MARKET

COMPETITIVE SUMMARY

The existence of other players within the industry is evidence of the market need for enhanced products that are cost effective. However, on close examination no other company is offering such an advanced solutions and products as “cannaquack” , combining commercial viability and cost effective technology with state of the art produce quality and a reduced carbon footprint.

“cannaquack” has several advantages against its competition, which can be seen below.

In addition, all of “cannaquack” production will be kept within the company, which means that the products will be tried and tested with full confidentiality. The company will maintain total control of all the variables in the production processes and in our growing programme

including seeds used, growing medium, nutrients, lighting formula, and any other processes used. Additionally, the company has created a semi-automated growth system that uses proprietary LED lighting for optimal growth and lower energy use. By keeping production within the company, the team will be able to continually develop these technologies and keep ahead of the competition.

A critical aspect of the company’s long term success will be on-going investment in research and development. “cannaquack” anticipates to enter the market with what is confidently believed to be a technically superior process to its competitors, offering many unique advantages. To maintain that advantage, and to be able to respond quickly to competitive initiatives, a strong and well-funded research function will be necessary. Continual technical development, research and on-going design improvement will be a fixed element in the company’s strategy.

COMPETITIVE ANALYSIS

“cannaquack” direct competition comes from alternative means of production, which includes greenhouse producers, open field cultivation, production in polytunnels. The strengths and weaknesses of competition segments are as follows:

ContainerCrop’s detailed competitive landscape can be seen below:

POSITIONING STRATEGY

“cannaquack” competitive advantage helps to create a unique position within the market. Product positioning is one of the most important elements of overall strategy. Effective product positioning ensures that marketing messages resonate with target customers and compel them to take action and purchase from the company. “cannaquack” product positioning begins with understanding the target buyer. Research shows that produce companies desire lettuce, vegetables and herbs that are high in quality, consistent in great taste and quality, conveniently grown through environmentally friendly means and with a long shelf life and good value. The positioning map below shows the current position of “cannaquack” within these parameters as well as the company’s closest direct competing segments.

RISKS MITIGATION PLAN

Crop failure through infestation or infection is a risk that applies to all fresh produce producers, whatever the means of production. “cannaquack” is well aware of this and has developed design safeguards, which, in conjunction with sound growing practices and methods, will keep this risk to a minimum. However, an inherent advantage of container growing is that should a problem arise, it is limited to a smaller area and quantity of production than would be the case in a greenhouse growing or conventional field growing.

Technological developments from competitors constitute another threat in the medium to long term – although it is already known that growing technology takes a long time to test and implement effectively. The company’s response to this is to have a well-resourced and highly active Research and Development function which will maintain the growing technology at the leading edge of the industry, constantly improving both design and best growing practice, to be in a strong position to respond quickly and effectively should a competitive initiative threaten the core business of all-year round growing with advanced hydroponics.

KEY COMPETITIVE ADVANTAGES OF OUR GROW SYSTEMS

•The ability to produce a constant quality product over and over.

•All criteria for consistent growth fully controlled including environment.

•More yield per sq./m compared to conventional growing methods

•Year-round, consistent high quality products—quality that reaches beyond organic

•Advanced (patent-pending) technology for the grow trays that semi-automates growth process

•Uses proprietary LED lighting to make significant energy savings

•Low capital outlay and rapid Return on Investment

•Reduces the carbon footprint of production

•Environmentally friendly, CleanTech technology that has a minimal use of water and energy

•Provides Microbiological control

•No need to clean or worry about pharmaceutical safety issues that occur in other grow systems.

•Provides highly quality products in any climate or location

•A highly portable system which can be used in any location or co-located with customers

•Business model is sales of product so no middle-man or extra costs

•Placing less stress on local resources

IT IS A DISRUPTIVE INNOVATION

It helps create a new market and value network, and eventually goes on to disrupt an existing market and value network

CleanTech is a new technology and business model that offers competitive returns for investors and customers while providing solutions to global challenges. CleanTech addresses the roots of ecological problems with new science, emphasising natural approaches. CleanTech is driven by productivity-based purchasing, and therefore enjoys broad market economics, with great financial upside and sustainability.

The “cannaquack” brand falls under the CleanTech umbrella due to several reasons; the first being the fact that the growth unit model saves energy during the growth and sales stages. Through co-location strategy, the company's produce uses very little transportation. As well as saving on fossil fuels and greenhouse gases, “cannaquack” model also saves on the water needed to grow crops In addition it does not contribute to the worldwide problem of fertiliser and pesticide run off inherent in traditional agriculture. “cannaquack” is thus an environmentally-friendly alternative to traditional farming. The company focuses on high-efficiency and little waste—whether it is fuel, water or energy output. By aligning with the CleanTech image, that company will be attractive to customers that focus on corporate social responsibility as well as to consumers who are willing to pay more for environmentally-friendly produce.

Strategic alliances will be critical for growing the company’s reputation and network. At “cannaquack” we follow a system of Good Manufacturing Practice (GMP) & (GAP) Good Agriculture Practice which are systems for ensuring that products are consistently produced and controlled according to quality standards. It is designed to minimise the risks involved in any pharmaceutical production that cannot be eliminated through testing the final product.

THE KEYS TO SUCCESS IN THIS BUSINESS ARE :

ü Developing and maintaining our relationships with large companies in chosen markets in order to achieve our growth and expansion targets

MARKET OPPORTUNITY

Lettuce is the number one crop by value in many markets worldwide, with total production of 23 million tonnes per annum. In the USA the market value is 2.2 billion USD per annum; the UK market alone for imported lettuce at 300 million USD.

The lettuce sector itself is continuously diversifying into new varieties, salad mixes, and other added value products such as living lettuce and micro leaf – all of which are ideally suited to container growing methods. (UN FAO data).

Currently very little produce is grown in high density vertical containers but that is about to change. The public wants fresher sustainable, chemical free organic produce that is reasonably priced. And food processors and distributors are looking for a secure source that is consistently available all year round. We are well positioned to tap into the lettuce market worth in excess of 3.5 billion USD in Europe and North America and make sustainable profits due to to our technology and a clearly planned business development program where we provide a very short “just in time”delivery of crops by colocating with our clients. Many of the major suppliers in the UK market are actively looking for an all year round supply of crops: Much interest has already been identified and discussions are well developed with potential clients,

UK AND EUROPE MARKET FOR LETTUCE

A large percentage of the lettuce consumed in The UK and Europe is imported. Imports have risen from 25,000 tonnes in 1993 to 187,000 tonnes in 2009. Domestic production has fallen alongside this, with only 2% exports compared to imports in 2009

The lettuce market is growing and is increasingly becoming diversified, with growing sales of butterhead lettuces such as Apollo, Salanova, Red Burpee, Buttercrunch, Bibb and Boston. The market for prepared baby leaf and microleaf salads is growing year on year, as is the market for living salads, sold with roots in its grow medium. All of these varieties can be grown in the container environment. The total European lettuce market is estimated at £1.8 billion, of which Spain is the leading producer. The average market price per tonne is 1400 USD per tonne

USA MARKET FOR LETTUCE

US lettuce production exceeds 4 million tonnes per annum, and is growing year on year. Per capita consumption is 13kg per annum, and exports account for less than 0.5% of total production at 111,000 tonnes. As in Europe, the market is expanding and diversifying, with pre-prepared salads (market leader Spring Mix supplied by Dole) growing rapidly. Over 90% of production is from California and the south west, so food miles are high to the most densely populated parts of the market in the North eastern states. Average prices are lower than Europe, at approx. 800 USD per tonne.

WORLD MARKET FOR LETTUCE

In the long term, there is almost an unlimited potential for sales growth outside the two key markets. Currently the world lettuce production is approximately 23 million tonnes per annum, and growing year on year (by comparison it was only 6 million tonnes in 1963). China produces 56% of world production, followed by USA (18%) and Spain and India (5%) and Japan (3%).

In the long run Container Crop will look into distant and isolated markets e.g. New Zealand and the Maldive Islands, where average price is 3000 USD per tonne, as margins in the UK and USA will be quite slim.

Growth opportunities in this sector are almost unlimited, and the lettuce sector itself is continuously diversifying into new varieties, salad mixes, and other added value products such as living lettuce and micro leaf – all of which are ideally suited to container growing methods. (UN FAO data).The lettuce market is growing and is increasingly becoming diversified, with growing sales of butterhead lettuces such as Apollo, Salanova, Red Burpee, Buttercrunch, Bibb and Boston. The market for prepared baby leaf and microleaf salads is growing year on year, as is the market for living salads, sold with roots in its grow medium. All of these varieties can be grown in the container environment.

CANNABIS MARKET

North American marijuana sales grew by an unprecedented 30% in 2016 to $6.7 billion as the legal market expands in the U.S. and Canada, according to a new report by Arcview Market Research. North American sales are projected to top $20.2 billion by 2021 assuming a compound annual growth rate of 25%. The report includes Canada for the first time as it moves towards implementing legal adult use marijuana. To put this in perspective, this industry growth is larger and faster than even the dot-com era. During that time, GDP grew at a blistering pace of 22%. Thirty percent is an astounding number especially when you consider that the industry is in early stages.

29 states approve the use of medical cannabis, and eight plus Washington D.C. have legalized recreational use. It’s easy to see why the industry is growing. But things are even farther ahead in Canada, where the regulations for production and sales have been in place since 2014, with the goal to have full federal legalization for lifestyle use in July 2018. According to a recent report from Deloitte, capacity in Canada – for recreational alone – is projected to reach “5 billion dollars per year to start.”While there are 35 million people in Canada and 325 million in the United States, the European Union is home to almost 510 million. Having just legalized medicinal cannabis in January, Germany is another growing market, with over 80 million people. The same goes for Greece, too, which also has a medical cannabis program that is taking off. That’s why the European markets are becoming increasingly important to the cannabis sector.These two countries (and other European examples) show that traditionally conservative attitudes towards medical cannabis are shifting. But that also means investors, who focus solely on North America, are missing the huge potential in Europe. In Germany, cannabis will be produced by licensed producers and distributed to pharmacies like any other medication, with each prescription eligible for full reimbursement from health insurance. In their patient-driven markets, Germans, Italians and other Europeans are demanding the alternative of cannabis over opiates. As Germany moves smartly down this path of medicinal cannabis, the rest of Europe will soon follow. And to ignore 500 million people in a stable economy is a mistake. We’re at the start of the global revolution. We all need to be looking to Europe

"European markets are increasingly important to the cannabis sector. Each has a well-funded medical system, residents who seek natural and complementary therapies, and a government-supported mandate to stop the rising tide of opiate addiction related to chronic pain treatment along with a thousand and one other treatments."

In our view, people who think opiates are the only answer to pain relief have a similar mis-perception as people who still think medicinal cannabis is nothing more than smoking up with their doctor’s permission.

Medicinal-Cannabis-Europe-Complete-Overview