“Our CBD brand Vaay became the first German direct-to-consumer CBD brand …I’m still somehow staying close to my roots.”
“The brand for millennials”
When Sanity Group started out in 2018, the focus was on medicinal cannabis for people aged 40+, now the Vaay brand is targeting a much younger demographic.
“I call it the brand for millennials,” Hänsel said.
“When we looked into the US back then [in 2018], we saw that there was a huge younger target group already consuming CBD overseas, but not really in Europe, and we wanted to be the first one in Europe to really go into that space of stressed millennials who cannot sleep, who have anxiety, who are stressed and are having a hard time coming down in the evening.”
The goal of Vaay is for millennials to view the product as a supplement to a healthy lifestyle, not to be looked upon as a drug or a medicine, which is clear from the bright, colourful packaging and fun messaging on the products.
The “relax, recover, sleep” range includes CBD and hemp products that are designed to reduce stress and anxiety, aid muscle recovery after exercise, and promote better sleep.
“The human being is the only being in the world that undersleeps by choice, and that’s the reason why that was a very important part of this range.”
High profile investors
Last week, the company announced a US$4.8 million investment from a host of celebrities, including Black Eyed Peas frontman Will.i.am, US actress Alyssa Milano, German soccer star Mario Goetze, alongside Bitburger Ventures.
Due to the company’s early investment from German venture capital companies, word spread quickly about this innovative business.
“I talked to Snoop Dogg’s investment manager, they said ‘We really like what you’re doing and we believe Europe is the next big market after the US. I want to invest in you.’ And then he invested, and suddenly a whole US celebrity group was unlocked,” Hänsel said.
The latest funding round brings total investment in the company to US$29 million, the highest level of investment raised in Europe by any cannabis startup to date.
Vaay is off to a strong start as it enters the UK market, due to musician Will.i.am’s support of Vaay and his role as a judge on TV talent show, The Voice UK.
Hänsel said the brand will first launch an e-commerce site before moving into retail channels.
“We normally start with direct-to-consumer, that’s [been] my bread-and-butter business that I’ve known since The Iconic – how to get people into an online store, how to make them convert, how to inform them. However, I strongly believe that the CBD game is not only online, you have to have retail partners,” he said.
Vaay works with pharmacies and drugstores in Germany and will adopt a similar strategy in the UK market.
“Ideally, we want to go into pharmacies first, because we believe they are the hardest to convince, and from there, we’ll go to the drugstores, specialty stores, and maybe at some point, Marks and Spencer and those stores,” he said.
“We really are hybrid by definition so we want to do online first, but then traditional retail too.”
But expanding a cannabis product into a new country brings a lot more challenges than a typical consumer goods item.
Every country has differing laws around the use of cannabis, CBD and hemp products. In the UK, for example, legal CBD products must not contain any more than 0.01 per cent of Tetrahydrocannabinol (THC), the principal psychoactive constituent of cannabis. In Germany, it has to be less than 0.2 per cent.
“There are people who say that when there’s zero THC, the efficacy of the product is not as good anymore. Others say THC doesn’t play a role. What we always said from the beginning is we want to remain very close to the natural plant, and the natural plant has, not only both but, many more cannabinoids.”
Vaay’s German product range contains the maximum THC levels allowed in both countries.
“These different laws make it a bit more complex. For example, if we sell well in Germany and not so well in the UK, we cannot just take our products into Germany and sell them there, because they’re obviously different products.”
Much needs to be done by the industry in terms of consumer education, as there is still a lot of misunderstanding around cannabidiols. In terms of marketing, social media advertising would be an important part of getting the word out about an online retailer, but CBD companies face barriers around that too.
“All the big global advertising platforms like Google, Facebook, Instagram, don’t allow us to advertise CBD because cannabis at a federal level is still illegal in the US, they cannot allow marketing of any part of the cannabis plant,” he said.
“It’s really tough.”
Influencer marketing has therefore become a key tool for the business in terms of educating consumers about the products and removing any stigmas associated with CBD.
Australia in sight
A successful UK launch spells a bright future for the business and puts it on track for a greater international expansion.
“If the UK goes well even [by] the end of the year, we have the potential to become the biggest CBD brand in Europe, because Germany and UK are the biggest two markets and if we lead both markets, there’s not much room for someone else.”
Currently, there is still a lot of red tape around the sale of CBD products in Australia but change is on the horizon. In September, Australia’s Therapeutic Goods Administration (TGA) announced an interim decision which would allow the sale of low-dose CBD products over the counter at pharmacies from June 2021.
With Hänsel and Friede’s strong ties in Australia, they are hopeful that they will be able to bring the product range Down Under in the near future.
“It will be one of our next big markets. I actually think that Australia will be before the US,” Hänsel said.
“The regulations are a problem … but we are now brainstorming how to bring Vaay to Australia and what kind of model [we need]. In terms of medicinal cannabis, Australia is opening up quite [a lot] right now.”