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Thirsty for Cannabis Beverages

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Thirsty for Cannabis Beverages

June 28, 2022 | Jim Baudino | Blog, Business, Industry News

June 27, 2022 by Diana Eberlein, VP of Marketing at SōRSE Technology

We’ve been saying “this is going to be the year for beverage” for years – and it’s yet to reach its full potential.  In fact, it’s barely scratched the surface. BDSA reported at BevNET Live that the US cannabis industry is approximately a $28B industry (medical & recreational), and expected to grow to $46B by 2026.  They also said that beverage currently accounts for 1% of today’s cannabis sales.

So why all the excitement?

Beverages, while currently a small portion of the market, are outpacing other categories for growth.  BDSA noted that beverage had 64% growth last year and 27% growth quarter over quarter.

But sometimes it’s not all about the numbers.  As a marketer, I watch consumer consumption and purchase behavior.

Think about it – When was the last time you went to a social gathering* (professional or personal) and didn’t have a beverage in hand?

Ever go to a restaurant and have them say “Drinks? Or are you only eating?” NOPE. But you will hear “Do we need a food menu or are we just drinking?” Whether you drink water, juice, kombucha, tea/coffee, soda, mocktails, or cocktails, you’re likely to take and consume a beverage in almost any setting. I mean, how many of us are having a drink while we’re reading this?

Drinks are approachable. Drinks are socially acceptable and discreet when it comes to consumption.  Drinks can appeal to every cannabis consumer with RTD (ready-to-drink) and RTM (ready-to-mix) formats and vary greatly by dosage.

But, as approachable as beverages may be, there are still hurdles to overcome – but as with most challenges, they lead to opportunities:

Challenge #1: Building Brand Loyalty & Trust

One of my favorite quotes from BevNET Live earlier in June was from Romitha Mally, Founder of Mally Collective, who said “It’s never been easier to launch a brand.  It’s never been harder to create and maintain customer loyalty.”

Even with infused beverages being a niche market, it’s still saturated.  So many brands in so many different markets.  A brand needs to stand out on shelves, but also find ways to differentiate itself whether through application or function.

The key to this is consistency.  

Consistent Messaging, Consistently:

This is marketing 101 – It takes on average 7 engagements with a brand to see a conversion.  If your messaging isn’t clear and consistent, the consumer won’t remember your brand or why they should want it.  Because these brands are startups in a startup industry, education is still a major component as consumers seek out reliable sources for information and products.  Also, be consistent with the cadence of your content because there’s a lot of content out there you’re competing with.  Plus, if you’re leveraging social media as part of your marketing mix, you want to make sure you abide by the algorithms for maximum exposure.  The more content you share, the better – but make sure the content delivers your consistent messaging, too.

This also goes for participating in social causes and philanthropy.  Studies show that consumers are heavily influenced by brands’ involvement in the community and causes they care about.  However, they don’t want brands jumping from one hot cause to another to appear “relevant”.  Again, consistency – select causes that align with your brand and target audience and demonstrate commitment to those organizations and movements.  

Consistent Experience:

This is arguably the biggest hurdle that the beverage and edibles category has had to overcome.  First, because everyone has had a bad edible experience that’s hard to come back from, the technology has matured just like the cannabis industry. 

There are water-soluble emulsion solutions for both RTD and RTM products that allow for accurate dosing and therefore a consistent experience for the consumer each and every time they have that infused product.  Consumers also appreciate the consistent onset and offset, with many consumers feeling “lift-off” between 10 and 15 minutes with the experience lasting about 1 hour or so.

Not all water-soluble technologies are created equal, so be sure you work with one that can help you expand into other legal markets, has stability data for a longer shelf-life, and has a clean flavor profile.  If it doesn’t taste good, no one will drink it, but it also has to taste the same from market to market.  Could you imagine if Coca-Cola tasted one way in NYC and another in LA?  No, that would never be acceptable for Coca-Cola or the consumer.  And the same goes for cannabis.  But when you’re dealing with an agricultural product and multiple suppliers, product consistency is harder to achieve so you’ll want to work with a provider that can help you achieve the same flavor profile and experience from market to market.  

Consistent Consumption = Consistent Sales:

Brands that tell the consumer how to enjoy and apply their beverage to their regular routine will encourage consistent consumption and therefore consistent sales.  The goal is to be their go-to drink during (insert activity here).  While there can’t be any structure function claims (medical/health benefits), you can give hints through your messaging, visual content, and branding to tell the consumer how they can blend your beverage into their routine to maximize the effects.

Consistency is what makes something “on brand” or not.

Challenge #2: Entertaining Education

How many times have you heard someone say “I don’t like edibles and drinks because I don’t want to have to wait an hour before I feel anything”?

Too many times.  And it’s especially frustrating because the category has come so far.  

Brands like Cann, arguably the most “famous” THC-infused beverage on the market, have invested a lot of money and creative resources in advertising and marketing to educate consumers on the possibilities of cannabis beverages.  Their celebrity and strategic partnerships have allowed them to cast a wide net across multiple legal recreational markets.

Other brands can benefit from this because the more approachable Cann is, combined with delivering a consistent and enjoyable experience, the more open those consumers become to trying other infused beverages and products.  

But there’s more – you can learn from their technique for engagement, which is reminiscent of many brands that are now household names.

Consumers must also be educated on why the products have a quick and consistent onset and offset, why one product tastes better than the other, what to look for to ensure their product is stable and homogenous (necessary for that consistent experience) – And why consumers need to treat a cannabis product like they would any other CPG.  

What Cann does particularly well, though, is blend “education” with “entertainment”, which is essential to capturing your target consumer, increasing brand recall, and expediting conversion to sales.  Their ads draw you in with bright colors and catchy taglines, but they also infuse it with educational content on anything from how to best consume the product, to their involvement in social causes, to what’s the active ingredient in the product (Hint: It is on the Cann, Powered by SōRSE).  Their content can make you laugh, get you fired up, put you at ease, or simply create a smile – just like their product.  

Evoking an emotional response from your target consumer is the best way to make your brand memorable, start building brand loyalty, and expedite sales conversion.

Challenge #3: A Recession

The legal cannabis market is approaching a true recession.  As we saw with COVID, cannabis is recession-proof, just like alcohol.  Even when cash is tight, consumers will budget for products that provide relief and an escape from daily stressors.  

This may however impact the consumer’s purchase behavior.  High potency, budget-friendly beverages with likely see a boost in sales.  With that and inflation in mind, ways to reduce COGS and better position themselves in the marketplace are already being evaluated.  Across THC & CBD, we’re already seeing a huge demand for stick-packs, water-soluble tinctures, wellness shots, and other drink additives that are cheaper to ship and more cost-effective for the consumer. 

Lower dose CBD-only beverages specifically may want to consider adding new SKUs with higher dosages per serving to compete with other products offering higher doses for a similar price point (based on the mg dosage).

Some brands are looking to minor cannabinoids to differentiate their products for various use cases.  There was particular interest in CBN and CBG at Expo West this year, as well as other adaptogens.  While there is absolutely an opportunity as these minor cannabinoids rise in popularity, keep in mind that the consumer base might need more education (and entertainment!) on these newer functional ingredients.

While a recession can cause some doubt, there are also numerous opportunities for brands to pivot since cannabis will still be in high demand.

THC and CBD beverages like Cann, Adapt SuperWater, Mad Tasty, CENTR, Day One, Major, Altitude, Crip & Crude, L8, APRCG, Leisuretown, Mary Jones by Jones Soda, and others are setting the stage and setting the bar high with tasty functional products that target a variety of different audiences…and we’ve barely scratched the surface with minor cannabinoids.  

This is just the beginning for cannabis beverages, and in many ways, it’s just the beginning for functional beverages and edibles.  I consider CBD the “gateway” for functional ingredients.  With CBD and THC’s continued growth, mainstream CPG brands will be more open to exploring other minor cannabinoids, functional plants like mushrooms, and more intoxicating ingredients like THC or even psychedelics in the future.

As cannabis advocates working in the food and beverage space, our passion is to create products that make people’s lives better.  Beverages will continue to grow and outpace other categories due to their approachability and social acceptance – but mostly, because people get thirsty.