Interview: David Prodanovic, Vice President-General Manager, Kindred CanadaMarch 26, 2019
In its core business, third-ranked U.S. spirits and wine wholesaler Breakthru Beverage has projected revenues of $5.4 billion this year, according to Shanken’s Impact Newsletter. But the company has also been among the earliest movers in the cannabis market in Canada, through its subsidiary, Kindred. Opened last October, Kindred is a Toronto-based cannabis brokerage led by Breakthru veteran David Prodanovic as vice president-general manager. Kindred is the exclusive national broker for cannabis producer CannTrust, in which Breakthru holds a minority stake. SND executive editor Daniel Marsteller recently caught up with Prodanovic to discuss the outlook for Kindred amid the early days of Canada’s recreational cannabis market.
SND: What was the rationale for entering the cannabis category?
Prodanovic: Given that Canada has adopted the same successful system for cannabis that’s in place for beverage alcohol distribution, and taking into account that Breakthru is the largest broker of beverage alcohol in Canada, we’re positioned to leverage our established business model and help shape a responsible recreational cannabis market across the country.
SND: Why was CannTrust the right producer to partner up with?
Prodanovic: CannTrust brings more than 40 years of pharmaceutical and healthcare experience to the cannabis industry, and is one of Canada’s most trusted producers of medical cannabis. They have the right mix of industry knowledge, product quality, and a world-class production process. The company is well positioned to grow nationally, with coast to coast distribution agreements on their four recreational brands—liiv, Synr.g, Xscape, and Peak Leaf.
SND: What early trends are you noting at the consumer level?
Prodanovic: We’ve been paying close attention to shifting trends and consumer behavior. Over 50% of customers walking into stores know exactly what they’re looking for. Often that’s high THC levels at a low price point. Depending on the occasion, consumers are also looking for the convenience and portability of a pre-rolled (joint). This is true for both new users and familiar customers alike.
SND: How is Kindred dealing with the supply shortage in Canada?
Prodanovic: It’s an industry-wide challenge. We’re working closely with our suppliers and customers to mitigate it, and over time the issue will resolve itself as suppliers expand their production and calibrate to an increased demand. For example, CannTrust recently received approval to expand its facility and is projected to double capacity to 100,000kg of cannabis a year by the third quarter of 2020.
SND: What are Kindred’s main objectives moving forward?
Prodanovic: We’ll continue to focus on building meaningful relationships with provincial control boards and designated retail outlets. This is an evolving market, and it’s important that we’re upfront and transparent with our customers. As part of that, we’re extensively engaging with bud tenders (store clerks guiding consumers through the purchase process) through sales calls and educational training sessions.
|LEADING CANNABIS COMPANIES—Revenues and Updated Share Prices|
(millions of Canadian dollars)
(billions of U.S. dollars)
1 Revenues for the 12 months ending September 30, except for Hexo Corp (12 months ending October 31), Aphria (12 months ending November 30), and Canopy, Aurora, and Tilray (12 months ending December 31).
2 Revenues converted from U.S. to Canadian dollars.
Source: IMPACT DATABANK