Keef Brands CEO Discusses Partnership Growth Strategy
Keef Brands, a Colorado cannabis company best known for its THC-infused sodas, has embraced the power of partnerships as it looks to grow the market for drinkables.
Earlier this year, the company announced an agreement with CannaCraft to re-introduce its products to the California market.
That partnership is one of a handful of deals inked by Keef Brands CEO Erik Knutson as the company has expanded its reach into multiple markets across the country.
The company currently distributes its products to more than 800 dispensaries throughout the U.S. and internationally, and is considered to be one of the leaders in a still emerging THC-infused beverages category.
Launched in 2010 by brothers Erik, Scott and Kelly Knutson, the company has developed a loyal consumer following for its Keef Cola, Colorado's first cannabis-infused soda.
Today, Keef has a range of low and high dose products and sells to recreational and medical consumers across Arizona, Colorado, California, Nevada, Michigan, Puerto Rico and Jamaica.
For Keef, its partnership strategy works two ways: In Colorado, the company helps brands with production and distribution. Outside of its home state, the company identifies partners that can co-pack and distribute Keef brands.
In January 2019, Keef Brands partnered with Ceria, a cannabis-infused beer company created by Blue Moon founder Keith Villa, as the brewery rolled out in Colorado. Keef Brands is also working with California-based Lagunitas and AbsoluteExtracts to launch Hi-Fi Hops in the Colorado Market.
Speaking to THCnet, Knutson said these partnerships are a crucial aspect of the company's strategy since interstate distribution is not permitted.
"Partnerships on the manufacturing side, especially for beverages, are critical while we're dealing with the issue of federal illegality,” he said.
According to Knutson, new market expansion is costly, and economies of scale are difficult to achieve.
Although every partnership agreement is unique, each one typically involves "contract manufacturing, distribution and [a] sales agreement," he explained.
This collaborative approach to product creation and distribution is common amongst small breweries. Co-branded beers, shared distribution networks and an overall collegial spirit have helped mainstream the craft brewing segment over the last two decades.
Similarly, Knutson said he views his partnerships as somewhat non-competitive because any growth is beneficial for the segment.
"More vendors means more people are spending marketing dollars to drive awareness for the category," he said. "That's good for everybody."
After a decade in business, Keef has solidified itself as one of the most recognizable cannabis businesses in the country. In its home market of Colorado, where the company’s root beer offering is a top seller, Keef sells the highest volume of beverages statewide.
"Approximately 20,000 to 30,000 beverage units each," Knutson said.
California is currently the company’s second-largest market, but Knutson expects it to move into the no. 1 slot within the next six months. Keef already has over 500 dispensaries carrying it's products and expects sales to approach eight figures by the end of 2020.
Looking ahead, Knutson said he is enthusiastic about the growth of THC-infused beverage sales, particularly as more states consider allowing on-premise consumption. Bars like Lowell Café, the country’s' first cannabis café, have already begun socializing the cannabis experience for consumers.
This presents new opportunities for cannabis companies, Knutson said, as social use locations will help drive consumer interest and break down price sensitivity toward cannabis-infused beverages.
"It's a much easier pill for people to swallow when you're buying a six dollar beverage at a bar," said Knutson.
He added that Keef intends to support social use legislation efforts across the country.
"We're excited to give people the opportunity to explore what cannabis beverages and social consumption is all about," he said.