2018 was a landmark year for the cannabis industry. The two largest legal adult-use markets in world opened, in California and Canada, and record numbers of medical patients and consumers gained legal access to cannabis across the world. As a result, cannabis consumers/patients, new and old, have been exposed to a plethora of brands, delivery methods and other options for consuming cannabis. While the global cannabis industry is still in its infancy, a number of interesting trends in consumer preference have emerged, which may signal patterns that reshape cannabis consumption as we know it.
Cannabis Consumers Value Variety
Market research firm BDS Analytics identified diversification of product as one of its top 10 cannabis market trends for 2018 and as a decisive practice for brands to adopt if they want to succeed. “Brands must remain highly attuned to their customers and offer a wide range of products to achieve and maintain marketplace triumph,” the report asserts. “Depending on one winning product is not enough to carry a brand.” Currently, the cannabis market is wide open, as no single product dominates any category. The market share for top-selling edibles products in California, Colorado, and Alaska does not rise above four percent. When Deloitte surveyed current and likely recreational cannabis users across Canada in early 2018 to gain insight into what consumer demand means for the new cannabis market, it found that 60 percent of current consumers and 49 percent of probable ones “consider the range of available products (e.g., edibles, pre-rolls, oils) to be an important purchasing criterion.” The regulatory environment in the US is likely to be playing a large role in keeping single brands from dominating shelves, as distribution laws prevent or limit intrastate sale of cannabis products. As more companies consolidate, or those laws loosen, category leaders will be more likely to emerge.
New Ways of Partaking in Cannabis Emerge
Product variety isn’t simply about SKUs, but about devising new, innovative ways to use cannabis. As more individuals warm to the idea of integrating cannabis into their lives, different conduits for consuming the plant are needed to accommodate a range of consumers. A recent article in Forbes supposes that smoking cannabis is a dying trend. “Now that more health-conscious cannabis consumers are searching for alternatives to inhaling their buzz, the cannabis industry has set its sights on this multi-billion dollar market with products destined to make pot-consumption more socially acceptable,” they write. New delivery methods for cannabis consumption are emerging as markets mature and brands are learning from consumer behavior.
For consumers seeking an alternative to lighting up the traditional way, vaping has become a major player in the legal cannabis market. Linda Gilbert, the Managing Director of Consumer Insights at BDS Analytics, cites vaping’s discreet and portable nature as the two main reasons it’s seeing a surge in popularity. This sudden surge has been the main driver of concentrate sales, a market that has seen major growth in 2018. Concentrates are the second largest marijuana product category after smokeable flower. According to a report by Arcview Market Research in partnership with BDS Analytics, consumer spending on cannabis concentrates in the United States is projected to reach nearly $3 billion in 2018, an increase of 49 percent over last year’s sales.
Transdermals and sublinguals are other methods that have become popular alternatives to smoking, but edibles remain a mainstay for nonsmokers. On a list that included things like oat milk and affordable wine lists, cannabis came in first on a Forbes roundup of 11 trends reshaping food in restaurants in 2018. Food industry “It’s undeniable that CBD is the hottest food and culture trend right now,” declares Izabela Wojcik, the Director of House Programming for the James Beard Foundation. Linda Burum, a food writer, author and frequent judge for the James Beard Foundation awards describes the growing list of available CBD-infused food products as “mind-blowingly vast,” noting how CBD can be found in “every consumable from gummy bears to bitters and hundreds of variations on chocolate. Savory items haven’t escaped the trend either.”
Are Cannabis Beverages the Future?
A review of 2018’s transforming cannabis market would be incomplete without noting the inevitability of cannabis in the beverage space. Big beverage companies—alcoholic and otherwise—see great opportunity in cashing in on the legal cannabis market. Beverage behemoth Coca-Cola is reportedly in “serious talks” to develop cannabis-infused drinks. Less than a year after taking a 10% stake to develop their own line of nonalcoholic, cannabis-infused drinks, Constellation Brands, the parent company of Corona and Svedka vodka, announced in August that it had invested $4 billion in Canopy Growth, a publicly traded Canadian cannabis producer. Most recently, beer giant InBev announced a $100MM investment in Canadian producer Tilray. While it remains to be seen how consumers will react to this novel product offering, businesses are optimistic, seeing cannabis as a strategic way to expand their existing portfolios.
For Cannabis Consumers Choice is King
While still in its infancy, the growing legal cannabis market has proven that when it comes to consumers, choice is king. The past year alone has made it clear that consumers want a compelling array of ways to incorporate cannabis into their lives—whether they sip, slather or smoke. Product offerings are becoming increasingly diverse and major players from other industries are doubling down on entering the emerging legal cannabis market. Few innovations are too outlandish or novel to consider creating as new consumers—with a diverse range of knowledge about, experience with, and reasons for purchasing cannabis—enter the space. As a milestone year in cannabis legalization comes to a close, brands are peddling the whole gamut of cannabis products consumers — from celebrity-sponsored vape pens to infused coconut water to make-your-own candy kits — are adding to their carts.