Deloitte estimates the Canadian market for edibles and alternative cannabis products to be worth C$2.7 billion annually. With the coming legalization of alternative cannabis products in Canada, it’s important for licensed producers and retailers to understand what consumers are interested in and their motivations. In this blog, we’ll explore the findings from Deloitte’s report Nurturing new growth – Canada gets ready for Cannabis 2.0.
Within the alternative cannabis market, edibles are forecasted to account for 60%, followed by beverages at 20%, while the remaining 20% will consist of topicals, concentrates, tinctures and capsules.
The Deloitte study covers two segments of Canadian cannabis consumers: The Risk Takers and The Conservative Experimenters .
The Risk Takers are experienced cannabis consumers who already use flower products. Their profile skews younger (ages 18-34) and they consume cannabis multiple times per week. This segment is also more likely to deviate from the letter of the law and take health and safety risks to enjoy life and have fuller experiences.
The Conservative Experimenters are novice or “cannabis-curious” consumers. They have less interest in combustible cannabis products and are more interested in alternative formats. Their profile leans middle-aged (aged 35-54) and they consume cannabis less than once a month. This segment is less likely to be an online influencer, possess a large social network, or prioritize their personal interests ahead of family interests.
In this blog, we’ll specifically focus on The Conservative Experimenters and their opinions of the top 3 product categories – edibles, beverages and topicals.
The Conservative Experimenters showed strong interest in trying:
Within the edibles market, the top cannabis-infused edible formats are dominated by sweet and indulgent snack options. About half The Conservative Experimenters are interested in cannabis-infused cookies (50%), brownies (49%), gummies (48%), and chocolates (48%).
Other products that with moderate levels of interest include candy, lozenges and gum (35%), caramels, chews, and taffy (32%), mints (29%), cake and pie (28%), truffles (25%), dried fruits, nuts and granola (25%), honey, sugar and artificial sweeteners (21%), and ingredients (19%).
Meanwhile on the savory side, 1 in 3 were interested in savory snacks (32%), followed by a big drop down to savory prepared meals (17%).
There are some differences between regions – for example, Quebec consumers are much less interested in gummies (37%), however they are more interested in savory prepared meals (22%) compared to the rest of Canada. Ontario showed the strongest interest in savory snacks (37%), while Atlantic showed the lowest interest (23%).
Top reasons for using cannabis-infused edibles by The Conservative Experimenters were: to have fun with friends (47%), to help relax or sleep (45%), reduce stress and anxiety (43%), and because they don’t want to smoke/vape cannabis (43%).
Deloitte found that brands don’t play an important role in driving the preferences of The Conservative Experimenters as only 13% of respondents say they look for a familiar brand. This is likely due to low levels of brand awareness. However, as The Conservative Experimenters start enaging with alternative cannabis products, we believe brands will play a much more important role in helping consumers navigate through the explosion of edible products that will enter the market this fall with legalization. Brands will need to be creative to stand out given the regulatory restrictions in Canada. Innovative formats and ingredients is another method than can help differentiate brand in a meaningful way. At the end of the day when it comes to edibles – taste is still king. Edible products must deliver on taste and texture to be successful.
When looking at cannabis-infused beverages, tea is the most popular choice among The Conservative Experimenters (53%), followed by iced tea, lemonade, and fruit drinks (47%), and carbonated beverages (43%).
Top reasons for use of cannabis-infused beverages by The Conservative Experimenters are: to help reduce stress and anxiety (45%), help relax/sleep (43%), and have fun with friends (40%).
Just over one-third (35%) of The Conservative Experimenters said they would drink a cannabis-infused beverage as an alternative to alcohol or to smoking/vaping cannabis. The Deloitte study also found that cannabis consumers are willing to buy cannabis-infused beverages in addition to what they currently buy – so it will be important to track interaction between alcohol/smoking and cannabis.
Finally, let’s take a look at the topicals market. Lotions, salves, gel, and creams (69%) were the most popular cannabis-infused topical products among The Conservative Experimenters.
While edible and beverage usage is more focused on social and mental health benefits, a majority of The Conservative Experimenters are planning to use topicals to alleviate or treat specific pain (79%). Additionally, 48% see cannabis topicals as an alternative to prescription medications, which could become a disruptive force to the pharmaceutical market. Similar to edibles, brands don’t play a major role in driving topical choices just yet.
Among The Conservative Experimenters, the allure of cannabis benefits in low dosages, combined with the familiarity of existing product formats offer a more comfortable and discreet on-ramp for them to enter the cannabis market.
Some implications for those playing to win in Cannabis 2.0:
- Understand their needs and motivations – what benefits are The Conservative Experimenters looking for? what role can your brand play in their life beyond simply addressing their functional needs?
- Manage their expectations and concerns – while taste, quality, potency and safety are obvious table stakes, The Conservative Experimenters require some hand-holding as they enter into a new market.
- Understand the consumer journey & optimize their experience – just as legalization has been both an exciting and frustrating experience for licensed producers and retailers, the same will hold true for The Conservative Experimenters; address their pain points and amplify their pleasure points.
- Design your brand to simplify their consumer journey – there is a tremendous opportunity for brands to be a reassuring guide as they enter into the world of cannabis; step up, be seen, and lead the way!
- Keep innovating – there are many touchpoints where occasions and needs intersect with the benefits and delivery formats of alternative cannabis products; design a robust pipeline to achieve a winning market footprint.