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CBD, personalisation set to drive cannabis market

In a webinar entitled “Cannabis Legalisation: How It Will Disrupt the Future” Euromonitor International analysts looked at several ways in which cannabis will likely disrupt the tobacco and alcohol industries as well as how these industries can adapt. [Some American focus but with global relevance. Ed]

A nascent industry grows

While the cannabis industry is less than a quarter of the size of the tobacco and alcohol markets, it is expanding at a faster rate.

The US cannabis industry, including legal and illegal sales, was worth $150- billion in 2018, while its market grew by 40 percent, according to Spiros Malandrakis, head of alcoholic drinks research at Euromonitor. Meanwhile, tobacco and alcohol have seen stagnant growth of around 1 percent.

In looking at the current global cannabis regulations, Shane MacGuill, head of tobacco research, noted that legalisation and development are faster in the West than the East, though he expected quick growth with a spread of legal medical and recreational cannabis to spread to the east by 2030.

Less ABV, more CBD

A major trend in alcoholic drinks is mindful drinking, Malandrakis noted, making the development of alternatives necessary as consumers cut down on consumption or choose low ABV options.

The beer industry has previously experimented with CBD but has often been hampered by miscommunication and misunderstanding of its proper usage, Malandrakis said, citing Black Hammer Brewing’s since-recalled Toke Back Mountain as an example.

He also cited Blue Moon creator Keith Villa’s Grainwave, a de-alcoholised craft beer infused with cannabis available in Colorado, as indication of ongoing innovation within the beer industry.

According to Malandrakis, the alcohol industry could potentially lose market share to cannabis, as the two share similar consumer demographics, use occasions and retail positionings, and thus are often combined or substituted for one another.

Malandrakis added that, one in four people who have consumed alcohol in the past week have also consumed cannabis, and one in five suggest they seamlessly substitute cannabis for alcohol.

Impending cannibalisation

Malandrakis outlined several issues currently limiting the ability of cannabis to compete with the alcohol industry.

Despite fears of cannabis cannibalising booze, he stated that “The Distill Spirits Council suggests that per capita in Washington, Oregon and Colorado, the longest standing recreational markets in the US, have not been hurt by legalisation, as ‘canna-tourists’ also partake in alcohol consumption.”

As for cannabis beverages, the onset effects remain questionable as THC is not water soluble, and can take one to two hours to be felt, meaning further research and innovation is needed.

Still, Malandrakis predicted that the next generation of commercial cannabis products, expected to emerge as early as Q4 2019, will speed up the cannabilisation of alcohol as production becomes more standardised and consistent, with Canada serving as the products’ testing ground.

The ultimate result, he stated, will see the cannabis and alcohol industry merge into a “holistic responsible intoxication” industry.

Positioning products

As cannabis companies slowly begin to establish their respective brands, Malandrakis discussed how emerging products should focus on sensations and effects (“relaxation” or “romance,” for example) rather than often difficult-to-pronounce strains.

Products such as edibles and beverages with low potency and a focus on lifestyle will widen the potential cannabis demographic beyond stereotypical “stoners.”

He noted that older females are the strongest growing demographic as products have become more normalised and are increasingly used to treat pain and insomnia.

MacGuill noted that synthetic cannabinoids are also on the rise. Terpene manipulation, “the sourcing of cannabinoids beyond CBD and THC that might only exist naturally in negligible quantities,” along with the potential for producing more predictable and affordable cannabis products, are the main drivers for synthetic formulations, he said.

Malandrakis also highlighted cannabis’ potential to be hyper-customisable due to strain and profile variety.

CBD, he said, is just “the tip of the iceberg” of cannabinoids: Delta 8 provides a nuanced experienced ideal for recovering addicts or the elderly; THCv, an appetite suppressant, could open the door for “skinny” cannabis products and lifestyle-focused alcoholic drinks; and CBN, the potential next CBD, is more stable than THC and has similar therapeutic benefits.

When these are paired with terpenes, a substantial amount of personalised and functionally optimised combinations can be created.

Looking ahead

Malandrakis concluded the webinar by touching on a few products which serve as indicators of future trends.

These products ranged from functional supplements to convenience plays to purely recreational items. Myrcene Hemp Gin, a terpene-infused English gin, is an example of botanical cross-pollination, blurring the lines between the cannabis and alcohol industries.

CBD-infused detox shot Sober Up is a post-alcohol hangover solution. Canopy Growth and Constellation are developing a yet-to-be-named non-alcoholic, THC-infused, zero calorie adult beverage.

Malandrakis also noted that the dispensaries of the future, such as social outlet and eatery Namaste Cafe, will take an experiential approach to education, allowing the cannabis industry to engage in discussion-based education which he noted has been a shortcoming of the alcohol industry.