The Canadian arm of alcohol distributor Southern Glazer’s Wine & Spirits LLC is entering the cannabis market by launching a marijuana-focused broker and partnering with licensed producer Aphria Inc.
The new company, Great North Distributors Inc., will represent Aphria products to retailers and regulators across the country, essentially acting as Aphria’s on-the-spot salesforce, the company said on Thursday.
“We’re going to be able to take a lot of the experience we have from the beverage alcohol market and translate it to the cannabis market,” said Doug Wieland, general manager of Southern Glazer’s Canadian division.
Southern Glazer’s, the largest wine and spirits distributor in the U.S., is already a major player in the Canadian alcohol market, representing brands such as Bacardi, Rémy Cointreau and Tito’s Vodka in both private and government-run liquor stores.
“We believe there’s going to be a lot of similarities (to alcohol) with both government involvement, and the way the product will be retailed through those government bodies,” Wieland said.
The partnership comes at a time when Canadian cannabis companies are starting to focus on retail strategies for the adult recreational market, which is expected to become legal sometime later this year.
Much of the industry’s activity so far has focused on cultivation: building facilities and getting production costs down. But, as with any consumer product, profits will ultimately depend on getting marijuana on store shelves and creating brand recognition and loyalty.
That’s led Canopy Growth Corp. to develop plans for its own retail store chain called Tweed Main Street (for provinces that will allow private retail), and Aurora Cannabis Inc. to buy a 20-per-cent stake in Alberta liquor store chain Liquor Stores NA, which recently changed its name to Alcanna.
“Whether it’s people choosing their own route to market or whether they choose an agency model, we believe the feet on the street are going to be key to the success of cannabis,” Wieland said.
Great North will initially have a team of 21 people. It won’t be transporting and warehousing Aphria’s products, but it will work with private and government-owned retailers to ensure Aphria brands get prime shelf and display space, as well as provide consumer data.
“It takes a lot of back office, training and … analytical tools to start (a national salesforce),” said Jakob Ripshtein, Aphria’s chief commercial officer. “What we’re able to do overnight is gain that expertise.”
Ripshtein wouldn’t comment on the financial arrangement between Aphria and Southern Glazer’s, nor Great North’s cut on Aphria sales. But the distributor will, at least at first, work exclusively with Aphria.
“We established Great North Distributors to be the exclusive manufacturer’s representative for Aphria in Canada and that is our primary focus at this time,” said Southern Glazer’s spokesperson Cindy Haas. “At such an early stage in this venture, it’s premature for us to speculate how our business and the portfolio we represent will evolve over time.”
Wieland said he approached Aphria around a year ago and pitched them on the idea.