At Headset, we’ve been tracking the recreational cannabis industry since 2015. Since then we’ve been hearing something along the lines of: “beverages are about to take off.” This prediction makes sense; cannabis is a legal and quickly gaining ground as an acceptable alternative to alcohol. Substitution of cannabis for alcohol has become so popular, the term “Cali-sober” popped up to describe the behaviour. As consumers look to replace alcohol, what better way to substitute the intoxicant than in the same beverage form?
However, when we look at the data, these predictions haven’t really panned out. Over the last five years, beverage market share in the US has maintained about 1% of total recreational cannabis sales, with sales to the category growing at roughly the same pace as the total market.
Between advancements in THC infusion technology, and a myriad of new brands catering to the occasional, low-dose consumer, there is a lot of reason to believe in the growth potential of this category.
Beverage Market Share in Canada and the US
Figure 1 shows that the beverage category’s market share in the US has held fairly steady between 0.85% and 1.1% over the last several years. In fact, market share to the category was slowly decreasing through late 2019 and early 2020 before maintaining just below 0.9% during the beginning of the COVID-19 pandemic. However, the category has been regaining ground since Q3 2020 and looks well-positioned to reach an all-time high as the US re-opens post-COVID.
North of the border, Canada’s market share of beverages surpassed the US in only five months and seems to be stabilizing at around 1.5% of total sales.
Beverage Basket Penetration in Canada and the US
Figure 2 reveals the basket penetration of beverage products by month. This can be interpreted as: if there were 100 total cannabis transactions, how many contained a beverage?
The trend in Canada looks very similar to the previous market share graph—rising quickly through the first half of 2020 and then stabilizing by late summer, this time at around 4.5% of baskets.
The basket penetration trend in the US, on the other hand, looks different from the trend in category market share. There is a relatively steady march upwards over time rising from 1.6% in January 2018 to 2.8% in February 2021. Even though market share hasn’t drastically increased, beverages are making their way into more and more baskets each month, indicating that more customers than ever are trying THC-infused beverages.