Nova Scotia-based organic kombucha brand Cove Kombucha announced this week it has raised a $1.2 million seed round, which will be used to expand its team, produce new packaging and launch a CBD-infused variety in Canada.
Vancouver-based investment bank Canaccord Genuity Wealth Management led the investment. Cove Kombucha CEO and co-founder John Maclellan told BevNET that the brand’s intention to launch a CBD-infused kombucha caught the interest of the bank, which has a cannabis sector that has worked with companies in the space, such as Charlotte’s Web.
Last week, Canada announced the legalization of cannabis-infused edibles, beverages and topicals, which will allow these products to hit shelves in mid-December after a 60-day notice period. Maclellan said Cove plans to “move quickly on the CBD opportunity” as it enters the “first wave” of these beverages. The line, which will contain 25 mg of CBD per bottle, will launch in December or early January.
According to Maclellan, Cove has been shipping product back and forth to the United States over the past year to develop the beverage, as it worked on perfecting its emulsification and stability. He said Cove will only produce beverages infused with CBD, not THC, to maintain its identity as a wellness company in retailers.
Maclellan said since the raise Cove has added three new hires, with plans to add more. New sales team hires will focus on the brand’s growth strategy, especially as Cove aims to expand distribution across Canada. He said Cove is also planning a route to market in California with its CBD kombucha, and is in the process of adding a new hire with substantial U.S. beverage industry experience to help with the launch, aimed for Q1 of 2020. He said additional hires will be in the marketing team, to aid the brand’s growing social media presence, along with operations.
Funds from the raise will also be used to support a packaging revamp. Cove recently launched into Canadian national retailer Sobeys in new 250 ml cans, adding to its current offering of glass bottles available at retailers such as Whole Foods and Costco. The new can line is currently available in the same flavors as its bottled offerings, though Maclellan said additional flavor launches in cans will soon follow. He said the brand will wait to hear consumer feedback before considering cans as its primary packaging.
As the kombucha market matures, Maclellan said that Cove’s innovation isn’t just based on its desire to stand out from the pack, even as the brand got off to a “later start” by launching in 2017. Most importantly, he said Cove’s drive for innovation is based on its goal to appeal to mainstream consumers as kombucha moves into more mass retailers and convenience stores.
“You want to have a product that isn’t just resonating with people that are shopping in the natural channel,” he said. “We’re innovating based on where we see customer needs. It’s not as much about competition.”