Mintel: Opportunity Exists in Canadian Cannabis Market
Legalization of cannabis edibles, beverages expected to spur growth.
It has been more than a year since cannabis was legalized in Canada, and while 2019 sales fell short of most expectations, 2020 is in a much better position to succeed, according to new research from Mintel.
The research firm reported the Canadian cannabis market not only has a significant number of users but potential users as well: six in 10 (59 percent) Canadians are currently using and/or interested in using cannabis. What’s more, a quarter (27 percent) of all consumers say they used cannabis in the first six months of legalization (October 2018 - March 2019) and a third (32 percent) of non-cannabis users say they are “open to trying it.”
Among these potential cannabis users (current non-users who are “open to it”), edibles are the most intriguing format (48 percent), including 47 percent of 20-34-year-olds, 49 percent of 35-50-year-olds, and 48 percent of those aged 55 and over. Overall, two-thirds (66 percent) of open non-users are interested in ingestible (edible and drinkable) cannabis.
"The key to future growth for many consumer industries will be to convert more of the consumers who are open to but not current users of cannabis; their hesitance to try cannabis was a contributor to the relatively low sales in 2019, but the legalization of edibles and drinkables in October 2019 will play a major role in 2020’s success,” said Scott Stewart, senior research analyst, Mintel. “Edibles and drinkables can be a great introductory way for new users to familiarize themselves with cannabis and better understand the cannabis experience, potentially leading to using other forms of the product.”
Cannabis products primarily serve health and wellness needs
While nearly half (46 percent) of cannabis consumers use it to have fun, and even greater percentage use cannabis as a wellness product. More than half of cannabis consumers use it to relax (62 percent) and relieve stress/anxiety (54 percent); meanwhile, two in five use it to improve sleep (42 percent) and their mood (39 percent).
Current users aren’t the only ones looking to cannabis to fulfill health and wellness needs: two-fifths (42 percent) of open non-cannabis users would consider using cannabis to relieve pain and a quarter (25 percent) to improve sleep.
Many of the barriers to cannabis use that consumers have can be overcome with time, education and support of brands. For instance, three of the top four barriers to usage for cannabis non-users are the smell (37 percent), smoke (36 percent), and health concerns (28 percent). When it comes to knowledge about cannabis, open non-users are lacking: only 41 percent of open non-users feel that they are knowledgeable on how to consume cannabis.
“New product innovation in the cannabis market has already begun to tear down some of the barriers related to wider cannabis consumption,” Stewart said. “In addition to edibles and drinkables that do not involve smell or smoke — two of the main complaints cannabis non-users have about the product — devices like vaporizers or vape pens, which create a vapor instead of smoke, serve to minimize these unwanted byproducts.
“Our research shows that many Canadians view cannabis as a very complex and intimidating product, and the lack of understanding leads many to avoid it entirely. Brands can navigate this by using online platforms and in-store employees to help educate consumers about cannabis. Strict laws around marketing cannabis mean that brands have to be very careful about their approach, but using factual statements to help educate and familiarize potential consumers with cannabis is a good way of establishing a trusted position in the market.”
Opportunities for non-cannabis brands
There are many opportunities for non-cannabis brands to tap into the cannabis market. One example is video gaming brands: one quarter (25 percent) of cannabis consumers use cannabis while playing video games, with nearly two in five of this group saying they do so to enhance their experience (38 percent).
Cannabis can also play a big role in the tourism market as 36 percent of current cannabis users are interested in cannabis-themed vacations. What's more, Mintel research on experiential travel reveals that 44 percent of travellers like to try something they have never done before and 27 percent want to leave their comfort zone while travelling. Using cannabis could offer some of the same attributes that these travellers are looking for, highlighting a connection between the two industries.
“The current challenge for companies and brands in the tourism industry entering the cannabis market is that many tourist destinations still have relatively few retail options,” Stewart said. “That is expected to change and we suspect the tourism industry will begin to attract more and more cannabis customers as the recreational cannabis market matures.”
Food companies that want to get involved in the cannabis market but want to take a less obvious approach and/or avoid the strict regulations around edibles and drinkables should capitalize on incorporating ‘munchies’ into their product messaging: more than four in five (83 percent) cannabis users say they eat more food when using cannabis.
“In all likelihood, the industry that can benefit the most from the legalization of cannabis – besides the cannabis industry itself – is food and drink,” Stewart said. “Our research shows that consumers find themselves eating more while using cannabis, creating sales opportunities for food and drink manufacturers, companies and brands without the need to actually create edible or drinkable cannabis products. By incorporating cannabis-related messaging in marketing campaigns and on product packaging, food and drink brands can play in the market without making huge investments in research and development and new product innovation.”