A new report from cannabis market data analyst Headset shows that cannabis beverage sales continue to grow in North America and new trends indicate that the sector may be poised for gains in market share. Headset’s industry report for March focusing on cannabis beverages was released last week and is available online as a free download.
In the report, Headset notes that many cannabis industry analysts have been expecting big gains for the beverage sector since the company began collecting and reporting on data from the legal marijuana industry in 2015. But sales data have shown that the bold predictions have failed to pan out.
“Over the last five years, beverage market share has maintained about 1% of total recreational cannabis sales, with sales to the category growing at roughly the same pace as the total market,” Headset wrote in the introduction to the report.
“But today, for the first time in a long time, our Headset analysts are bullish on beverages,” the report continues. “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.”
In Canada, beverage sales have grown to 1.5% of sales in barely more than a year on the market, while in the U.S. cannabis drinks are posting a more modest 1% share. Cannabis beverages actually saw a dip in the U.S. during 2020, but have recovered to slightly more than 1% of the market this year. Headset notes that some trends in the sales data could mean that cannabis beverages are ready to make more gains in market share.
After remaining relatively steady for about two years, the percentage of baskets (retail cannabis transactions) that included a cannabis beverage started to climb from about 2% in March 2020, approaching nearly 3% in February 2021. After debuting in Canadian dispensaries in January 2020, baskets with cannabis drinks quickly jumped to about 4.5% in six months, a level the metric has hovered around since June.
“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,” Headset wrote.
The report also shows that cannabis beverages are popular across demographic lines, although women tended to spend more than the average consumer on the products. The authors also note that cannabis beverages seem to be settling into two general groupings—those that offer the maximum permissible dose of THC per unit (usually around 100 mg) and those with a potency of 10 mg or less.
Across five markets in the West, consumers showed great affinity for products containing 100 mg of THC, or even more. Overall, these ‘macrodosed’ beverages account for nearly 60% of sales so far this year. In the state of Washington, however, cannabis drinks with 100 mg of THC claim an overwhelming share of the market (more than 90%), leaving few consumer dollars for sales of lower-potency alternatives. Or, as Headset points out, perhaps indicating a tremendous opportunity for Washington’s cannabis beverage brands.
California’s Cann Can Do
The Headset report delved into cannabis beverages sales in California, noting that market conditions can vary from state to state. The data show that California consumers dropped $15.5 million on weed drinks in January 2021, up more than six times since legal recreational sales began in January 2018.
Californians have readily embraced cannabis beverages containing lower-THC “sessionable” dosing, with options containing 12 mg or less capturing more than a third of the market. Two of the three leading brands in the state are finding success with ‘microdosed’ products intended to replace alcohol. Leading the pack is Cann social tonics, which posted nearly $2 million in sales in January 2021 alone.
“There are a lot of people who want to incorporate cannabis into their lives recreationally without the fear of getting too high,” Cann co-founder Luke Anderson said in a recent press release. “Cann lets you rewrite the ‘bad edible experience’ you had in college and change your social drinking routine at the same time.”
Cann’s popularity and growth in the California market have focused attention on the brand from larger players in the industry. In early March, the company announced a partnership with multi-state operator Green Thumb Industries. The deal will bring the company’s formulations first to GTI’s home state of Illinois, with plans to expand to other markets including freshly legalized New Jersey.
“The cannabis beverage category is poised for growth. Consumers are increasingly entering the market seeking alternatives to alcohol with familiar consumption experiences,” said Green Thumb founder and CEO Ben Kovler. “Cann sits squarely in this opportunity, delivers on the consumer need, and complements our brand portfolio with entry into the beverage segment. What’s even better is cannabis drinks can offer a superior experience, fewer calories, and no hangover.”
Cann co-founder Jake Bullock said that the management at GTI, which has cannabis operations in 12 U.S. markets, believes in his company’s vision to “offer a superior alternative to alcohol.”
“Cann social tonics create a refreshing, uplifting social buzz without alcohol’s negative effects. We believe that cannabis beverages will change the way people drink in this country—imagine drinking a few Canns instead of several beers, wine, or cocktails and waking up the next day without a massive headache,” Bullock said. “We offer a much smarter, delicious choice.”
Will that choice lead sales of cannabis beverages to finally live up to long-held expectations? As a “legal vice quickly gaining ground as an acceptable alternative to alcohol,” Headset analysts believe the sector’s time may have finally come.