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Straight Dope: Canna Energy hemp oil drink scores sales high

02-Apr-2014
Last updated the 03-Apr-2014 at 13:16 GMT - By Ben Bouckley+
A Canna Energy poster, advertising its launch in Florida this year
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Canna Energy says it has sold around 150,000 cans of its hemp oil infused energy drink in its first 100 days and is hot on the heels of Red Bull and Monster in terms of sell-through in many Colorado locations.

Founder Mark Spoone tells BeverageDaily.com that the CSD could sell close to 1m cans in 2014, and explains its short history, which began when he ran into problems selling a Cannabis-based energy brand in the US.

“We got some pretty interesting traction but quickly ran into challenges with it. So we set out last October to create what we thought was a better mousetrap of sorts,” he tells BeverageDaily.com.

The result is Canna Energy, an energy supplement infused with 50mg of hemp seed oil (hemp is a high-growing varietiy of the cannabis plant), which is emulsified in the energy drink with patented technology from VIRUN that uses Vitamin E as a binding factor instead of synthetic chemicals.

Despite the notoriety, a host of possible health benefits...

Essential Fatty Acids (EFAs) in hemp oil are associated with health benefits including protection against heart disease, cancer, bowel disease and other autoimmune diseases.

“Cannabis and hemp has got tremendous notoriety in this country right now. We’re seeing people on both sides of the equation – values and supposed ‘evils’ around it,” Spoone says.

“We put a stake in the ground and said ‘Look! Hemp is not marijuana. Your stance on THC [the principal psychoactive in cannabis] and medicated use of marihuana is your choice, that’s not our mission or mantra.’”

Instead, Canna Energy’s mantra involves using the energy drinks category with its 13.6% CAGR, but creating a healthier alternative with Omega 3s and 6s that educates people on the benefits of industrial hemp.

In its first 100 days Canna Energy has sold about 147,500 cans across 10 states, has 2,214 wholesale and retail locations, and is coming to market with a second production run of around 10,000 cases.

“We’ve got pre-orders for almost 30% of that through a couple of regional distributors. We haven’t got national distribution yet – we’re a bit challenged with the hemp leaf on the logo,” Spoone says.

That said, Canna is talking to a PepsiCo distributor in Portland, Oregon, and Spoone hopes to secure nationwide distribution for the brand within seven months, with preliminary approval with Core-Mark (to do precisely this) contingent on getting one of that company’s key customers on board.

Tutti-frutti flavor but a smoother finish than Red Bull

Canna Energy predominantly uses natural ingredients – cane sugar to sweeten the drink and no artificial preservatives, colors or flavors or sweeteners; a low-calorie launch will fuse stevia, xylitol and erythritol.

Spoone claims the drink, with its tutti-frutti flavour, has beaten Red Bull Original in around 200 blind taste tests conducted by his brand in-house, with 75-78% of people preferring the drink.

“Red Bull has a bit of a metallic taste, a slightly bitter finish – we tried to get rid of that, and people find our product has a smoother finish, a fruitier flavour and doesn’t have the same metallic bite,” he says.

Spoone explains that Canna Energy uses hemp oil rather than fish oil to deliver Omegas 3 and 6, because “fish oil doesn’t evoke much a reaction from people, but hemp leaf does – it’s very iconic”.

“That’s one reason why we chose to use hemp for our packaging, to catch that 18-25 demographic, the dominant consumer base for energy drinks,” he adds.

“It might be evocative, it might also be a little bit provocative – but it’s going to get people talking, and that’s a catalyst for us in using hemp.”

'Canna Get Some!' - Cheesy but fun for 18-25s

This element of provocation and fun is also apparent in Canna Energy’s marketing tagline ‘Canna Get Some’, which Spoone admits is a “little bit cheesy, but 18-25s, the core audience, get a chuckle out of it – it’s fun!”

Nonetheless, this edgy appeal also carries drawbacks, and Spoone says that executives at major grocery chains – “usually male, usually white, usually in their 60s” – sometimes have problems with the drink.

“We’ve been accepted at a couple of quite conservative national chains such as Kroger, we’ve got their verbal approval for a local affiliate King Super’s in Boulder Colorado – the tree hugger capital of the world,” he says.

Marijuana was recently legalized there, and Spoone tells this website he hopes to use that as a jumping-off point to extend distribution across other outlets in the state and further afield.

“But we’ve talked to people in Arkansas and Alabama – and everyone there looks at it, tries it, says they like it and think it would do really well,” he says.

“Then 50% of the time when it gets to upper management – generally that 60-year old white guy who owns the company and is in charge of its image – we’re finding that’s where the hurdle comes in.”

But at marketing, store and consumer level Spoone says the brand attracts strong support, and he insists he wants to build a national mainstream brand, not a co-brand.

Strong sell-through data in Colorado

Given sales figures to date Canna Energy is on the right track, and Spoone claims that across three local chains in Colorado where the brand is stocked, it is the No.3 selling drink by volume behind Red Bull and Monster in around 70% of the locations.

“What’s compelling to me is that these guys average 40 facings in each of these convenience stores. On average we’ll have three. From an ROI standpoint, that’s a pretty powerful statement,” he says.

Spoone hopes that such anecdotal field data – ROI, margin contribution, sell-through rate – will help the brand penetrate national chains such as 7-11.

“Our goal for the year to spend all our time, energy and focus on 10 strategic markets we think are receptive to the drink. Given our first 100 days, my goal for the year would be 800,000 cans (possibly closer to 1m) which would be a great starting point,” he tells BeverageDaily.com.

(These 10 markets are Washington, Oregon, California, Colorado, Austin (Texas), Florida, New Hampshire, Vermont, Maine and Massachusetts.)

“We didn’t set out to be Red Bull. We did set out to be a very cool, interesting brand with a good following and a certain notoriety,” Spoone says.

Related topics: Health and Wellness , Functional Beverages, Fizzing-Up Carbonates, Future Flavors, Markets, Energy & Sports, Ingredients