Interview, Part 1: Andrew Rapsey, Canopy Growth’s Global Head Of Beverages
December 1, 2020While adult-use cannabis markets across North America continue to gain steam—largely on the momentum of inhalable products—many industry players see cannabis beverages and other ingestible formats as holding vast potential for the future.Constellation-backed Canopy Growth is betting heavily on cannabis drinks, and has already taken a hefty share of the Canadian market with brands like Deep Space, Houseplant, and Tweed, while preparing to debut its beverages in the U.S. next summer via its partnership with Acreage Holdings. SND recently caught up with Andrew Rapsey, Canopy’s global head of beverages, to discuss current developments and future aspirations in the cannabis drinks space.
SND: What’s the rationale behind Canopy’s big push into cannabis drinks, versus other form factors?
Rapsey: The majority of our sales, as is the case across the category, are within flower and other inhalables. But we know there’s a whole segment of the population—probably the majority—that has a bias against inhalable formats. There are some people who will never experience cannabis via flower or vapes. We view beverages as a way to unlock the potential of cannabis with those consumers. We know from our research that beverages are a less intimidating format. And we’ve figured out how to dose them to a point where we’re making it essentially the equivalent of a typical alcohol beverage serving, and similar in effect to a light beer or a small glass of wine.
SND: You first launched cannabis beverages in Canada earlier this year. How has that effort gone so far?
Rapsey: From a year-to-date perspective, we’re in the 70% range in terms of market share. We believe a large part of that is driven by our specific portfolio, which has a lot of flavor variety as well as different potencies for different types of consumers. That, combined with the fact that our ingredient panel has less sugar and lower calories than traditional beverage alcohol and eliminates the potential for hangovers, is proving out our growth thesis on this category. We’ve sold just over 2 million beverages into the Canadian boards and provinces. For context, the entire THC beverage market in the U.S. was 4 million cans over the same period. Given the fact that Canada’s population is roughly the size of California’s, that’s an incredibly encouraging stat for us in the year-to-date. One of our advantages from being fully vertically integrated from production to retail is that we have the best price points in the market currently. That’s something we hope will translate as we extend into new markets. (Canopy’s Deep Space brand retails at about C$8 ($6.17) per 222-ml., while Houseplant and Tweed are positioned at C$5 and C$4 per 355-ml., respectively.)
SND: Do you see that early success in Canada transferring to the U.S. when you launch the beverage portfolio in California and Illinois next summer?
Rapsey: Yes. We believe the reason the THC beverage market has been slow to ramp up in the U.S. is because it has essentially catered to heavier users. We would equate some of the beverages in the U.S. to liquid edibles. About 55% of sales are at 100 milligrams of THC per unit. Our portfolio is anywhere from two milligrams per can to 10 milligrams per can, which makes it a lot more sessionable. The idea here—particularly on the lower end of that spectrum—is that consumers don’t go to a party and have only one beer; they dose throughout the evening, if you will. That same sort of sessionable, social experience is an occasion we’re going after with the majority of our portfolio.
SND: How big can beverages be as a share of the total cannabis market?
Rapsey: In the U.S. it’s been in the 1.5% to 3% range depending on time of year. We’re bullish that we should be able to at least double that. About 3% to 6% would be what we would say is achievable in the current market. Looking ahead, there are a couple of unlocks that aren’t in our control, such as regulatory changes, on-premise consumption, and other things that could start to unleash further upside, and all of a sudden that number gets small really quick again, and the potential market gets a lot bigger.
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