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 vice 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 behavior. As consumers look to replace alcohol, what better way to substitute the intoxicant than in the same form factor?
However when we look at the data, as we always do, these predictions haven't really panned 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.
But today, for the first time in a long time, our Headset analysts are bullish on Beverages. 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. This report provides an understanding of where Beverages have been, where the category stands today, and where we believe it's going.
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While market share for the Beverage category has held steady over the past few years, there have been increases in basket penetration and customer trial rates with different trends in the US and Canada that indicate future growth for the category. In Canada, for example, basket penetration for Beverages rose quickly in the first half of 2020 and stabilized at around 4.5%. In the US, however, basket penetration had a more gradual increase over time from 1.6% in January 2018 to 2.8% in February 2021. This means that Beverages are making their way into more and more baskets as time goes on. Beverage sales trends also differ from state to state in the US. In Washington, for example, 100mg Beverages dominate the market while in California, sales to products of 12mg or less make up more than a third of the Beverage market. Looking at the top brands in California specifically, we see different brands finding success by occupying a certain niche within the category. Keef Cola, for example, offers value-priced products. CANN's product prices, on the other hand, can be almost eight times higher than the market average and caters to those looking for a more premium product.
Unless otherwise indicated, US data includes recreational sales from California, Colorado, Massachusetts, Michigan, Nevada, Oregon (including Medical sales), and Washington. Data for Canada includes recreational cannabis sales from Alberta, British Columbia, Ontario (private non-OCS.ca sales only), and Saskatchewan.
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