Alternative cannabis products will entice 3 million new consumers
Alternative cannabis products – which include edibles and beverages and are slated for legalization in Canada in October – could add as many as 3 million consumers to the cannabis market, according to research from EY and Lift & Co.
These “2.0” cannabis products are composed of edibles, infused beverages, topicals, concentrates, and capsules. According to previous research from Deloitte, 2.0 products are projected to create a $2.7 billion market, with more than half devoted to edibles ($1.6 billion) and a sizeable portion to beverages ($529 million).
The EY report projects that the legal availability of edibles, extracts, and topicals will convert about 12% of current non-consumers.
Current cannabis consumers make up 17% of Canadian adults, and have less focus on brand than on quality, intended effects, and potency, according to EY. In fact, 70% of current consumers don’t know what product or brand they will purchase prior to entering a cannabis store.
Current cannabis consumers are likelier to match a “risk taker” profile, according to Deloitte’s research, skewing younger and consuming dried flower cannabis. The “conservative” consumers projected to be converted by alternative cannabis skew older and female; they have little interest in combustible products, preferring familiar consumption formats like baked goods and gummies.
“New product offerings will open the doors for experimentation among current and non-consumers, giving cannabis companies the opportunity to capture a larger market share,” Monica Chadha, EY Canada cannabis leader, said. “But companies should keep in mind that these consumer segments will have very different attitudes towards cannabis and product formats, ultimately driving the need for differentiated customer experiences.”
Current non-consumers are less concerned with potency and price, and more focused on clinical research and recommendations from health care practitioners when making buying decisions, according to the EY report. Thirty-three percent of non-consumers said they don’t know enough about cannabis to consume it.
“Current non-consumers need more information before they feel comfortable trying cannabis products,” commented Chadha. “Deciphering through online information for what’s credible can be a challenge. Companies will need to determine the best way of building awareness and educating targeted consumer segments as one way to help inform the purchasing decision and build brand loyalty.”
