How to make money in the falling market of therapeutically active hemp raw materials
The consumer is not interested in various kinds of “canned surrogates”, but in hemp products with significant therapeutic potential, made from “fresh” green mass of leaves and inflorescences. To organize this kind of sales “from the wheels”, it is certainly necessary to organize the cultivation of certain volumes of therapeutically active hemp raw materials in greenhouses or premises in order to be able to provide fresh products in the spring-summer period of the absence of raw materials grown “on the ground”.
At the beginning of this month, the editors of the specialized electronic edition of national hemp growers focused the attention of our respected readers and listeners on the fact that both in the USA and Canada there is a crisis of overproduction of hemp raw materials rich in therapeutically active elements. However, any crisis opens up opportunities for companies that can use the market situation for their own development, focusing their work on certain features that positively distinguish their products from the total mass of what is sold on the market. In search of this kind of highlights of the North American market, statistical indicators helped, which “lit up” the company, which is rapidly developing in a declining market. It is the activities of this company that I would like to draw attention to in order to demonstrate another trend that will prevail in the global hemp market for therapeutically active raw materials in the next few years.
First of all, it is necessary to focus on the fact that, according to Health Canada, the imbalance in the overproduction of hemp raw materials, which have significant therapeutic potential, is primarily associated with licensed manufacturers, and not with wholesalers or retailers. Despite the catastrophic drop in sales of companies specializing in the cultivation of hemp raw materials rich in therapeutically active ingredients in Canada, it is worth paying attention to the performance of Organigram. The above New Brunswick company managed to increase its market share and sales, while the sales of most of its main competitors fell sharply, and the write-offs of “damaged assets” increased sharply over the same period. For example, a report from a New York-based financial company that specializes in research related to modern cannabis in North America claims that sales of selected Organigram competitors in the second quarter of this year were down more than 39% year-on-year. In the same period, Organigram's sales grew by 60%.
Part of the question of how the company managed to achieve such impressive results can be answered in an interview with Organigram CEO Bina Goldenberg, who focused on the following components of the success of her enterprise:
- the company gradually increased its production capacity and produced only the amount of hemp raw materials rich in therapeutically active elements that were sold on the market;
- based on qualitative sales forecasts, Organigram sells most of what it produces, avoiding the massive write-offs faced by larger competitors;
- it is necessary to develop with contractors a fairly wide, but optimized for sales, product line and, together with them, invest not only in the production, but also in the promotion of high-quality hemp products in the extremely tough North American market;
- at the moment on the market, not only quality is crucial for the consumer. Hemp is an agricultural product, so consumers do not want end products made from hemp raw materials to have a shelf life of up to two years. Unlike our competitors, we actually work “from wheels” with approximately three weeks of stock, unlike our counterparts in the market selling hemp raw materials, which are from 6 months to two years old.
Those. A key factor in the success of the Canadian company in the extremely tough North American market is the fact that Organigram management has grasped that the consumer does not want to receive a “canned” product, but a fresh one, and deliveries to manufacturers and store shelves should be organized almost online. According to Ms. Goldenberg, her company's success in the declining Canadian market comes down to three key messages:
• accuracy of the forecast of its capabilities and the general state of the market;
• well-considered investments in production;
• work "from wheels" and small warehouse stocks;
• quality of customer service.
Commentary of the specialists of the “Ukrainian Industrial Hemp Association”
The experience of the Canadian “Organigram” once again shows that the consumer is not interested in various kinds of “canned surrogates”, but in hemp products with significant therapeutic potential, made from “fresh” green mass of leaves and inflorescences. To organize this kind of sales “from the wheels”, it is certainly necessary to organize the cultivation of certain volumes of therapeutically active hemp raw materials in greenhouses or premises in order to be able to provide fresh products in the spring-summer period of the absence of raw materials grown “on the ground”.
One example of the need to establish this kind of “customer needs” sales cycle is the joint experience of working with our European colleagues, who faced the most severe dumping of Canadian hemp producers in the EU market. It is possible to effectively resist the expansion of Canadians in the European market, including by using the tactics of actions in the North American market of the Canadian company "Organigram".
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