Cannabis 2.0 in October 2019 saw the legalization of edibles containing cannabis, with high hopes that cannabis-infused beverages would eventually control 20% to 30% of the market. Two years later, has that happened?
Cannabis Retailer spoke to Bethany Gomez, Managing Director, Brightfield Group, about key trends and opportunities in the cannabis beverage sector.
Leading up to October 2019, there was a great deal of excitement and investment from large alcohol manufacturers in the cannabis space—like alcoholic beverage behemoth Constellation Brands investing $5 billion for a 38% stake in Canopy Growth, HEXO Corp and Molson Coors forming joint venture Truss, and Anheuser-Busch InBev partnering with Tilray.
Gomez suggests that this initial excitement got ahead of the market in the Canadian drink space, with many companies facing challenges at the onset—like issues with the supply chain, getting products on the shelf, or cans stripping off THC.
Cold beverages are proving to be more popular
With the kinks worked out, there is a greater portfolio of cannabis beverages hitting the shelves, intentionally designed, targeting different customers, and exploring new flavours. Cold beverages are proving to be more popular among both licensed producers and consumers than hot ones.
Canopy continues to hold a large share of the market. But despite initial predictions and investment, cannabis-infused beverages are only 3% of the market in Canada ($142 million). In the United States, cannabis drinks are less than 2% ($426 million) of the overall cannabis market.
Cannabis-infused drink consumers tend to have higher income and be younger: 83% of drink consumers are under age 45. This may be attributed to Generation X and Millennials reducing their alcohol consumption. Consumers skew slightly male (53%) and 73% are partnered or married.
83% of drink consumers are under age 45
When cannabis beverages first launched, there was speculation that the consumer would be someone who did not want to inhale or was looking for an alcohol substitute. But that hasn’t been the case: 84% of consumers use cannabis beverages to relax at home, 70% consume drinks before or during video game play, and 69% consume cannabis drinks while doing home duties like cleaning and cooking.
17% of cannabis consumers are purchasing drinks
17% of cannabis consumers are purchasing drinks, but they make up only 3% of cannabis sales. Gomez says there needs to be greater adoption of beverages among consumers and more occasions to consume for the sector to reach the next level of growth.
In 2022, we’ll continue to see brands improve flavour profiles and experiment with new ones. Recent flavour trends include lemonade and iced tea, seasonal trends like watermelon or pumpkin, and exotic combinations like cardamom or turmeric.
Cannabis-infused beverages have higher dosage restrictions in Canada, compared to the United States, but improving the speed of onset could help the industry growth. Gomez says we’ll see a growing focus on products that can metabolize faster.