The cannabis-infused beverage sector has seen some of the most significant investments in the industry, including almost $4 billion by Constellation Brands into Canopy Growth and $50 million from AB InBev, alongside powerhouse brands such as Molson Coors and Lagunitas entering the space looking to grab their share of this rapidly emerging market.
Although cannabis-infused beverages account for only about 2% of legal cannabis sales in most adult-use markets, they remain among the fastest growing and most buzzed-about sectors in the industry in both Canada and the United States — a trend that shows no sign of slowing.
In the tidal wave of new entrants into the beverage arena, few have captured the attention of industry insiders and consumers like Napa Valley-based beverage startup House of Saka. The first and only company to produce alcohol-removed, cannabis-infused beverages made exclusively from Napa Valley appellation wines, House of Saka is determined to take cannabis consumption out of the shadows and into the mainstream.
Setting the Bar
From the perspective of House of Saka co-founder and CEO Tracey Mason, cannabis-infused beverages, particularly her cannabis-infused wines, represent the future of cannabis consumption. A former wine industry executive and innovator, Mason sees infused drinks as a means of extending cannabis consumption into occasions in which it’s not traditionally played, including holiday parties, happy hours, bridal showers, dinner parties, as well as simple relaxation.
Cannabis-infused beverages like House of Saka PINK, made from Napa Valley Rosé of Pinot Noir, and WHITE, made from Napa Valley Chardonnay, are part of a new wave of consumer products that are healthier, easier to consume and more socially acceptable — the likes of which Mason believes will become the go-to format for both legacy and emerging cannabis consumers.
The company’s first alcohol-free, cannabis-infused wine drinks hit California’s adult-use market in late 2019. But it wasn’t just the novelty of a cannabis-infused wine from Napa Valley that attracted attention. It was also the idea of a luxury product that could rise above the plethora of canna-brands with green-leaf logos and over-the-top marijuana imagery.
“We felt like we had an opportunity to do something different in this industry,” Mason says. “And I think that any time you can do something different and be first to give something a try, it gives you an opportunity to set the bar for an entire category, and that’s what we believe we have done.”
As the company wraps up 2020, House of Saka PINK and WHITE beverages have made their way into more than 30 top dispensaries in California and are the fastest-growing brand and best-selling beverages on the Ganjarunner, Driven and Budee delivery platforms. With its production challenges in the rearview mirror and a stable distribution network in place, the company projects revenue to grow tenfold over the course of the next year, and it aims to have products available in two additional states within the next 12 to 16 months.
But perhaps more impressive than the product itself is the fact that House of Saka has done everything with less than $500,000 in seed money.
“That’s something I am especially proud of. It’s truly an incredible accomplishment to develop and launch two exceptional SKUs into the most competitive market in the world, to successfully navigate all of the regulations, production setbacks and the packaging constraints to get to where we are,” Mason says. “It is a testament to a great idea, well-executed and to our team who have shown beyond the shadow of a doubt that we really know how to manage cash flow and, in doing so, demonstrate the deep respect for our investors and the faith they have placed on us.”
The Critical Fundamentals
A lot of things have to go right to launch a successful startup. But to start a successful business in a highly targeted, highly regulated, niche category such as luxury infused beverages, basically everything has to go right.
The House of Saka founders chose to target the luxury space “because there was a huge void in that type of positioning,” Mason says. Drawing a comparison between cannabis and the auto industry, Mason goes on to say there are plenty of good cannabis brands that sit in the Honda/Toyota category, but she wanted House of Saka to be more “on the Mercedes side of that equation.” That position, Mason claims, is more aspirational, more defendable and more sustainable. Thus, the packaging and branding were essential.
“It’s artful. It’s unique. It’s well-thought-out — and it’s very expensive, which drives my CFO crazy,” Mason says with a wink. “But at the end of the day, it’s worth it because you only get one time to position the type of brand and company you want to bring to life.”
House of Saka also had to find the right retail partners and strike a balance between brick-and-mortar stores and delivery services. Mason knew the delivery component would be critical to House of Saka’s success because it would give the company a way of reaching the emerging female demographic of cannabis consumers without them having to enter a dispensary.
In addition to the leading delivery platforms, House of Saka products are currently available in about 30 highly curated California cannabis retailers. The company has been particularly selective with its retailers because not every dispensary is “pro-beverage,” Mason says. “Many don’t have the physical space, the clientele or the right sales strategy to make drinks a focal point of their business. And I get that.”
“We don’t need to be in every dispensary,” Mason says. “We need to be in the right dispensaries and on the right delivery platforms, and that gives us the ability to promote within those channels heavily.”
‘The Highest Quality Wine’
But none of that would have mattered if the product didn’t taste good.
The world-class branding, posh packaging, committed retailers and wide-reaching tech partners would have been meaningless if House of Saka couldn’t deliver on its promise.
“I think that’s why our repeat purchase rates are so high,” Mason says. “We knew that if people had an overwhelmingly positive experience with it, they would come back to it. And that’s certainly what we’re seeing in the market right now.”
When she joined co-founder Cynthia Salarizadeh to launch House of Saka, Mason brought an impressive resume from the alcohol industry and deep connections to some of California’s top wine producers. Along with Chief Financial Officer Sue Buchorski, the House of Saka C-suite has more than 60 years of experience in adult beverages.
It was through those connections that House of Saka was able to source its most important ingredient: “the highest quality wine this country produces.”
Mason says House of Saka’s wine sourcing is its most important asset. Even within the company’s investor decks, those sources are kept anonymous. But turning the raw ingredient into a shelf-ready cannabis-infused wine product is both a labor of love and a highly technical manufacturing process.
The alcohol has to be removed, and the cannabis emulsion has to be added, all without destroying the flavor profile that consumers have come to enjoy. That means the emulsion has to be developed specifically for each vintage.
“When I say that Saka is handcrafted, I mean literally everything about it is hand-touched,” Mason says. “We’re physically developing the flavors and physically working with everything to create the right emulsion, to create the right experience. It’s been exceedingly rewarding to be able to do that.”
Mason says the brand and product were undoubtedly developed with the female consumer in mind, though taste tests have scored well with men and women. The company started with its Saka PINK, with a Rosé of Pinot Noir as its base, because it’s the fastest growing wine varietal among women. Next came Saka WHITE, a Chardonnay as its base, the top-selling wine varietal in the United States.
When Mason and Salarizadeh founded the company at the end of 2018, the technology wasn’t up to speed. At the time, they had to create the best product they could and wait for the tech to catch up before the beverages could be bottled compliantly.
But the result has been worth the wait, Mason says.
The Saka beverages are very easy to micro-dose and to meter doses; one ounce of Saka PINK is equal to 1.5 milligrams of THC (each 750-milliliter bottle contains 40 milligrams THC and 5 milligrams CBD). The bioavailability is much better than traditional edibles, with an onset time of 15 minutes or less — and each serving is just 11 calories.
The Foundation and The Future
House of Saka is named for an ancient society of female warriors said to rule the world and conquer all they desired. It’s a fitting name for an all-female company with an all-female advisory board “in the sense that we’re fierce, and we’re determined to make things happen,” Mason says.
The company ethos is focused on “rising to the occasion, but also being highly mindful of and respectful of other cultures, other lifestyles, and creating a diverse and flexible business model that I think marries to the female executive and the female worker,” she adds.
At publishing time, House of Saka is securing its Series A funding that will help fuel growth in 2021. And while a multi-state expansion plan is on the horizon, the company is laser-focused on California for the short term.
“We’re in the middle of the largest legal cannabis market in the world,” Mason says. “And so really dialing it in here and creating a sustainable brand and reputation is paramount to our success.”
House of Saka is launching two new products, giving it a total of four SKUs in the California market. The first is a single-serving wine beverage. The second is a dip into the health-and-wellness sector with a cannabis-infused bath bomb — another luxury item that pairs well with House of Saka’s signature drinks (“It’s like getting a three-hour massage,” Mason says. “It’s an incredible experience.”).
Mason will be the first to admit she sets an extremely high bar for performance. But she does so to create a corporate culture that will allow the company and its employees to succeed.
Rising through the ranks of some of the most potent adult beverage companies in the world wasn’t an easy feat — especially as a female in a male-dominated industry.
As House of Saka’s chief executive, she doesn’t want to hold anybody back.
“I want to help people rise,” she says. “And I think we’re creating the environment that people can do that.”