Freddy’s Fuego operates with the simple yet impossibly difficult goal of incrementally getting better with every single harvest.
“Just like in any other business, the moment you get complacent and rest on your laurels, you get passed,” co-founder Tim Haggerty says. “There is always somebody doing it better than you.”
From the genetics to the closed grow environments, everything bearing the name Freddy’s Fuego is customized to be high-end. And when other cannabis producers in Washington were cutting corners and slashing prices, Freddy’s maintained its top-shelf pricing strategy and cultivation philosophy, helping the company double its sales from $2.5 million in 2019 to $5 million in 2020. According to Haggerty, the company was on track to bring in $7.5 million for 2021.
“I don’t think anyone has ever grown a plant to its maximum genetic potential,” co-founder Ben Davis says, “but it’s our goal to constantly increase by 1% on each grow, to try to get better and to see what we can do to enhance and bring out more terpenes, cannabinoids and THC.”
The process isn’t cheap and the margins are paper-thin, but the belief is if the quality is there, consistently, then the company will earn its place at the top.
“It’s something that we have done since day one, even to a fault,” Haggerty says. “Even when there was the big oversupply in 2018. We got our ass kicked like anyone else, but we just had to stick with it.”
And, for the most part, it’s working, as the company’s products regularly sell at $50 an eighth at approximately 225 retail stores in a state where thrifty consumers can purchase an ounce for the same price.
“We are in the top 5% of price points,” Haggerty says. “We have been fortunate enough to command a pretty high price point and still do a decent volume.”
On the Hunt
Davis spends a good amount of time each year in and out of airports, traveling to cannabis hot spots, developing new relationships and, hopefully, keeping ahead in the genetics game.
“The pheno hunts are about constantly searching for new flavors and new genetics. It’s very expensive and it’s hit or miss,” Davis says. “A majority of the seed breeders are friends of mine that I communicate with about the genetics that we’re hunting, so it kind of gives us the best ability to find the newest and best cultivars that hopefully the customer base will enjoy.”
This level of research and development takes a considerable amount of time and money, and it doesn’t always deliver the desired results.
“Ben and I would definitely butt heads in the past,” Haggerty says. “He was very much team genetics and ‘let’s cure this for as long as possible’ and ‘let’s do all the little things to make us stand out’ at a time when a lot of people were just growing Blue Dream and putting it in a bag and not really caring.”
Freddy’s mantra is to be different and to invest more money and time finding new cultivars and new terpene profiles.
“We’ve spent well over $1 million researching and bringing new strains to market,” Davis says.
The company developed “pheno parties” as both a celebration and a way to mitigate the risks of bringing new genetics to market. Once Freddy’s Fuego has procured about 40 new cultivars, the company begins its 12- to 18-month research process, where on average, four or five strains will make it to market. At the end of each cycle, the company throws a “pheno party” where industry partners, consumers and critics learn about what genetics were grown, where they came from and the test results. Davis says the company uses the feedback to find the most popular cultivars that can provide a return on investment and that can remain viable on a shelf for up to six months.
“Finding terpene profiles that are loud six months later, not just when they are fresh on the plant, and going through this process with the community allows us to put our best foot forward when it comes to finding out what the customer base wants,” Davis says.
Finding a Premium Balance
Initially, Freddy’s Fuego operated more like a home grow, where the team only did what was in the best interest of the plant. While the company still strives to do that, the co-founders realized there had to be a point where the garden could have its boutique flourishes, while still being profitable and operating on a reliable schedule, a classic clash seen even the company’s founders.
“We are very opposite, but we also really respect each other,” Haggerty says of his relationship with Davis. “There was a learning curve to meeting in the middle.”
“We consider each other the yin and yang,” Davis adds. “We really complement each other.”
The co-founders agreed they couldn’t change the recipe on a cultivation that was earning a premium price-per-pound, but they did find new ways to mix the ingredients and revise post-cultivation procedures.
Although Freddy’s Fuego is a Tier III license holder, which allows it to produce up to 30,000 square feet of cannabis and process it, the company only uses approximately 10,000 square feet at its Poulsbo, Washington, facility. The company grows in eight separate 1,000-square-foot rooms with each room using closed grow environments to tailor the humidity, temperature, oxygen and CO2 levels to the specific requirements of each cultivar. But the company needed to tighten up its harvesting schedule.
Initially, when the plants were ready to harvest, the company had staff dedicated to one task, such as bucking, trimming or packaging. Then in 2019, all the employees began working together on a rotating cycle of daily tasks. With all the post-cultivation tasks regulated to a cycle, the staff started keeping pace with the production side of the business. This led to a bump in production, followed by an increase in profits.
Streamlining the operation also freed up time to launch two additional product lines: the mid-tier Cake Cannabis and Fire Ass Mids budget line, which together bring in $1 million annually.
“We got away from the home grow practices and more into commercial manufacturing — more automation, more systems, more process and just more streamlined,” Haggerty says. “It was huge for us.”
The additional streams of income feed right back into the company’s grow operation. Although Freddy’s artisan approach includes fine-tuning the grow environments based on the week or even day during cultivation, the company found ways to incorporate automation systems. Davis says the grows have fully automated HVAC and irrigation controls, freeing up additional time for plant maintenance.
“When you automate, it gives you more time to spend with the plant, look at the plant, to give the plant maintenance, collect data points and slowly tailor your strain-specific data,” Davis says.
That extra time helped Freddy’s Fuego hit a new milestone with its Ice Cream Mint strain, which just received the best test results since the company started cultivating in 2017. The cultivar, an Ice Cream Cake strain crossed with Kush Mint, tested at 38% total cannabinoids.
“It’s an incredible cultivar and it set a record for our testing,” Davis says. “We’ve tested over 300 strains, so to be the No. 1 out of 300 strains is pretty special.”
It’s the kind of numbers only made possible from a commitment to getting just a little bit better with every harvest, a commitment Freddy’s Fuego knows it customers expect and Davis is keen to deliver.
“As a connoisseur company, I think a person buying a $50 eighth is buying the flavor,” he says. “They can’t be unimpressed.”