Brendan Mitchell-Chesebroan expert analyst at BDSAa global cannabis market research firm, explores 2024 cannabis consumption trends and how brands are addressing economic challenges through innovation, premiumization, and developing consumer-centric products for growth and continued profitability in a competitive market.
The rise of premium cannabis products
The cannabis industry is facing price compression, severely impacting brand profitability. Brands are adapting strategies to counter these challenges, with some opting for premium offerings to stand out in the market.
Mitchel-Chesebro points to the success of proprietary strains and high-quality inputs like rosin and live resin in attracting savvy consumers willing to pay a premium for superior taste and effects.
Additionally, products designed to deliver specific mood-oriented effects are gaining traction, as they meet consumer demand for personalized cannabis experiences.
“Consumers are more attracted to these types of products… willing to pay more for products that consistently deliver on this,” he adds.
Adapting to economic pressures: strategies for survival
Mitchel-Chesebro points out that automation and technological advances in cultivation and production are key strategies brands are leaning towards for cost efficiencies. Additionally, targeted promotions and discounts have become a nuanced art for retailers, who aim to boost sales without eroding profit margins.
“Price compression has had a huge impact…with low single-digit margins in mid-2021,” Mitchell-Chesebro noted. During this spike in legal cannabis demand, fueled by pandemic consumption patterns, sales subsequently declined and inflation worsened the industry’s thin margins.
“Promotions are great… but you don’t want to discount so much that it decreases your overall profit,” he adds.
Innovation in product packaging
An interesting trend emerging in the cannabis market is the consumer shift towards larger packaging, particularly in the flower and pre-roll categories.
This shift reflects a growing consumer preference for value, balancing cost with quantity and potency.
“Half-gram flower packages… have gone from representing about 6% of total flower sales to about 10%,” Mitchel-Chesebro reveals, indicating a significant market shift towards bulk purchasing.
Consumer preferences and brand loyalty
Brand recognition and loyalty play a crucial role in consumer purchasing decisions, ranking as the fourth most cited product choice factor.
“24% of consumers cited brand recognition as a determining factor in product choice,” notes Mitchel-Chesebro, underscoring the importance of consistent and specific product experiences in building brand loyalty.
This focus on reliability and effect-based marketing strategies underlies the evolving landscape of consumer preferences in the cannabis market.
Furthermore, according to BDSA data, 26% of US consumers choose outlets for their favorite brands, while 37% remain loyal to products and varieties that are proven to work.
If you want to talk more about this interesting and important topic, join us at the next Benzinga Cannabis Capital Conference in Florida at its new location in Hollywood on April 16-17, 2024. The two-day event at Diplomat Beach Resort will be a opportunity for entrepreneurs, large and small, to network, learn and grow. Renowned for its trend-setting capabilities and influence on the future of cannabis, mark your calendars for this conference to be the cannabis world’s event of the year.
Buy your tickets now at bzcannabis.com – Prices will go up very soon!
Photo: image generated by artificial intelligence.