A Replacement to Alcohol – October 2021 Cannabinoid Monthly Playbook

Trends, Insights, and Market Potential for Cannabis Beverages

Walk into any party or socially gathering in 2021, and its likely spiked seltzers will be front and center among the alcoholic offerings. Small portions, sleek design, and a relatively high alcohol content makes for a satisfying and economical beverage. To both consumers and producers of the cannabis industry, take note: the spiked seltzer craze presents an opportunity for cannabis-based beverages to reach a similar level of popularity among consumers.

For years, industry watchers have predicted a surge in cannabis beverages sales, but “liquid cannabis” has been slow to gain traction. In 2021, however, the data is starting to back these forecasts. Based on May 2021 data from Headset, a cannabis market intelligence platform, beverage basket penetration increased significantly in both Canada and the U.S. in the past two years. “Basket penetration,” or the percentage represented by beverages in the average cannabis consumer’s basket, increased from about 1% in 2020 to 4.5% in 2021 in Canada; in the U.S., penetration rose from about 1.6% in January 2018 to 2.8% in February 2021. Cannabis beverage sales are rising in several states including WA and CA. In California alone, the state reported $15.5M in sales by January 2021, compared to $2.7M in January 2018.

Consumers and producers alike are entering the cannabis beverage space at a quick pace, with Canada serving as a prime case study. Responding to the diverse needs and interests of consumers, Canadian cannabis beverage sales have shifted to reflect a wide variety of brands as opposed to just a few brands dominating the beverage space. This increasingly diverse playing field mirrors the gradual brand expansion of spiked seltzers and enables consumers to select from a variety of dosages (ranging from 100 mg to 5 mg THC or less), flavors, and designs. While cannabis beverages are not as popular as alcoholic beverages, trends in both Canada and the States suggest they have the capacity to enter this category.

Especially when marketed and consumed as alcohol replacements, cannabis beverages allow consumers to enjoy the myriad of benefits of cannabis without the all-too-familiar side effects of alcohol. Particularly in social settings, beverages offer an efficient, discrete, and novel way to consume cannabis. Based on sales trends in CA, WA, CO, NV, and OR, consumers tend

to adopt an all-or-nothing mindset when considering their desired dosage: sales are increasingly consolidated at either 100 mg or 10 mg products, with the latter category appealing to those who prefer micro-dosing and consume the beverage as an alcohol alternative. The ability to purchase based on both dosage and flavor is likely to appeal to consumers who want a highly curated and personal experience, whether the beverage is consumed alone or with good company. Although the industry is still young and likely to fluctuate alongside COVID trends and other global factors, cannabis brands would be wise to invest in beverages as an exciting and versatile product for the modern consumer.

Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.

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