North Coast wine industry finds potential cannabis business ventures appealing
Last year when Francis Ford Coppola unveiled a cannabis product line to go with his wine and hospitality empire, the famed film director was stepping into the unknown.
The traditionally hidebound North Coast premium wine sector had held the emerging cannabis industry at arm’s length, especially in Napa County, because of the stigma of stoners as well as state and federal regulatory concerns.
“We jumped into the cannabis world. Will it work? I’m not sure. But we are willing to take that chance,” said Corey Beck, the chief executive officer and winemaking boss for The Family Coppola, which includes the iconic Geyserville winery.
The results have so far proven the risk was worth taking. Only two accounts from Coppola’s nearly 10,000-member wine club dropped subscriptions because of the new marijuana division, which is a separate business entity named the Sana Co. The media attention on the product — a limited edition of three different cannabis flower strains tucked inside a wine-bottle shaped tin container — was tremendous for the business, Beck said.
“I will say for the investment ... we made and all the press we got, it more than paid for itself,” the Coppola CEO said Thursday during the keynote address at the third annual Wine and Weed Symposium held at the Hyatt Regency Sonoma Wine Country in Santa Rosa.
If anything, Coppola’s pot experiment and related beverage ventures have shown that wineries and breweries are leaning toward embracing cannabis or at least attempting to better understand the marijuana industry rather than treating it as a foe, speakers said at the event. Indeed, hundreds of attendees assembled in the hotel ballroom to hear from various speakers on more collaboration between the cannabis and wine sectors, both of which have huge financial stakes in the region.
“As some of those worst fears never really materialized, then the fear sort of dissipated a little bit,” said George Christie, president of the Wine Industry Network, a Healdsburg company that sponsored the event.
Instead, local wine companies and breweries are looking for more marijuana business opportunities, especially because profit margins for cannabis products can be higher. Constellation Brands Inc., owner of local wineries such as Robert Mondavi Winery in Oakville, in April announced a $1.7 billion deal to sell more than 30 wine brands to E. & J. Gallo Winery after increasing its stake in a Canadian cannabis company.
Lagunitas Brewing Co. of Petaluma was the first major beer brand to go to market with a cannabis-infused drink that does not contain alcohol. Lagunitas said Thursday that HiFi Hops, will be sold at the Outsidelands Festival in San Francisco this weekend, making it the first cannabis drink to be legally sold at a music festival in the United States.
“It’s great validation in this space that a brand like Lagunitas, arguably a premier brand, puts its logo on something that is (made) with water and deals with THC (chemical in pot giving the high sensation),” said Cy Scott, chief executive officer of Headset Inc., a Seattle-based market research firm, who spoke at the event. “They are doing really well just getting started.”
The beverage slice of the cannabis sector still is tiny compared to edibles, oils, vaping pens and flowers to smoke, representing only 2% of the industry, Scott said. Overall, California dispensaries sold some $2.5 billion worth of cannabis products in 2018.
One major challenge for beverage producers is to make a cannabis drink that tastes as good as a premium wine or beer, industry analysts said. HiFi Hops, for example, is a hop-flavored tonic water much less robust than the hearty Lagunitas India pale ales. Federal law bans wine and beer makers from placing either THC, the chemical that triggers psychoactive effects, or cannabidiol, a cannabis compound typically used to treat pain, in a beverage with alcohol.
Coppola is exploring if it can remove alcohol from its wine so that it could infuse it with THC, CEO Beck said. “It’s the taste. It’s a big deal,” he said. “We are definitely getting closer.”
“Taste matters,” said Jessica Lukas, vice president of consumer insights for BDS Analytics Inc., who predicted a $1 billion cannabis beverage sector in the United States by 2022. “People still want these products to taste good.”
You can reach Staff Writer Bill Swindell at 707-521-5223 or firstname.lastname@example.org. On Twitter @BillSwindell.