When it comes to the cannabis industry, identifying the “lead-in weed” provides insights into the market’s future. With this in mind, one needs to look no further than the Canopy Growth Corporation as to what the future holds. Among the top cannabis companies, Canopy Growth Corporation generated nearly 80 million Canadian dollars in 2018. And it’s market cap has skyrocketed from $11.66 billion to $16.34 billion. As a result, Canopy Growth Corporation’s strategy of diversification and brand cultivation appears to be working quite well.
This article is an update on our reporting on the cannabis industry and article comparing Canopy Growth vs Tilray in Spring 2018. Since then, the fortunes of the companies have changed dramatically and in opposite directions. This article dives into what is causing Canopy’s Growth.
Canopy Growth Corporation’s Strategic Diversification
Cannabis was considered an illicit substance with no documented medicinal value not too long ago. Times have changed, however, and a growth industry has seemingly sprouted up out of nowhere. But success has eluded some among the budding (pun intended) cannabis companies. Only a few are making it, courtesy of some carefully orchestrated strategy. For Canopy Growth Corporation, that successful strategy includes diversification. After all, why stake out one section of an emerging space when you can lay claim to many?
The following is a snapshot of Canopy Growth Corporation’s diversification strategy, which has set it apart from other cannabis companies.
- Cannabis in Animal Healthcare – The cannabis market for animal health is estimated at $50 billion thanks to applications in cancer care and pain management. Canopy Growth Corporation hopes to make a notable impact here.
- Pain and Sleep Aids – Estimates suggest that one in five people have chronic pain. Likewise, as many as a third have at least intermittent insomnia. Canopy Growth Corporation is, therefore, targeting these industries with estimated revenue potential of $90 billion and $100 billion respectively.
- Cannabis Derivatives and Beverages – It’s not surprising that the company is pursuing the cannabis beverage market aggressively. Partnering with Constellation Brands, Canopy Growth Corporation is heavily invested in R&D in this area. Its projected $1 trillion market value is certainly enough of a driver in this regard.
An Array of Markets Under a Single Brand — The Canopy Growth Lifestyle
While Canopy Growth Corporation has targeted multiple markets in its strategy, a unifying brand is also their goal. The company recently acquired the Ontario-based Tweed to develop its brand image further. Tweed is expected to expand its current online cannabis-related retail products in actual brick-and-mortar stores all over Canada.
The latest Canopy Growth Corporation news highlighted their partnership with Sequential Brands Group. As the company behind the Martha Stewart brand, Sequential offers Canopy Growth Corporation access to millions of households to further the brand image it hopes to create.
In essence, the cannabis company seeks to portray what looks to be a holistic lifestyle image in its branding efforts. This path includes consideration of health and wellness and an active lifestyle. And it naturally includes recreational aspects of life as well.
Tilray and Canopy: Two Strategies, Two Directions
Six months ago, Bold Business examined both Tilray and Canopy Growth Corporation. Tilray had chosen to invest more heavily in the pharmaceutical aspects of cannabis. While this decision still has lucrative potential, Tilray has since shifted gears a bit. In part, this occurred because of recent Canopy Growth Corporation expansion and growth. While Canopy Growth Corporation news shows rising market cap, Tilray’s has shrunk over 40 percent. Tilray at our previous reporting had a $12.29B market cap and as today it is $6.7B. On the other hand, Canopy Growth had an $11.66B market cap and now is at $16.34B.
As a result, Tilray has taken a page from Canopy’s book. For example, Tilray has partnered with Anheuser Busch to research cannabis-related beverages. Tilray has also acquired Natura Natural Holdings while sharing revenues with Authentic Brands. And Tilray recently acquired Manitoba Harvest for CA$419 million dollars to secure its production resources. These reflect obvious changes in strategy for Tilray compared to its approach less than a year earlier.
With each passing day, the cannabis sector grows – due in part by growing scientific and regulatory acceptance, and of course because of an increasing public sentiment that what was once illicit might actually be acceptable. For those who’ve cut into the market hoping for a slice of the pie, this has proven to be a boon. But among those cannabis companies who’ve come forward with their forks and knives ready, Canopy Growth Corporation has stood out. If they keep making their bold strategic moves, they’ll likely find continued success in the future.