By Charles Roques
The concept of branding livestock goes back as far as Egypt. It was brought to the Americas by Spaniards and adopted by immigrant ranchers. It became the ownership mark of cattle ranchers to identify the many cattle grazing together on open ranges. To make identification easy, simple iconic symbols became known as brands.
These brands transformed into corporate logos, with a successful logo embodying a company in an easy-to-read icon. Today’s brands create identity through associations with visual images, color, memory, smells and textures, with such branding techniques now being vital in the legal cannabis industry. Accordingly, investors need to learn what’s underneath an image because even mainstream brands have been known to capitalize on subliminal stimuli as a means of attracting consumers.
Cannabis-infused edibles and alternative forms, like drinks infused with cannabis, are becoming popular and may overtake smoking as the preferred form of dosage. Not many of the current edible manufacturers are publicly traded, but that could change quickly. In the meantime, some existing non-cannabis companies, like makers of so-called energy drinks, are noticing this and have started to move into the marijuana-related market.
The energy drink sector derives much of its “energy” from caffeine as many on the market will state, although usually in small print. Several other healthy ingredients may be included and the implication is that the healthy ingredients supply the energy. Adding hemp or cannabis extract to an existing recipe or formula may not create a new product and simply claiming that it contains 100% hemp juice does not change that fact. True cannabis-infused drinks or edibles may not need many additives or boosters like caffeine. How rich or potent are the other inclusions? Do they overpower the cannabis addition? Is there enough cannabis to make a difference?
Health-conscious consumers will read labels for artificial or toxic ingredients. To protect the health of your investments, do research beyond a company’s branding to understand all of the additives, sweeteners and fancy packaging. Junk food has some of the strongest branding and promotional images ever created, but that doesn’t make it good for us.
There are great medical benefits from cannabis, but like the ubiquitous greek yogurts, or any other nutritional fad that comes along, that may not be the only ingredient, nor the principal one. It helps, even with this wonder plant, not to assume that the addition of cannabis, CBD, THC or hemp juice will be beneficial when mixed with other deleterious or questionable ingredients that could undermine a product’s quality or desired effects. Additives like preservatives are claimed to protect the nutrients, but in reality they often just preserve the shelf life long enough for someone to buy it.
Whatever your thoughts are on cannabis, whether new-age or old school, the business aspects will be handled with the same tactics as many other products. Good companies should offer a good product and sell it because of its intrinsic qualities and not because of its association with another product or single ingredient. Don’t confuse branding with honest ingredients.
Smart investors need to understand the power of branding not to cash in on it or avoid it, but to consider its part in the equation for evaluating a company. Good investing is about making decisions based on fundamental business principals. Sure, there can be fancy icing on the cake, but it’s alway better if it is in the form of profits for shareholders or true health benefits for the consumer.
Attractive wrapping should incite your curiosity so you can discover what is inside the package. Make sure the qualities you respond to reflect the product or business and not just what you want to hear. And don’t underestimate the power of branding. It can be stronger than caffeine.