Cannabis Market Data, Insights and Branding: How to Succeed in a Crowded Market

Bethany Gomez

Good weed sells itself, right?  Not anymore.  Legalization has given the modern cannabis consumer the power of choice.  You can walk into a dispensary and see hundreds of different cannabis products on the shelves; it looks more like a CVS or a liquor store than the 2-3 options your dealer offered a few years ago.  For better or worse, gone are the days when you can focus only on growing good weed and expect it to do well.  Just two years ago, when we started tracking the competitive environment in the cannabis space, the top ten brands of edibles made up less than 40% of the market in most states, and the top ten concentrates brands made up less than 10% of the field in most markets!  Unbranded products were very common, as were small local brands and the vast majority of consumers complained about a lack of consistency and reliability in their products.

 

Legalization has made marijuana a part of the Consumer Packaged Goods industry - by far the fastest growing CPG industry but also far and away the most complicated and difficult to maneuver, thanks to all the regulations and convoluted supply chains.  The high levels of risk and overall craziness of the industry deterred significant investment for a long time, but not anymore.  The new generation of brands entering the market are backed by investors with deep pockets and are clearly spending on research, branding, advertising and distribution; many are witnessing explosive growth, starting to edge out established players.  This is driving consolidation in the market, with the top 10-20 brands peeling away from the rest of the pack.  Now, in many states, the top ten brands make up at least 60% for edibles and 30% for concentrates.

 

So how do you compete in an increasingly crowded and professional market?

  1. Identify a high growth market with minimal competition.  Yes, there is no doubt that Colorado has been a trailblazer in the legalization movement and its market is by far the most mature in the industry.  But the top ten brands in edibles already own 65% market share and the category is only expected to grow by 14% in 2017, quite low by cannabis standards.  You might be able to launch a successful edibles product here, but it is sure to be an uphill battle.  Data (specifically category market sizes, forecasts and brand shares) is your friend here for identifying opportunity and evaluating the competition. 

 

  1. Know your target consumer. And no, all marijuana consumers 21+ are not your target consumers.  Environmentally conscious Gen Xers with chronic pain could be.  Or Millennial moms looking to swap their glass of wine for an infused chocolate.  Or baby boomers looking to avoid an opiate cocktail. Before you can create a product and a marketing strategy, you need to understand who your consumer is, what are their pain points, how your product solves this and how to reach them.  Where will they be using your product? How often? Where do they get their media? What other products do they use? This is where consumer insights data is so important, as it can give you a clear picture of your target consumer and how to reach them.

 

  1. Know your competition. Once you figure out who else is playing in your space, you must understand their strategic positioning and core consumer base and see how it compares with yours.  Kiva and Korova are two of the top edibles brands in California but they do not compete with each other.  Kiva has a positioning targeting lower dosage, higher income women looking for premium infused chocolates; something that would be comparable to Godiva that gets them high (but not too high).  Korova's tagline is "unrivaled potency" and targets middle-income heavy users in their 20's and 30's.  Your brand will have the most success if it's positioning and branding are unique from the competition.

 

  1. Invest in quality branding and advertising, including package design and labeling. One of the primary reasons cannabis consumers purchase a product is because they trust it to give them a consistent experience.  Your packaging, marketing, and social media say a lot about your brand, and if it is not polished and professional, and if you skimp there it will make your consumers wonder if you skimped on product quality as well.  Shrink wrap and pot leaf logos are not going to cut it anymore - enlist a professional.

 

Brightfield Group is a full-service market research firm focused on the legal cannabis industry.  Our products provide insights into the cannabis market, companies and consumers to inform our clients' strategic business needs. Our multisource methodology and wide range of product tools give us a unique, 360° view of the cannabis industry.  Brightfield Group is comprised of a team of highly educated analysts with decades of experience analyzing opaque markets and hard to reach consumers.