Canafarma Hemp Products Corp (CSE: CNFA) on the surface may appear to be your typical hemp-related operation. The vertically integrated operation cultivates hemp on a 55 acre farm in New York, and then processes it into CBD-based consumer products for the end consumer. So what exactly is different about the firm relative to the numerous other CBD-focused operations? Largely, that comes down to its sales and marketing strategy.
Typically, the struggle for many new consumer products is getting their product onto retail store shelves. This is a struggle for two reasons: first, is the problem of getting retailers interested in your product enough to place it on store shelves. Second, is the issue of various fees that can be charged to manufacturers once products have passed the review stage.
According to Trax Retail, the typical cost of a “slotting fee” – a fee charged by retailers to manufacturers to have products displayed on store shelves – at a grocery chain is $1,500 per SKU per store. Across multiple product SKU’s and multiple stores in a large grocery chain, this figure can add up to substantial expenses before the first product is even sold, which must be factored into the profitability of a product. And this doesn’t factor in additional “display fees” which can be charged for special product placements to draw much sought-after consumer eyes.
This process can be made considerably easier and less costly however if the product is a brand that consumers know and trust, and that will likely draw consumers to the store. Think of PepsiCo or Coca-Cola in this regard – while these firms pay millions per year to have promotional space at retailers globally, the reality is that no retailer is going to turn away their business on the basis that they don’t like their product, or they don’t think it will sell.
This is where Canafarma’s marketing and sales strategy comes into play, and sets them apart from their peers whom are slugging trial product from door to door hoping that a retailer will allow them to sell their stuff. Rather than focus on getting their product on retailer shelves, the company right now is centered on the direct to consumer marketplace. Here, Canafarma is focused on getting their flagship brand, Yooforic, sold by affiliate marketers online whom will be paid a small commission on each sale.
Part and parcel with this affiliate sales program is a strong marketing campaign that has been heavily enhanced through the use of influencers. In conducting product trials late last summer, Canafarma had its product featured in a Sean Paul music video among numerous other influencer campaigns.
In terms of products, the company currently sells three products which it boasts as having some of the highest absorption rates of a full spectrum phyto cannabinoid hemp product – 84%. It’s two primary products, a chewing gum and a hemp infused oil, as well as a recently launched topical, are sold as a premium product within the CBD space.
A single pack of gum, with 50mg of hemp oil per piece, runs at a rate of US$29.99 per ten piece pack. This is where the beauty of the direct to consumer campaign comes into effect however. That price is for a single packet of gum. Alternatively, a consumer could pay a discounted rate of $24.99 per pack if they subscribe to the service, receiving a package every 30 days under a recurring charge. Referred to as a “subscribe & save membership,” the company offers this option on all of its products to entice repeat product sales.
This is effectively step one of Canafarma’s marketing strategy. Once the firm has an established following, and even further, an established brand, the company will be able to take its product line to national retailers and large online retailers, such as overstock.com and Target. The third phase outlined by the firm involves specialty retailers such as Walmart, Costco, Amazon and more to get stronger product placement. The fourth and final stage then involves international distribution of the Yooforic product line once the brand dominates the domestic market.
This marketing and sales strategy is the core of what sets Canafarma apart from its CBD-focused peers. Rather than center on the hemp cultivation sub-sector which has a low barrier to entry and little differentiation among competitors, the company has focused on developing a brand that has strong consumer support through the use of direct consumer sales and strategic influencer marketing.
FULL DISCLOSURE: Canafarma Hemp Products Corp is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Canafarma Hemp Products Corp on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.