Consultant & Coach to Cannabis Firms | Speaker | Publisher of the Cannabis Management Review at mitchellosak.substack.com
How Does Big CPG Look at Cannabis? A few weeks ago, I assessed how Big Tobacco will step further into the cannabis space. This time, we'll consider consumer packaged goods companies. In our industry, few topics generate as much heat - and as little light. To best answer the question, it helps to be employed at a CPG firm or work closely with them. I’m fortunate to have done both (at P&G, Maple Leaf Foods and SC Johnson). CPG is a loose collection of national and global companies that sell everyday products like food, alcohol and household products to consumers. CPG firms focus on uncovering consumer insights, creating IP and building differentiated brands. The large players typically compete in mature markets and leverage sophisticated practices and consumer data to develop multi-year strategic plans. Why should cannabis firms care about CPG? > LPs & MSOs will need to play defence when more CPG firms enter the sector; > CPG firms can provide an M&A exit, world class capabilities and capital to a worthy weed company; > Despite differences, cannabis businesses can learn a lot from their CPG peers. I have consulted to some CPG firms who were thinking about entering the cannabis and CBD markets. The scopes of work can give you a sense of what CPG really care about and how they might enter the cannabis space. In each case, my strategy and analytical work focused on 3 areas: 1. Defining the real market CPG cares a lot about choosing profitable markets and segments to compete in. Big CPG needs to capture significant shares of large markets to justify the capital and organizational investment. These generation 2.0 CPG players are also not naïve or overly exuberant. They won’t fall for TAM fantasies or be seduced by the performance of legacy MSOs and LPs. 2. Identifying material risks These are risk-aware companies. A ‘test & learn’ approach will be the entry path of some firms. They understand that you make money by not squandering it and by ensuring your limited capital is deployed in the best 'risk vs reward' situation. Furthermore, CPG take things like product safety, regulatory compliance and ESG very seriously. 3. Understanding the regulations: today and tomorrow As expected, CPG want to know what’s allowed and not allowed by market. Furthermore, they want to understand what the path to legalization or relevant reform is. Two other strategic questions inevitably entered the strategy deliberations: - Can you differentiate and win at the consumer & trade level? - What is the fit with their existing capabilities and assets? Some LPs have danced with CPG partners and investors, with less than ideal results. These are more teething pains and less an indictment of the CPG-cannabis fit. Our sector has barely felt the impact of the big CPG players. That moment will soon come. 🔔 Hit that follow bell to always get my unique, impactful content #cannabisindustry #CPG #cannabis #FMCG #cannabis #strategy
Lots of CPG sitting on the sidelines observing. Will your business be an attractive partner, an acquisition target, or one that will be bulldozed over when tides shift? Spot on as usual Mitchell Osak. I'd add that the brands built the right way with a clearly defined audience (and large), messaging, story and personality will be true competitors and therefore the most likely to be acquired at a handsome payoff.
Many informed longtime stoners prefer smaller, artisanal growers for so many reasons. Mass production, corporate influence,🥱.
Mitchell Osak Exactly! Most don't realize, when the companies that play at that level truly enter the cannabis space, most currently operating in the space will not be able to compete
Mitchell Osak again posts great insights! We’re hosting our first cannabis expo in Minneapolis this weekend. If enthusiasm could be traded for stock warrants we’d all be fully vested in the wildly anticipated windfall just around the corner. Reality is such buzzkill. We have one dispensary where we can buy legit THC flower. And that’s four hours north of the Twin Cities on the Red Lake Reservation. Licenses for cultivation and more retail doors are expected in ‘25 or ‘26. Low dose edibles and bevies abound at remarkably sophisticated dispensaries around the metro. Our traditional legacy suppliers are thriving amidst the regulatory entropy. But hey we’re legal. You betcha!
The cosmetics skin care opportunity is enormous-bigger than beverages.
I agree important to watch CPG moves. Very helpful. Thank you 🌼
Love this, thank you Mitchell Osak great post
Thank you for this post. CPG will have a big impact in this space and very important to watch.
On point! I too hail from the global CPG leaders and agree here. I educate & discuss these points on the regular with prospects and clients when sharing why a national trade event for THC CPG brands & retailers is playing to the future.
Early risk taking leader in Cannabis & Psychedelics | Software / Hardware Innovator | MMPR Lic #005 2014 | 2x seed to IPO (TSX.V / NASDAQ ) > -High Times Top 50 Women - Ai/ML/HPC Architect - GPU Encryption Pioneer 2011
2moI’d discussed Cananbis cosmetics and skin care with a multi decade cosmetics and skin care test lab president. The processor lic and facility sterility is similar to cosmetics mfg and trials. Yes. Trials. Clinical trials for “claims”. That showed me they can do cannabis anytime they care to incur cost. Done. Stigma, kept them from first moving. Yay them. They get to watch and live real-time necropsy everyone else’s attempts. And don’t have to help or get involved. Yay. Once it’s baked out they cherry pick what they can digest easiest > risk averse is an understatement. Dd will be Long and have clawbacks. Most founders dislike gov oversight. Dislike regulations. Find constraints a challenge to their “authority”. That will make their companies radioactive to cpg brands. “Play one on tv” isn’t “is one in real life”. The OG/ legacy folk nope. Folks who “care more” nope. The ones with most accurate insight and cost controls gets attention. Financials set the hook. Cleanliness closes the deal. Ease of digestion. Zero controversy or pain.