Small But Mighty: BDSA's Price and Preference Insights on the US Cannabis Beverage Market

In an exclusive interview with Benzinga, Brendan Mitchel-Chesebro, an analyst at BDSA, a market intelligence firm specializing in the global legal cannabis industry, provided valuable insights into the evolving trends and dynamics of the thriving cannabis beverage market.

Mitchel-Chesebro characterized the cannabis beverage market, which currently comprises just 1% of the industry, as "small but mighty."

Despite its relatively modest market share, this segment has witnessed remarkable growth. Mitchel-Chesebro emphasized that while not many brands have entered the beverage sector, those who have done so effectively are reaping substantial rewards, and enjoying robust sales growth.

Key Cannabis Beverage Categories: Drinks, Mixes And More

According to the analyst the cannabis beverage market can be disassembled into major categories such as drinks, powdered mixes, shots, tea, and coffee products.

Among these, cannabis drinks dominate the market, accounting for approximately 75% of total cannabis beverage sales.

Notably, the top-performing brands in this space primarily focus on producing different types of cannabis-infused drinks. Following drinks, powdered mixes constitute about 10% of beverage sales, with shots making up roughly 7% of the market.

While cannabis beverages may not be the biggest players in the legal cannabis industry in terms of sales volume, their impressive growth and unique appeal are making them a notable and profitable segment.

Distinct Consumer Preferences

Mitchel-Chesebro provided insights into the characteristics of the cannabis beverage market, its consumer dynamics, and the distinctions between beverage and inhalable consumers.

He highlighted a significant difference between cannabis beverage consumers and the general cannabis consumer population. Beverage consumers are seeking products that cater to specific needs, with a focus on relaxation and mood enhancement.

"Beverage consumers are more likely to mention a desire to manage anxiety as a reason for their cannabis consumption, with 46% reporting this need compared to 40% for all cannabis consumers,” Mitchel-Chesebro said.

BDSA data reveals that inhalable cannabis consumers exhibit a higher frequency of use, often consuming throughout the day.

"When comparing consumption frequency among inhalable and beverage consumers, including both adult use and medical markets, approximately 66% of inhalable consumers engage in daily cannabis consumption," Mitchel Chesebro said.

"This is a substantial proportion of inhalable consumers. In contrast, daily consumption rates for those favoring edibles, specifically beverages, are notably lower, resting at around 37%."

Consumption Trends And Motivations

Moreover, the time of consumption varies significantly between inhalable and edible consumers.

Inhalable consumers tend to consume throughout the day, with a peak in the evening. In contrast, only 13% of edible consumers report consuming their products in the morning, indicating a more pronounced nighttime use pattern.

This hints that many choose edibles for sleep-related needs. Edibles, with their predictable and manageable effects, might find a niche among those who seek a morning or daytime relaxation option.

The analyst pointed out that consumers of cannabis beverages appear to be motivated by relaxation and recreational needs more than health and wellness.

BDSA's data underscores the unique appeal of cannabis beverages, highlighting their focus on relaxation and the management of anxiety as key consumer drivers in this emerging market segment.

“Roughly half of beverage consumers cite wanting to relax or be mellow as their primary motivation, a figure consistent with the broader consumer base. However, beverage consumers are more likely to mention a desire to manage anxiety as a reason for their cannabis consumption, with 46% reporting this need compared to 40% for all cannabis consumers,” Mitchel-Chesebro said.

Competitive Pricing and Market Expansion in Cannabis Beverages

Mitchel-Chesebro noted that the average retail price for beverage products is approximately 30% lower than that of edibles. This price differential could be a significant factor driving consumer interest in beverages, especially as the number of beverage brands has rapidly increased in recent years.

To illustrate the growth in the beverage market: in 2020, in California, there were only 40 beverage brands in the state. However, by Q1 of 2023, this number had increased to 54, indicating substantial expansion, “particularly in a market where attrition is common,” Mitchel-Chesebro said.

Exploring Minor Cannabinoids in Cannabis Beverages

Mitchel-Chesebro also discussed the utilization of minor cannabinoids in cannabis beverages, comparing their prevalence to that in the edible category. He noted that beverages have not seen as many products incorporating minor cannabinoids, such as CBN (for sleep aid) or CBD (for inflammation), in comparison to edibles.

To provide context, Brendan mentioned that around 8% of edibles in the markets they tracked in Q1 of the current year contained CBN. In contrast, for beverages, the figure is less than 2%.

This indicates that beverages have been slower to feature products designed to cater to health and wellness needs that consumers seek through minor cannabinoids.

In addition, he highlighted the potential of powdered mixes within the beverage category containing minor cannabinoids.

Often marketed toward athletic and sports-oriented consumers or individuals seeking an energy boost, some of these products incorporate cannabinoids, electrolytes, or stimulants to cater to consumers looking for a pre-workout or outdoor adventure solution. A trend that suggests a dynamic and competitive landscape in the beverage segment.

Boosting Beverage Growth Through Inhalable Insights

At this point, is there anything the edible category can learn from the inhalable category to continue growing?

According to Mitchel-Chesebro convenience is a pivotal aspect of inhalables, that drives consumers, and should be considered by cannabis beverage brands.

Notably, cannabis beverages have faced a challenge due to their bulkier nature. However, the "cannabis shots category" can represent a lighter, more convenient option for brands.

Yes, you read it correctly, cannabis shots exist and come in different presentations such as little packages, or droppers, containing a cannabis-based powder or mix.

Cannabis shots provide a convenient and efficient method of consuming cannabis, as they can be effortlessly blended with various beverages. This versatility makes them an attractive product option with untapped potential for brands to harness, particularly in regions where the market is still developing.

Mitchel-Chesebro highlighted that in some markets, like Colorado, the prevalence of powdered mix products has led to a more significant share of total beverage sales. This suggests that consumer trends and preferences can vary by region and that certain markets may favor specific product types based on local demand and brand presence.

Photo By: NoName_13 via Pixabay.