Today, the total cannabis industry is worth an estimated $61 billion, with the U.S. edible cannabis marketplace carving out approximately $3.6 billion on an annual basis and continuing to climb. In fact, the cannabis-infused food and beverage sector is on track to increase to over $8 billion by 2025.
As the industry continues to evolve, understanding how demographics play a role in today’s cannabis marketplace is imperative. A few top cannabis consumer groups actively purchase edible products and define how retailers and manufacturers should be approaching the cannabis market to meet the needs of these top food and beverage consumers, whether approaching the industry through business-to-business (B2B) or direct-to-consumer (D2C) sales avenues.
“Packaging plays another important role in both manufacturing and marketing. Reducing waste by transitioning from polypropylene containers to flexible packaging can help alleviate pain points when considering solutions as an MSO,” says Rebecca Maestas.
Buyer personas are semi-fictional representations of an ideal customer based on market research and real data about existing customers. When creating buyer personas, variables like customer demographics, behavior patterns, motivations, and goals should all be included—and the more detailed you can get with this information, the better.
B2B denotes the wholesale channel in the cannabis space. These are contacts that represent decision makers, including owners and buyers that greatly impact the product mix that is carried in a retail location. Also consider the budtenders (dispensary employees) who are on the front line and are some of the most-influential people in the cannabis industry—because they call the shots at the point of sale, which can make or break a brand or product.
D2C refers to selling products directly to customers, bypassing any third-party retailers, wholesalers, or any other middlemen. Of course, due to the regulatory framework in the cannabis space at this point, most states don’t yet have a D2C channel.
For example, the only way to purchase cannabis products in most states requires the consumer to visit a retail establishment in person to verify identity and age. This very highly regulated industry and legal landscape has not allowed any other method of purchasing products—until recently. In states such as California, and most recently Colorado, consumers can access delivery services that provide on-demand products. The cannabis commerce environment is changing rapidly, allowing for a more-diverse demographic of consumers to participate in cannabis consumption.
When gathering business intelligence from partners, such as wholesale clients, develop a series of questions that will provide the best information and analysis to better serve their needs. First, drill down into what they like best about the cannabis brand and products offered under the brand portfolio. Secondly, find out how often they purchase to ensure timely follow-up and reorders. Learn more about their business goals and how you can help them achieve those goals. Identifying an opportunity and finding the best solution for the retailer will help both sides of the equation, yielding more units sold to the retailer. Knock down barriers to entry by finding ways to endear them to your brand and involve the entire retail sales force to keep them engaged. Then organize the information gathered from the analysis and create a matrix as reference. This will help build the roadmap for:
- Building out campaigns for demographic groups/segments
- Creating segments based on behaviors and needs to formulate tactical efforts, such as email blasts and promotions
- Creating a “lead list for sale” organization
For any product to be successful, it requires initial sales and repeat sales to a growing group of consumers. To understand how these consumers interact with brands throughout the customer journey—for instance, from when they see a digital ad to when they are standing in front of a budtender at the point of sale—an analysis of behavior needs to take place.
Here are some questions to better understand how to create strategies for growth. These should be addressed with a large sample of consumers:
- How do they get information?
- How do they communicate?
- What media do they consume?
- What is important to them when considering a product?
- What objections might they have?
- What drives their decision-making process?
Once all the data points have been compiled, buyer personas or segmentations will start to form. General cannabis industry personas can be broken down into categories like Light Consumers, Moderate Consumers, and Heavy Consumers. Within each of these segments, consumer personas begin to emerge. Light Consumers tend to be social opportunists who consume cannabis a few times a year, usually in a social setting. Moderate Consumers gravitate toward CBD products and edibles, and they are looking to use cannabis daily as a medical or wellness enhancement for pain management, anxiety, or sleep issues. The largest segment among Heavy Consumers are more-traditional consumers who have adopted cannabis consumption as a lifestyle. They tend to be young professionals and older millennials who make up a diverse group and are ready to spend disposable income on cannabis.
MEETING CONSUMER NEEDS
To meet the needs of different consumers, manufacturers must take a slightly different approach when it comes to product creation. For example, Moderate Consumers who are searching for wellness products are going to gravitate toward THC-to-CBD ratioed products. Tinctures with different ratios that can be used for myriad conditions and ailments are a great option for this segment and can fulfill a wide range of needs.
For example, the Tonic Drops line of tinctures, which is part of the Infusiasm family of brands, offers four different varieties, with varying ranges of cannabinoid content including 100% THC, a 50:50 CBD-to-THC ratio, a 20:1 ratio, and a 50:1 option that all feature the same format, easy dosage, and packaging.
Form factor, or what type of product will perform well in any market, comes down to several variables, including dosing, flavor profiles, seasonality, and product approachability. Edible manufacturing allows the producer to replicate products across markets to create consistent, reliable experiences for end users. The one product category that makes this difficult to achieve is flower, since there are several factors that will impact the final product, including strain availability. However, a multi-state operator (MSO) in the edibles space can produce the cannabis input, such as distillate or cannabutter, consistently across all markets that will yield the exact same product from state to state. Edible manufacturing can also take advantage of economies of scale when purchasing raw ingredients that will be used to create baked goods, candies, chocolates, topicals, tinctures, etc.
Packaging plays another important role in both manufacturing and marketing. Reducing waste by transitioning from polypropylene containers to flexible packaging can help alleviate pain points when considering solutions as an MSO. This can also help create cohesive solutions across all markets to reach economies of scale and save additional money on transit and warehouse cost. Lower-impact packaging also allows marketing to craft a story around how the consumer can actively participate in environmentally conscious decision-making—being part of the solution. This appeals to a wide range of consumers in the cannabis marketplace. It is critical to recognize that design and branding are both extremely important elements to think about when building a product line to ensure you reach your target audience and the messaging is aligned with their goals.