Ray’s Lemonade -“Liquid Sunshine in a bottle!”
Cannabis drink Ray’s Lemonade sales crossed a million dollars per month making it the best-selling cannabis drink in USA. We caught up with Co-founder Daniel Kinney on what it takes to build a million dollar brand.
Tell us a little about yourself. How did you start? What made you decide to start making cannabis beverages with Ray’s Lemonade
I am the most unlikely person to be owning a cannabis lemonade company, my background is in construction, I was never a food or beverage guy but give me a skill saw and a pile of lumber and I can make all your dreams come true!
Still, just a week ago we celebrated a new milestone, our wholesale lemonade sales reached over a million dollars per month in revenue. Comparing the sales to all other brands over the last 365 days, it shows that Rays lemonade is the best-selling cannabis beverage in the USA. Now, it would be nice if I could say, we planned it all like this but we didn’t.
Early on, at the marijuana farm, we were trying to find a way to even out the ups and downs of the flower sales and overcome the pain of low prices as new farmers overgrew and undercut everyone’s prices. We were looking for a value-added cannabis product because we reasoned that with the intensely competitive market, we needed something that set us apart and would continue our relationship with the retail stores all year round, even when the flower sold through and we were out until the next harvest, or if someone walked in the retail store offering an incredibly cheap flower. We wanted to create a more durable relationship.
My brother Ray and I bounced ideas around and we quickly landed on lemonade. I liked lemonade because it just felt right, refreshing, delicious, familiar, and relaxing… “Liquid Sunshine in a bottle!” he said.
We started with the original lemonade flavor. Neither of us had any experience making beverages and so the rollout was slow, from label designs to perfecting the formulations it all fell to Ray, who is the primary operator of the farm and it turns out he has a great sense of creating excellence in all the things we do. It had to pass through Ray’s gauntlet of requirements to be excellent before it could be released, so by the time it was tweaked, reformulated, taste-tested and reworked again, It looked great and tasted great. But consumers adopted it slowly, most didn’t know cannabis could even be delivered that way. The beverage business grew organically with no marketing at all. We considered ourselves marijuana cultivators first and foremost, so it started as a trickle and we were fine with that but, now it’s a raging river of Lemonade and it’s our single biggest focus and most successful product!
Source: Ray’s Lemonade
As Co-founder of Ray’s Lemonade, what does your day look like?
“Ha! I’m sure almost everyone wonders what the hell I do all day? Life is good at Ray’s Lemonade! I love building things so, I am happiest when I’m doing that. I am tasked with building our new California facility which is exciting and challenging. Some days I’m building new relationships with vendors or talking to entrepreneurs who are wondering about becoming a licensed manufacturer. In California, I am working at building relationships with retailers and home delivery companies who are also excited about the product, and I love hearing from consumers how much they love the products, those are some of the highlights and it’s a good life when you get to do all that on a daily basis.
Just this last summer, a Seattle store was sold out of Ray’s Lemonade, so our delivery team was sent to deliver a large order. As they came through the front door with cases of lemonade the whole store erupted in applause!
That enthusiasm is contagious and it all makes the work worth the effort.
Tell us about your production. How does it all work? How many cases? What processes do you follow in making your cannabis-infused lemonades?
It starts with this promise to the consumers, “Great taste, Great effect… Every time!” Everything we do revolves around that principle and promise.
Cannabis drinks are hard to make and good tasting drinks are much, much, harder. We make our own emulsion in-house and it is the basis of all our products. It needs to disperse evenly in the tanks, not crash out over time, and above all, it must remain the best tasting emulsion out there. You’ve heard that “oil and water don’t mix?” Well, that’s not entirely true, but there is a lot of specialized steps to make it work well. Much of our processes are closely guarded proprietary trade secrets. Every beverage starts with all natural ingredients, our recipes and SOPs are meticulously followed, and our cannabis comes from 90% pure distillate, which at that level ensures that no contaminants are present. The beverage is mixed in 30 barrel tanks and the filling lines run about 20,000 bottles of Lil Rays and 5000 bottles of the 12oz Rays Lemonade per day.
Source: Ray’s Lemonade
You have a bunch of SKUs, can you take us through them and their prices. How do you come up with new Ray’s Lemonade flavors? Which SKU sells the most?
Isn’t the line up amazing? From Huckleberry to Kiwi and Dragonfruit to Tigers Blood, these flavors are all incredibly good! No matter which one you try the most common reaction is “WOW!, that is really good!”
The creation of any new flavor goes through rigorous testing and vetting but it starts with an idea. Sometimes the ideas are suggestions from our consumer fan base and sometimes inspiration comes from Ray and “G” (Geyang Wu, PHD), our in-house doctor of food science. The consumer is always the driving force and the final decider of what we should focus on, last year over 1.86 million people chose to spend their time with a Ray’s branded product. People have a lot of choices and we feel honored that we can connect and satisfy their desired experience with our products.
Our best selling SKU is: Lil Rays, Strawberry Lemonade 100mg. It sells for around $12.00 in the store.
What do you think is the best marketing strategy for cannabis drinks? How do you market Ray’s lemonade?
It’s funny but I don’t think we ever really have “marketed” Ray’s Lemonade products. It has been an organic growth from the start. People try it and love it, they take it to a friend who loves it too, and so on. That word of mouth type of marketing is the best endorsement that a product can have.
As we expand to new markets, like California, we are just now beginning to spend money on marketing and reaching out to new consumers that may have never heard about us. We are looking at three fronts to introduce ourselves to consumers, getting retail shelf space directly, working with established distributors, and Direct-To-Consumer e-commerce via home delivery options so that the product is available to everyone. Our best marketing tool is having a delicious tasting drink with predictable quality and great cannabis effects. Usually, a company only gets one chance to impress a person, we want the first time that you try Ray’s product to be special, that you will absolutely love it!
How important is the role of a retailer in moving your product? How do you decide which retailers to work with and how do you work with them to push sales?
In Washington, the retailer is the gatekeeper to access the consumer, so getting shelf space at the stores is everything, there are strict rules regarding using “undo influence” under Washington law, so there is no magic trick to it, it is a level playing field for everyone and the product genuinely must be a highly desired product for the retailer to want it. That means our products have to sell through… and they do!
In Washington State there are 463 licensed retail stores and Ray’s Lemonade is carried in 442 of them, which is a 99% market penetration.
Coming to California there are some new rules like home deliveries are a thing here and that creates a whole new way to reach the consumer. California is a big and diverse place, as a result, we are actively looking at successful distribution companies and are willing to speak with prospective distribution partners so as to not leave anyone out. We want to be able to reach all California consumers. We are starting those conversations now and I want to encourage anyone reading this, that has a distribution business or home delivery business, to contact us if they have an interest in working with us.
I would assume education is key in creating awareness about this relatively growing industry.
What is the best way to educate the new consumer? How do you go about it?
Yeah, that is a common response “Wait what, you can drink cannabis?” Once a person knows cannabis drinks exist, it’s not hard to convince them. When something is inherently true, it also makes the most convincing argument.
What a cannabis beverage does that nothing else quite matches is:
-As a liquid, it is faster acting than other edibles, and we do some added proprietary steps to even reduce the time further. This helps the consumer experience, by easily letting people land on just the happy dosing amount they love.
-More variety; the many flavors and types of beverages give a wide range of experiences to meet people’s preferences, refreshing, sweet, tart, soothing, etc.
-Social situations: As a beverage, it reduces the stigma some people feel about cannabis. America loves their beverages and this normalizes the experience for many people.
-It’s easy and fun to share a new flavor with a friend, bring it to a BBQ, take it on a hike, a day at the beach or other social gathering. Cannabis drinks are growing in popularity because they make sense in people’s lives.
Where do most of your sales come from? What age groups consume your beverages the most?
Honestly, we don’t focus much on demographics, we focus on the big three important things; “Great taste, Great effect… Every time!” The whole team has that laser focus on making a great product and it shows, Ray’s Lemonade makes a beverage that can be trusted to give you the same experience every time.
It turns out that a lot of different people appreciate that effort and love that experience of drinking a Ray’s Lemonade. Retirees, musicians, soccer moms, business professionals, athletes, artists, construction workers, health care workers, dog walkers, government employees and on and on... It is such a wide swath of people. They are aged 80 to 21 years, we hear from many of them and love the feedback! We think that we have the best consumers and fan base anywhere. Our demographics mirror the industry as a whole, there really is no difference. Some statistics I’ve seen show that beverages appeal slightly more to women and the boomers, but our internal data doesn’t really lean one way or the other, some of our proudest and loudest fans are under 25yr old males. Our beverages appeal to a wide spectrum of cannabis users, from the canna-curious to the legacy user
What e-commerce platforms do you use to list your beverages? Has the boom of e-commerce helped your sales? (If you could tell us more about that)
We have become the #1 best-selling cannabis beverage in the USA by being really good at selling in Washington and we only sell in Washington through retail stores. That’s the state law, there are no direct to consumer sales there, but now with our expansion to California almost complete, we are excited and making preparations to use e-commerce to its fullest and best effect. We love the possibilities and most of all that it’s possible to have a direct one-on-one relationship with the consumer.
How do you explore new markets for your beverages and focus on business development? What market are you planning on entering next?
It’s tough to know true facts in the cannabis beverage space in particular. The data that is being sold and spread around is often tainted to make one company look more attractive, but it’s not reliable because companies are leaving out huge swaths of the marketplace and not even reporting basic facts. If I asked you, “Who is the best selling cannabis drink in America for the last 365 days?”, Well… Cann Social Tonic says that they are, Google says that Keef Cola is, but actually the best-selling cannabis drink in America is Rays Lemonade! In fact, even if you look at the most recent 30 days, Ray’s is pulling farther and farther out front, those competitors only sell 54% and 60% of what we do. I’ll bet that’s news to most people because the data you see is misinformation. It is used to tell a story, people will conveniently exclude Washington state or use some other tactic which misleads the reader.
As we expand, we intend to focus on Washington and California and expand to other legal states by partnering with strong companies uniquely positioned to better serve the area they are already located in. These relationships are created by using licensing agreements and royalty arrangements. We license the intellectual property, proprietary recipes and SOPs, and provide the knowledge, training and know-how to make them successful right out of the gate.
Source: Ray’s Lemonade
What challenges have you come up against that you didn't expect?
This is such a complicated and new industry, we all have to think outside the box, beyond what would be expected of a normal business in a more mature industry. Whether it is formulating in-house the best-tasting emulsion being used today, engineering and inventing a plastic dosing cup that slips onto the bottom of the bottles so we can comply with state rules, or needing to work around advertising rules to get the word out about our brand. This industry requires us all to be extremely creative and become bold problem solvers. We, as a group, are building this industry one little step at a time. It is common to need to be an expert in many diverse fields on a daily basis, and I didn’t expect that.
As a 100% self-funded and profitable company, what advice do you have for newcomers in the cannabis beverage industry?
We are forced every day to make hard decisions around expenses and overhead. It would be nice to hire a bigger team, pay ourselves better or even grow the company faster, which we are in a position now, to maybe do that, but, we have had to be profitable every step of the way! If we don’t make a profit, we don’t have money to keep the lights on and that gives us all a lot of clarity. To reach our goals our team needed to be flexible and wear a lot of different hats. We all pitch in where needed, employees may switch to completely different roles, like the graphic designer, might be moved to apply labels two days a week and then be tasked to inventory finished goods at the end of the week. The added benefit is that doing almost everything in-house gives us expertise that almost no one else has. It decreases the costs, increases profits and increases stability, ultimately making us a more valuable company.
Fifteen years from now, what role will drinking cannabis be in our culture?
I see evidence every day, that cannabis use can be healthy and beneficial in people’s lives. The legalization movement and end of prohibition are creating a unique spot in history for a company like Ray’s Lemonade to thrive and help shape the future for the better.
I expect to see cannabis drinks wholly accepted by the public, in restaurants and bars, grocery stores. Online cannabis sales and in-home deliveries will become as popular as Amazon and may actually be Amazon. I can see a cannabis beverage in every fridge!
Cannabis beverages will naturally fill needs in people’s lives, medically, socially and recreationally. So, whether we consume to focus, be social, relax, be creative, or more, this type of beverage will always find a following. Cannabis beverages naturally have more benefits and uses than any other beverage and cannabis is certainly a healthier choice than alcohol as a social drink. I believe as this category matures, there is no reason that it won’t be outselling cocktails and beer on a regular basis.
What are the future plans for Ray’s Lemonade?
Great question, I am not able to give the specifics, but there is some stuff that the industry hasn’t seen anywhere yet that we think will blow people’s minds… really great products! We have a multi-year plan of new releases, including completely new brands and completely new flavors of lemonade, with some seasonal favourites.
Our biggest expansion plans this year involve opening up the California bottling facility. We are constructing a 26,000 SF bottling facility in Lemoore, CA. It should be launching products in California by late summer. We also are going into Canada with a 10mg drink. We are talking with folks now, about expanding to the east coast through partnerships with licensed Ray’s Lemonade manufacturing.
Source: Ray’s Lemonade
Which is your favourite lemonade flavor, and what is the perfect setting you enjoy it in?
I love the full sized Huckleberry, Ray’s Lemonade (12oz), /10mg THC / 100mg CBD/, pour it over ice, into a tall glass, and sit in a comfortable chair by the lake and just watch the world go by.
I also love Lil Ray’s, Tigers Blood flavor 100mg. I need to be careful with that one, since I’m a 10mg guy and it tastes so delicious that it really takes willpower to not drink just a little more, so I dose it out. Each capful is 5 mg and I give myself two capfuls, either straight or pour it into bottled water or other drink. The coconut, pineapple vibe just hits me perfect.