In a category buzzing with noise, CENTR has been quietly waiting for its moment to roar.
Thanks to its eponymous CBD-infused soda, the publicly traded Vancouver-based functional wellness beverage brand has emerged from the pioneering days of CBD drinks as a fast-growing category player. According to data from Brightfield Group, in the first half of 2022, CENTR, which is sold in stores in 25 states, had 1.03% share of the U.S. CBD beverage market, a category projected to reach nearly $192 million in sales this year.
With wind its sails, the company is preparing to amplify its message in the coming months, investing in marketing and releasing a brand new non-infused product line.
“A lot of the investments that we’ve made over the past three years are ones that you don’t see,” said CEO Arjan Chima. “We are really investing in the retailers through traditional beer-style marketing and advertising because that’s what retailers get and understand.”
The brand itself was created by a small group that included Chima and Paul and Melissa Meehan; the latter pair are the founders of distillery and spirits business Goodridge&Williams, maker of NUTRL Vodka, which was sold to Labatt Breweries of Canada, a division of Anheuser Busch InBev, in January 2020. NUTRL has since been launched in the U.S. as a ready-to-drink vodka seltzer. Chima was involved in that business as Chief Commercial Officer in addition to his work at the Meehan’s marketing agency, me&ideas. He subsequently has held various roles at CENTR including Board Member, CFO and President before taking on the CEO role in June.
The brand’s success thus far has been based primarily on service and execution, partnering with independent retailers and driving traffic for its two-SKU line of sparkling soft drinks in 12 oz. cans. During the onset of the COVID-19 pandemic, Chima said the brand focused on independent groceries and c-stores, making the investments with those partners to keep CENTR on the shelf and in coolers. Healthy margins helped make their case; delivering 30mg of CBD for $4.99 per can, CENTR is more cost effective, even though Chima acknowledged consumers “aren’t there yet.” Consistent collaboration with retailers on promotions, temporary price reductions and ad buys “within their ethos and ecosystem” decreases the need for CENTR to constantly reinvest.
Whereas many startups seek out younger talent to handle field operations, CENTR sought experience, stacking the sales team with veterans from Red Bull, Gallo and across the beverage industry, which Chima said was invaluable in helping the brand become one of the first CBD drinks to be nationally distributed by Southern Glazer’s Wine & Spirits in April 2021, providing further market validation.
“It was sort of let us show you how we can do this together,” he said. “The conversations that we’ve had to convince the retailer and the distributor has been the experience on our team. Having done it from a top of the house level before and knowing how to invest properly in a brand, as opposed to just putting it on the shelf and letting it die.”
As for the product itself, CENTR is all about simplicity. The formulation uses a CBD isolate, rather than a full-spectrum extract. The can’s basic black and white design makes it more approachable for a wider age demographic, Chima argued, while focusing on a single, signature flavor available in regular (cane sugar) and zero-sugar versions with no natural or artificial sweeteners. That approach will continue as the brand creates more products.
“It’s kind of like how Red Bull just tasted like Red Bull before they started launching their other flavors,” Chima said. “For us, CENTR tastes like CENTR.”
And like Red Bull, the company has targeted c-stores as its primary growth channel. Along with brands like Kill Cliff (also distributed by Southern Glazer’s), CENTR is part of a cohort that is developing the segment as a path to bring CBD-infused beverages to middle income consumers that may not fit the yoga-and-wellness profile that other brands have attached themselves to. According to Brightfield Group, CBD-infused products generated $162 million in dollar sales in c-stores in 2021, with that number expected to rise to $193 million in 2022, or about 4% of the total pool. The channel represents around 19% of the $175 million CBD beverage market.
For other channels, CENTR has other products. The brand has showcased more dynamic flavors (Pomegranate Hibiscus, Cucumber Yuzu) in its three-SKU line of powder drink mixes, but Chima sees CENTR’s non-CBD drink Enhanced, set for launch in October, as a “game-changer.” The single-flavor sparkling product will feature adaptogens and nootropic ingredients aimed at promoting immunity, mood, focus and other functional need states, and will be available in caffeinated (Enhanced+) and non-caffeinated varieties.
It’s become something of a standard play for CBD beverages to release a complementary non-infused line that can seed brand awareness in a larger pool of retailers that would otherwise not be available; see Cloud Water, VYBES, Recess and others. That’s why marketing and educating consumers about why to choose CENTR will be critical in fueling its continued expansion. CENTR will spend “significantly” on marketing and advertising in this fiscal year, Chima said, by investing in influencers and media buys, as well as experiential wellness-themed activations, one of which is scheduled for this Thursday in Los Angeles.
“That’s what’s exciting,” he said. “I’ve been waiting for three years to really invest in the marketing side of it and now we’re going to spend a considerable amount of money in marketing to drive our online sales, brand awareness and really leverage influencer partnerships.”
That work will focus around marrying functional wellness with active lifestyles, not exactly a stretch in California where CENTR does most of its business. But the brand is also looking to take the overall category into new directions. CENTR is the first CBD drink to do a digital media buy with rapid delivery platform Gopuff, while Chima said CENTR Enhanced is in discussions with New York University to study how functional ingredients included in the product can impact e-sports performance.
“People talk about the scale of [the category]; now if you’re gonna invest in it, you gotta invest in it properly and take that long term approach, as opposed to that quick adrenaline shot in the arm and hope someone buys you out,” he said. “That’s not our play. Our play is truly to build a business.”