Consumers have many options to choose from in the legal cannabis market. In the U.S., brands have generally been given more room to express themselves, and appear to be building more brand loyalty. In Canada, marketing is more restricted. A recent survey revealed that many brands are having trouble gaining mindshare with Canadian consumers. What has been missing in this discourse is data straight from the providers; the insights the industry needs to help understand what brands and formats are catching on.
To get a more granular view of the state of brands and customer loyalty, we dove into Headset’s Insights tool to identify the top trends in some of North America’s largest legal cannabis markets.
Data was analyzed using Headset Insights. Geographies analyzed include California, Colorado, Nevada, Washington, Ontario, British Columbia, and Alberta. The following date ranges, including limitations on those ranges, were used in this article:
In California, Nevada, Colorado, and Washington, dried flower was the top selling product format, with between 46-56% of all recreational cannabis sales in the last 365 days. Vapes were the next best selling product in all four states. In Nevada and Washington, pre-rolls sold better than edibles, yet the reverse was true in Colorado and California.
Across three of the four U.S. states analyzed, vape market share has dropped in the last 30 days analyzed compared to its market share for the last 365 days. This could reflect the continued emergence of new brands in other categories or a shift away from often shared, smokeable formats during the COVID-19 pandemic (pre-roll market share dropped as well). It may also be a result of the longer sales cycles associated with vapes, where both power units and cartridges last longer than other formats.
While dried flower held the most market share during the periods analyzed, it is a fragmented category that tends to be driven less by the top brands than other product formats (excluding Colorado). The top five selling dried flower brands make up approximately 30% of sales in the past year in the four U.S. states analyzed, leaving a variety of other brands to round out the remaining 70% of sales. This is a sharp contrast to beverages, edibles, and tinctures:
Broadly, it doesn’t appear that dried flower brands have captured the same mindshare as other product formats. This is not the case in Colorado, where House Brands, a local low-price value brand, accounted for 77% of dried flower sales in the week before we conducted our analysis. We believe this is good news for brands looking to break through in the dried flower category. While value may be the main driver in dried flower products, we think House Brands’ dominance in Colorado signals that there is room for local brands who fully understand the needs of their demographics.
In the last 90 days analyzed, vapes increased their market share in Ontario and British Columbia. This increase has come at the expense of dried flower and pre-rolls, both of which have seen a slightly decreased market share in the last 90 days compared to the last 365 days. We believe that this increase reflects the later rollout of vapes in Canada compared to recreational U.S. jurisdictions, and that there may be a slight decrease associated with vapes’ longer product life cycles.
The leading brands in cannabis 2.0 formats appear to be brands that consumers recognize from the dried flower and pre-roll products that were the only formats available for the first year of legalization. Redecan, Aurora, San Rafael, and Good Supply are leading brands in the dried flower and pre-roll categories, and at least one of edibles or vapes, too. As more 2.0 products come online, and brand awareness becomes more prevalent, we may see some divergence away from those brands whose 2.0 products are benefitting from dried flower and pre-roll brand awareness.
As prices drop, it might seem like there is little room for new brands in the dried flower category. Yet in Alberta, Pure Sunfarms— a newer entrant to the Alberta market —was a top-selling brand in the last seven days with 14% market share, indicating that new brands may still be able to carve out room for themselves. Conversely, Aurora was a top five dried flower brand in the last 365 days, but not in the last seven, 30, or 90 days analyzed.
We are less than a full year into the availability of cannabis 2.0 products, and many edibles and beverages were not available for some time after the first date they could be sold. We believe that the top five edibles (78% market share in Ontario) and beverage brands (81% market share in British Columbia) are enjoying a first mover advantage. As more brands become available in these categories, we expect to see this market share flatten before the winning brands emerge as we believe they have in Colorado and California.
These real-time insights give us a look into the dynamics shaping North America’s recreational cannabis markets. By understanding both the long-term trends and emerging changes, we can get a more holistic view of the state of cannabis brands and product formats. Headset’s Insights tool is the only tool that allows for this level of granularity, and when combined with their other products, they provide data and analysis that helps make the whole industry smarter and more responsive to customers. We believe that, as the industry grows, this data will become an invaluable tool for retailers and brands looking to make smarter decisions about how to connect with consumers and entrench themselves as a part of the cannabis market.
Disclaimer: Headset is a Canopy Rivers portfolio company.
This is not an offer to sell or a recommendation to trade in any securities. This information is provided as of the date hereof. This document contains data obtained from third parties that Canopy Rivers has not independently verified. This document also contains forward-looking information within the meaning of Canadian securities law, which is based on certain assumptions. While management believes these assumptions are reasonable based on information available as of the current date, they may prove to be incorrect. Many assumptions are based on factors outside of Canopy Rivers’ control and actual results may differ materially from current expectations. Forward-looking information involves risks, including, but not limited to, the risk factors set out in Canopy Rivers’ most recent Management’s Discussion and Analysis and Annual Information Form. You should not place undue reliance on forward-looking information. Except as required by applicable law, Canopy Rivers assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances.
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