp-derived THC, which seems to have broader flexibility. We cover all of this and more in our communications. Obviously, we want to encourage interest in the product, but we take seriously the opportunity to explain: ‘here’s what this is, here’s how it works, and this is the established science behind it.’ The low and slow mantra remains consistent and helps us get to the educational aspects because people are interested in learning more about THC-derived products.
DO How do you reach potential new customers?
GC There’s opportunity in approaching a widespread audience to gain broad awareness, as well as reaching local organizations with niche needs and values. We’ve had incredible success getting involved in smaller communities where we can capitalize on social interactions and be a part of those key conversations. We found that people care about understanding the product and nutrition, especially with the most health-conscious younger generation. By attending local gatherings, such as farmers markets and music events, we are able to meet those needs by providing education at points of contact where they are engaged and want to know more.
DO What can you tell me about your processing? What are the common practices in the industry and why do you make your product the way that you do.
GC The basis of our beverage is a natural, legal hemp which produces Delta 9 THC. For someone moving away from alcohol, it represents a break from the normal mindset towards something more wellness-minded. THC is increasingly becoming a preferred choice as signaled through preliminary data which shows that awareness is increasing. We don’t think of our product as a replacement for alcohol. It’s a unique experience but we recognize the cross over potential. There are people out there who unwind with a glass of wine that will come to find they prefer to unwind with a product like ours or enjoy both. Our products are lower in calories than an average glass of wine and offer a flexible user experience with a range of THC options (3mg–10mg).
DO Do you see the company expanding beyond cocktails?
GC Right now the future looks limitless. The energy segment has been on fire for years – growing, growing, and growing. But even within that industry you are seeing beverages get a bit healthier. With Upward, we combined THC with energy and they’re very complementary, even on a scientific level. THC is known to have that relaxing calming effect, but then you add caffeine into the equation and the result for a lot of people is an amazingly focused experience. That’s an example of the natural momentum we had from our original product line to a new sector. We expect that momentum to continue carrying us forward. The beverage category from energy drinks to coffee and cider is very interesting, and we are continuing to explore and listen to our customers and their preferences.
DO What challenges are you finding that other beverage producers aren’t? Is it regulations? Is it the flavor profile of products with THC?
GC It’s a highly regulated environment which changes everyday. We have a strong infrastructure as an established business and our compliance team is continuously monitoring conversations for each state when it comes to compliance.
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