BMTC18: Marketing: Legal Cannabis is a Brand Innovation Game Changer

The focus is on how Cannabis is and will impact every industry and the growth/evolution of both the industry and consumers provides an opportunity for many in terms of new products, innovation, need states, communication, and how it may or may not relate to beer sales and beer marketing. Presenter: Jessica Lukas

Transcript

1. 2017 BDS Analytics | CONFIDENTIAL Legal Cannabis is a Game Changer Presented by: Jessica Lukas | Client Engagement 812.371.5520 jessica@bdsanalytics.com
2. 2017 BDS Analytics | CONFIDENTIAL 2017 BDS Analytics | CONFIDENTIAL Key Areas: ✓ One of the Fastest Growing Industries in the US ✓ Legal Cannabis Consumers are already YOUR consumers ✓ Cannabis driving marketing, product, brand innovation
3. 2017 BDS Analytics | CONFIDENTIAL Cannabis in daily topics and conversations
4. 2017 BDS Analytics | CONFIDENTIAL 50 Shades of Gray Legal Adult / Medicinal Legal Medical – Available Legal Medical – Not yet available CBD Only No legal cannabis
5. 2017 BDS Analytics | CONFIDENTIAL Legal cannabis is… GROWING 27% CAGR from $9B in 2017 to $24B in 2021 2014 2017 2021 Adult Use Medical North American Cannabis Retail Sales (in Billions) $3.4B $9.2B $24.2B
6. 2017 BDS Analytics | CONFIDENTIAL Spectacular growth of Adult Use markets $0 $20 $40 $60 $80 $100 $120 Millions CO Adult WA Adult OR Adult CO Med OR Med CAGR 42% CAGR 49% CAGR 43%
7. 2017 BDS Analytics | CONFIDENTIAL While still 50% of the market, Flower is losing dollar share year over year $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Millions Total CO Category Sales Flower Concentrates Edibles Pre-Rolled Shake/Trim/Lite Topicals Devices Plants Accessories Apparel Pet Products *BDS Analytics GreenEdge POS Retail Data
8. 2017 BDS Analytics | CONFIDENTIAL 800,000,000 legal cannabis transactions To date, BDS Analytics has processed and analyzed more than …and adding more each month 17,000 consumer survey responses
9. 2017 BDS Analytics | CONFIDENTIAL Legal Cannabis is… Evolving Rapidly
10. 2017 BDS Analytics | CONFIDENTIAL What some might imagine…
11. 2017 BDS Analytics | CONFIDENTIAL In reality, the Consumer experience is normalized
12. 2017 BDS Analytics | CONFIDENTIAL Branded products see tremendous growth—now ~40% of sales *BDS Analytics GreenEdge POS Retail Data; Colorado Retail Dollars 81% 74% 68% 62% 19% 26% 32% 38% 2014 2015 2016 2017 COLORADO CANNABIS RETAIL DOLLAR SALES Branded vs. Generic Products Branded Generic
13. 2017 BDS Analytics | CONFIDENTIAL Brands are EVERYWHERE
14. 2017 BDS Analytics | CONFIDENTIAL Sophisticated “CPG-like” branded product offerings
15. 2017 BDS Analytics | CONFIDENTIAL Celebrity Endorsements
16. 2017 BDS Analytics | CONFIDENTIAL Product Trends: Discreet, low-dose, new forms, pets
17. 2017 BDS Analytics | CONFIDENTIAL There is a time and a place for getting high (and that is not all the time); many consumers look for a more “portioned” experience Recent Adopters™, novice, inexperienced, and infrequent Consumers are a prime target 20% 15% 18% 23% 24% Don’t know 5mg or less More than 5mg, Less than 10mg More than 20mg Preferred Edible Dosage: PREFER LOWER CONCENTRATE PRODUCTS THAT ARE PORTION- CONTROLLED AGREE MANUFACTURERS NEED TO DO A BETTER JOB MAKING PRODUCT DOSAGES RELIABLY CONSISTENT 10-20mg
18. 2017 BDS Analytics | CONFIDENTIAL Specialized delivery systems erupt. Absorption science language (transdermal, sublingual) will become everyday consumer vocabulary Pharma-inspired Health/Beauty Mix-Ins
19. 2017 BDS Analytics | CONFIDENTIAL It is NOT just about THC—CBD is exploding!
20. 2017 BDS Analytics | CONFIDENTIAL Cannabinoids Cannabinoids (THC and CBD) are the chemical compounds secreted by cannabis flowers that provide relief to an array of symptoms including pain, nausea, anxiety, and inflammation THC—primary psychoactive compound in cannabis; Regulated Market ONLY CBD—non-psychoactive compound in cannabis with broad medical applications; regardless of where it is derived, it is the same chemical compound • General Market availability of Hemp derived CBD—comes from a cannabis plant with <0.3% THC by weight • Regulated Market ONLY for Cannabis derived CBD
21. 2017 BDS Analytics | CONFIDENTIAL Legal Cannabis is… A Game Changer
22. 2017 BDS Analytics | CONFIDENTIAL Majority agree with some form of legalization ~ 90%agree there should be some form of legal marijuana usage ~80% agree marijuana has medical benefits BDS Analytics Consumer Research across CA, CO, WA, OR among state representative sample of adults 21+ Total State Data is an average of weighted state data.
23. 2017 BDS Analytics | CONFIDENTIAL 28% …of adults 21+ in CA, CO, OR, & WA have Consumed Cannabis Within the Past Six Months BDS Analytics Consumer Research across CA, CO, WA, OR among state representative sample of adults 21+ Total State Data is an average of weighted state data. ~ 34% are Acceptors (would consider in the future) ~38% are Rejecters (would not consider in the future) ~ 60% have consumed cannabis in the past ~35% have consumed cannabis in the past
24. 2017 BDS Analytics | CONFIDENTIAL The stereotype is the outlier
25. 2017 BDS Analytics | CONFIDENTIAL There is no one Cannabis Consumer Diverse ✓ Generations ✓ Gender ✓ Socio and economic backgrounds ✓ Motivations ✓ Need states ✓ Benefits Premium / Luxury / Economy brand buyers Source: Greenercannabis.com
26. 2017 BDS Analytics | CONFIDENTIAL Men & Women Avg Age. 42 Who are the Cannabis Consumers? 54% Work Full-time 43% Live in Cities 67% Are Outdoorsy 36% Are Very Social 53% Spend More $ for Quality 48% More Satisfied with Life 54% Are Creative 49% Like to Try New Products BDS Analytics Consumer Research across CA, CO, WA, OR among state representative sample of adults 21+ Total State Data is an average of weighted state data.
27. 2017 BDS Analytics | CONFIDENTIAL Fascinating Findings
28. 2017 BDS Analytics | CONFIDENTIAL Preferred Consumption Method 24% Prefer Edibles Prefer Inhalables 70% Prefer Topicals 4% BDS Analytics Consumer Research across CA, CO, WA, OR among state representative sample of adults 21+ Total State Data is an average of weighted state data.
29. 2017 BDS Analytics | CONFIDENTIAL Recreational & Social 68% BDS Analytics Consumer Research across CA, CO, WA, OR among state representative sample of adults 21+ Total State Data is an average of weighted state data. Health or Medical 52% ~40% ✓ Relax/Be Mellow ✓ Manage Anxiety ✓ Manage Stress ✓ Feel Peaceful Consume Primarily for Relaxation Purposes Motives for consuming vary and are multi-faceted
30. 2017 BDS Analytics | CONFIDENTIAL And Consumers’ Need States are numerous, evolving throughout the day, time of day, mood, activity, and more 8 ✓Relax/Be Mellow ✓Manage Anxiety ✓Improve Quality of Life ✓Improve Sense of Wellness the average number of reasons consumers give for WHY they consume ~ ✓Enhance Creativity ✓Have Fun ✓Be Happy ✓Feel Peaceful AGREE the effect marijuana has on me largely depends on how it is consumed.
31. 2017 BDS Analytics | CONFIDENTIAL Products targeted to Need States (mood & effect) emerge and work, as they are relevant to how Consumers consume and Consumers “get it” Offerings of CALM, CRUISE, CREATE, CONNECT, CHARGE #1 Flower Brand in CA in 2017 (Mar-Nov) “A line of functional cannabis products formulated to satisfy your specific needs and desires.” #1 Pill/Tablet Brand #5 Edible Brand in CO in 2017 (through Nov)
32. 2017 BDS Analytics | CONFIDENTIAL Legal Cannabis is… Interacting with Beverage Alcohol
33. 2017 BDS Analytics | CONFIDENTIAL As legal access grows, cannabis+alcohol increasingly in the news
34. 2017 BDS Analytics | CONFIDENTIAL CBD beverages, Hemp beer and spirits….
35. 2017 BDS Analytics | CONFIDENTIAL AND CBD beers… Medicator is Vermont's first CBD- infused craft beer; A 6.0% American Pale Ale with a deep golden/amber color and a distinctly hemp-forward flavor and aroma. We put the CAN in cannabis with the release of Medicator, our CBD-infused IPA/American pale ale hybrid.
36. 2017 BDS Analytics | CONFIDENTIAL LAGUNITAS SUPERCRITICAL Ale: Ale Brewed with Cannabis Terpenes California-only release, for now... “With the help of our friends at AbsoluteXtracts, we pulled the terpenes from some of NorCal's Finest Cannabis (sans THC) and brewed it with some of Yakima's Finest Hops... Together, it's like giving our brewers a whole new set of colors to paint with!” -Lagunitas Lagunitas brews hops and terpenes for new flavor experiences
37. 2017 BDS Analytics | CONFIDENTIAL
38. 2017 BDS Analytics | CONFIDENTIAL Bud & Beer Tours
39. 2017 BDS Analytics | CONFIDENTIAL While both generate a “buzz,” perceptions/stigmas are different Wake & Bake vs. Rise & Shine
40. 2017 BDS Analytics | CONFIDENTIAL Or… Marijuana Mom vs. Wine Mom
41. 2017 BDS Analytics | CONFIDENTIAL • Cannabis impacts different people VERY differently • Cannabis effect/experience varies based on consumption method, product, varietal, time of day, what was eaten, etc. • Many many many more methods of consumption for cannabis • Hangovers or lack thereof • Cannabis has POSITIVE medical and personal health associations for Consumers, many Acceptors and even some Rejecters • There is still a stigma and knowledge gaps—it will be awhile before cannabis replaces a cold beer or fine wine occasion, thus an opportunity to coexist with alcohol Cannabis is different than Alcohol…
42. 2017 BDS Analytics | CONFIDENTIAL Attitudes on the Effects: Top 2 Box Agreement, 7-pt Scale. Total Consumers CA Consumer CO Consumer OR Consumer WA Consumer Unweighted base n=2,401 n=600 n=601 n=600 n=600 Marijuana does not impair me as much as drinking alcohol does. The effect marijuana has on me largely depends on how it is consumed. I have experienced becoming too dysfunctional from using marijuana or marijuana containing products. 65% 45% 22% 65% 51% 28% 58% 42% 21% 67% 45% 19% 69% 44% 20% BDS Analytics Consumer Research across CA, CO, WA, OR among state representative sample of adults 21+ Total State Data is an average of weighted state data. State level data is weighted to represent the population. Most Cannabis Consumers feel marijuana is less impairing than alcohol
43. 2017 BDS Analytics | CONFIDENTIAL Drink Alcohol 80% Drink Beer 63% Drink Wine 52% Beer drinkers consume cannabis to relax or be mellow • Non-craft beer drinkers consume cannabis more frequently and make stronger health/medical associations (pain and stress relief) with cannabis use, compared to craft beer drinkers BDS Analytics Consumer Research across CA, CO, WA, OR among state representative sample of adults 21+ Total State Data is based on unweighted numbers. Drink Spirits 58% Wine drinkers consume cannabis to relax or sleep better Spirit drinkers consume cannabis to relax and manage anxiety Alcohol brands that learn to coexist with Cannabis (versus resist or defend against) will be the most successful long term
44. 2017 BDS Analytics | CONFIDENTIAL wine 52% 48% 41% In fact, more Cannabis Consumers drink spirits, beer, and wine, compared to Acceptors and Rejecters beer 54% 40% 29% craft beer 43% 28% 19% spirits 58% 45% 32% BDS Analytics Consumer Research across CA, CO, WA, OR among state representative sample of adults 21+ Total State Data is based on unweighted numbers. In the P6M, which, if any, have you used or consumed? CA & CO Consumers are more likely to consume alcohol+marijuana—Craft Beer specifically high in CO Fewer Consumers consume wine in OR & WA CONSUMERS ACCEPTORS REJECTERS
45. 2017 BDS Analytics | CONFIDENTIAL Music/Movies 48% Snacks 45% Chocolate 26% Fine Dining 18% Craft Beer 18% Wine 14% Cocktails 16% + And Consumers pair the two Exercise 19% BDS Analytics Consumer Research across CA, CO, WA, OR among state representative sample of adults 21+ Total State Data is an average of weighted state data.
46. 2017 BDS Analytics | CONFIDENTIAL Legal Cannabis is… Driving Innovation
47. 2017 BDS Analytics | CONFIDENTIAL Growth will drive changes across virtually every industry *ARCVIEW MARKET RESEARCH in partnership with BDS Analytics Health and Beauty Aids Tobacco And the list goes on… Health Care and Senior Care Agriculture / Gardening Automotive Manufacturing CPG Retail Clothing / Accessories Luxury Products Pharma and OTC Bev Alcohol Fine Dining, Casual Dining, Fast Food Food and Beverage Communications Technology Travel and Tourism Banking and Finance Publishing Safety and Regulatory Education Market Research
48. 2017 BDS Analytics | CONFIDENTIAL Opportunities Abound ✓ Core brand communications ✓ Wider Consumer Adjacencies ✓ Consumer Targeting ✓ Packaging ✓ Renovation ✓ M&A ✓ Line Extensions ✓ Dispensary Partnerships ✓ Brand Partnerships ✓ Grower Partnerships ✓ Promotions ✓ Product Development ✓ Consumer Segmentation ✓ Portfolio Management ✓ Optimization … and much more
49. 2017 BDS Analytics | CONFIDENTIAL From tourism…
50. 2017 BDS Analytics | CONFIDENTIAL To travel… On the offer’s landing page, Spirit says, “If you want to make a beeline for Colorado right now, we don’t blame you — but we’re up to take you to plenty of chill destinations. … Book today … and be sure to pack some munchies.”
51. 2017 BDS Analytics | CONFIDENTIAL Cannabis Consumers more likely to choose cannabis friendly destinations OF US ADULTS 21+ MORE LIKELY TO CHOOSE CANNABIS FRIENDLY DESTINATIONS OF P2Y US CANNABIS CONSUMERS 21+ MORE LIKELY TO CHOOSE CANNABIS FRIENDLY DESTINATIONS 17% of US Adults 21+ traveled to state/country where cannabis is legal in the PAST YEAR 30% consumed LEGAL marijuana
52. 2017 BDS Analytics | CONFIDENTIAL …and transportation
53. 2017 BDS Analytics | CONFIDENTIAL From breakfast fare to snacks and fast foods
54. 2017 BDS Analytics | CONFIDENTIAL Merchandising products for FIDO may be less obvious…
55. 2017 BDS Analytics | CONFIDENTIAL …while Music and Entertainment are a logical fit for many
56. 2017 BDS Analytics | CONFIDENTIAL How about NETFLIX branded boutique strains?
57. 2017 BDS Analytics | CONFIDENTIAL A new language for marketers is emerging… Can you talk the talk?
58. 2017 BDS Analytics | CONFIDENTIAL
59. 2017 BDS Analytics | CONFIDENTIAL Changing Times… “Just say know” campaign in New York Times
60. 2017 BDS Analytics | CONFIDENTIAL Scotts saw the opportunity early on for core brand communications
61. 2017 BDS Analytics | CONFIDENTIAL
62. 2017 BDS Analytics | CONFIDENTIAL THE RECENT ADOPTER THE OUTDOOR ENTHUSIAST THE MEDICALLY MOTIVATED THE CONNOISSEUR Different Consumers present different innovation opportunities By understanding the Consumers we can identify areas for development
63. 2017 BDS Analytics | CONFIDENTIAL 2017 BDS Analytics | CONFIDENTIAL Legal Cannabis Consumers are changing the game for virtually every industry. You don’t have to be in the cannabis business to be impacted. Legal Cannabis Consumers are your customers. With legalization, they are evolving in their attitudes and practices. If you don’t keep up with them, you will be left behind. Legal Cannabis Consumers are creating significant innovation opportunities. Game changing consumer trends are a foundation for game changing innovation.
64. 2017 BDS Analytics | CONFIDENTIAL QUESTIONS?