Chemesis President: Customer Focus Critical to CPG Success
Chemesis International President Josh Rosenberg joined the Investing News Network to discuss the consumer focus he intends to bring to Chemesis and its operations.
Chemesis International (CSE:CSI,OTCQB:CADMF) President Josh Rosenberg is a 27-year veteran of the consumer packaged goods (CPG) industry, including experience working with major brands such as Coca-Cola and a number of its global brands and products.
Rosenberg has worked at all levels of the Coca-Cola organization, moving his way up from “street to suite” to become a leader in the CPG space. After spending 18 years with the company, Rosenberg moved outside of CPG when he stepped into ownership at Accent Food Services, a multi-state convenience services company bringing fresh food, snacks, beverages, and convenience items the last mile. Rosenberg is active with the board and serves as Chairman of the National Automatic Merchandising Association for the convenience services industry. In 2018, Rosenberg decided to expand on his CPG and distribution experience by moving into the cannabis industry, where he felt his experience at Coca-Cola could be leveraged to improve cannabis-based operations.
According to Rosenberg, a focus on the customer is one of the most critical aspects of the CPG experience. Under his leadership, Rosenberg is working to develop an operational playbook at Chemesis that can be easily replicated and scaled across the United States. Part of this strategy includes the company’s unattended retail operations, which are designed to create a frictionless consumer experience without the need for a retail employee.
Investing News Network: Can you give our audience some background on your experience?
Chemesis President Josh Rosenberg: I am a 27-year CPG distribution sales executive. I grew up in the Coca-Cola system, spending 18 years there. I started out as a merchandiser. I was hired during the Kentucky Derby in Louisville Kentucky as a freshman in college. I was going to school to be an educator and got a six-week temporary job. They had such high turnover and people left quickly because of the difficulty of the work, so I have done it all. I have done merchandising, route driver, delivery from entry-level sales, and account management operator. I ran large operating regions and business units including manufacturing and supply chain management strategy. My time at Coke gave me a diverse background. I am proud of my experience in both sales & marketing, commercial strategy, operations and manufacturing. As I got into executive leadership, I led the consolidation of Coca-Cola’s decentralized call center. That gave me an early understanding of technology, specifically in how technology can really enable business through project management.
I was able to go down to Atlanta for a few years through some business consolidation. I actually spent three years in our commercial leadership group. That group is responsible for taking any new brand, or product, or equipment initiatives and pushing them through to the execution field. Those three years transformed my whole career because I had access to our international business. It was a North America-led position in which I participated in building commercial execution for brands, channels, and customers. This included participation in onboarding of multiple acquired brands, many of which are now billion-dollar-plus brands.
I started on the bottler side, then the Coca-Cola Company acquired us. I was privileged to be one of the 48 people that spent 18 months in a think-tank, a white wall room designing the new Coca-Cola that shaped the Coca-Cola that exists today. That was amazing because I had my hand in redesigning a 125-year-old brand, again, a great global perspective really connects the old Coke in the old way of life of how coke reached consumers to the way consumers shop today. It is just unbelievable that I got to do it there.
I joined the board of Chemesis in September. I really got involved in the business strategies, pushing and challenging the norm of what a cannabis business was and what everybody thought it should be. Whether it was focused on manufacturing or extraction, nobody was talking about the consumer. I thought that was a big gap. I am focused on the consumer side. What is our retail strategy? How are we going to go to the market? How are we going to connect with the consumer, help the consumer navigate the unknowns of the cannabis plant, and how they might best use it? How do we put it in a place where it is secure, it is a confident purchase, it is an educated purchase, and it is a thing the customer wants to do over and over again?
INN: Considering the changes in cannabis globally, how is Chemesis unique?
JR: Consumer focus. We are a consumable. My background is from the street to suite and it was in almost every element of the Coca-Cola ecosystem, which exists in the cannabis space and in the seed-to-sale vertical that we own at Chemesis. You have to understand the life cycle of the consumable product that we are trying to get in the hands of consumers. How do we optimize costs on the backside? Everything up until that point of purchase is an opportunity to make money and lean principles have to be applied.
One thing that makes Chemesis unique and bold is that at the beginning of this year, the company made a change to our business plan. We are spinning out Colombia because of the unique Latin American consumer & regulatory market, and the difference in go-to-market approach within that country, and we are putting a majority of our efforts into Puerto Rico where we have true seed-to-sale with a dispensary, and we are driving dollar growth.
We fundamentally believe the heart of what we do is the voice of the consumer. We have to be able to recruit them. Once they recruit, we have to be able to understand them and give them the right product, in the right place, at the right price, at the right time. Then we have to recruit, retain, and grow our share of wallet with our consumer base. That is a traditional Coke or CPG brand tool that has been used from the beginning. How do I get them into the buy ecosystem and then get them to spend more money once they are there in the life cycle that they consume? We are doing a lot of really cool things to create that consumer experience and test and validate it, ensuring that we are constantly meeting and understanding the voice of the consumer so that we can own their loyalty.
INN: How has your MSO strategy evolved and where does your expertise come into the picture?
JR: I went from a single facility all the way to national and global responsibility, so I understand a diverse marketplace. There is not a one-size-fits-all because consumer demographics change, regulations will change, and location preferences will change, all based on where you operate.
We’ve got a great strategy for multi-state operations. First of all, let’s get our playbook right. This is how we want the quality of our products and this should be the cost base of our products, whether we do it directly, own the manufacturing, or whether we outsource. We have the ability to be going to new states to look and see how far along they are in their development curve. If there is a really good manufacturing practice there. Do we need to really invest our capital there? Or do we need a partner? We have to think about our decision trees. First and foremost, we do not deviate from our brand but we apply our brand strategy based on the local regional demographic regulatory and compliance landscape.
What we love about that is, with our playbook and with the use of technology, our customer CRM, we have a customer relationship model. We have engaged a call center partner to stay engaged and help educate, recruit and retain our customers. We have a loyalty platform. Then it is just a matter of evolving the brand experience model. That is where the levers come into play. Each one of the levers helps build upon the consumer experience with our brand. This creates stickiness with the consumer. We want to be a value-driven leader in manufacturing all the way up to consumption because the market is evolving. As the market is evolving both in function and form, we have to be able to make sure our consumers know that Chemesis is a trusted advocate and the consumer can depend on us to be there at the right time and right place.
INN: Can you tell us about the company’s unattended retail strategy?
JR: In my last decade at Coke, I was branded the unattended retail guy. Nobody else wanted it. They did not want to touch it. It has a high cost of capital. Everybody was focused on Food Service and Big Box Retail. Walmart, Kroger’s, Safeways, that’s where you stack it high and let it fly. Then you have this little guy over here, Josh, that manages one percent of the overall company business. But every single consumer interaction was the only time that we had a direct transaction with the consumer.
Until e-commerce, the only way that Coca-Cola interacted directly with their consumers was through an unattended vending machine. Back then, vending technology trailed traditional retail consumer engagement. Now, through technology and consumers’ preference for convenience, the market has evolved. If you think about unattended experiences, how long ago did you go to the counter at an airport to check-in or do anything relevant to your flight? How many times do you go into your bank versus the ATM? Or mobile check-in or mobile deposit or mobile interactions? I can go on and on all day about the unattended transaction world that we live in, yet when it comes to consumables, we are stuck on this idea that consumers want to get in their car, go to a location, wait in line, and deal with the public. Especially during a pandemic, it doesn’t make sense.
What we have been able to do is put all that in a box. The digital component of it can educate, advertise, and create impulse or influential buys. It can bring people in. The touchless transaction is safe. The education through our automated attendant and the use of artificial intelligence is remarkable. I can ask “Vicki” (our auto-bot) any question, anything I need in a private manner in order to understand what I am about to transact.
It increases my ability as a brand owner to promote and know the individual consumer profile. When I walk up to that machine, that machine knows me individually. I can target market brands, which is incredible for the consumer experience. It is going to know once I enter our unattended retail store, the automated budtender will have all my history. Vicki knows when I shopped, categories I purchased, brand, and total dollar spend. From this data, our AI can promote products through highlights, videos, and promotions to extend the consumer’s experience. By exposing the consumer to relevant products, we are better positioned to capture a greater share of wallet and most importantly, create a better consumer experience.
INN: What is Chemesis’ main focus for the remainder of 2020?
JR: My operations team and partners are really focused on continuous improvement with stretch goals to monetize as much of our operating expenditures as they can from just lean operating principles, automation, and clearly defined metrics. By the fall, our operational unit down in Puerto Rico will have transformed. Our operational gains will put dollars back in our business. By the end of the year, we will start to take this playbook back and apply it to our other operating units.
2020 started off with a capital raise of $2.6m where we were able to begin to optimize our operations. In addition, the company has filed a Regulation A offering that we expect to close in 2020. That is going to help increase our capital contribution to put back into some of these initiatives and optimize our operations. We also have some dollars set aside for M&A that the consumer marketing side and capital necessary to deploy our ViaTouch strategy.
The dispensary side will have finished our remodels and created our brand look and feel within our dispensary business. So we really got that dialed in as far as our consistent consumer experience when they walk in the store. Then lastly, ViaTouch, the VICKI, we are looking to start, beginning with this next month, to place around twenty a month. We are starting to get a lot of traction. The pandemic has impacted our ability to engage our team, customers, and consumers. Everyone had to adapt to a new norm which we believe worked in our favor. A touchless, unattended retail experience opens the door for us to accelerate placements. Retailer response while paused, is now accelerating with great anticipation. So whether it’s independents or chains, we see a real, great growth opportunity on our CBD side with Via Touch and really optimizing that platform. So place some equipment, increase our footprints in stores, build our brand, optimize our operations. Now we take that playbook and will be ready as we go into 2021 so we can apply it against the M&A strategy and make our entry into existing markets stronger.
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