Cannabis Beverages: A look at category trends & performance

Introduction

Cannabis Beverages are one of the most exciting categories of the ever-growing cannabis industry. Considering this form-factor is already so deeply integrated in the social lives of many adults, it can often serve as an entry way for the “canna-curious”. As more and more cannabis Beverage brands innovate in the space, new and seasoned consumers alike can appreciate the convenience and enjoyability of a refreshing cannabis Beverage.

At Headset, we have been following the cannabis industry since 2015 and have seen some of the obstacles that this category has faced as it has expanded. Last year, we published our first report on the topic. In this most recent report, we once again dive deep into the category, exploring growth in cannabis Beverages over the past two years in the US and Canada by examining market share through time, growth in new products, package sizes, top brands, and more. The report’s findings should serve as directional insight into the ever evolving category of cannabis beverages.

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Executive summary

Beverages are continuing to perform successfully as a cannabis product category in both the US and Canada with distinct trends in both countries. Beverages were introduced to the Canadian market around January 2020, with market share reaching 1.8% by December of that year. By December 2021, Beverages reached a peak of 2.1% of the total Canadian market. Cannabis Beverages have a longer history in the US market and growth in this category has been slower and more consistent through the past two years. Beverages began January 2020 at 0.9% of the total market in the US, and reached 1.1% by January 2022. The number of cannabis Beverage products have grown faster in California than in any other US market. In 2021, the number of cannabis Beverages nearly doubled to 530 distinct products in California. When we look at which Beverage segments are popular in the US and Canada, there are some clear differences in the two countries. For example, the largest Beverage segment in the US was the Drops, Mixes, Elixirs, and Syrups segment, which made up 27.7% of total Beverage sales from January 2020 - January 2022. In contrast, this segment only made up 4.7% of total Beverage sales in Canada. Continue reading the report to explore more category trends and insights.

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Methodology

Data for this report comes from real-time sales reporting by participating cannabis retailers via their point-of-sale systems, which are linked to Headset’s business intelligence software. Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider.

In this report we examine sales in markets where Headset provides Insights data. This includes AZ, CA, CO, IL, MA, MI, NV, OR, and WA in the US and AB, ON, BC, SK in Canada. We present all data in local currency and do not make adjustments for currency fluctuations.

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Market share of cannabis Beverages

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First, let’s explore how the Beverage category has captured market share in the last two complete calendar years from January 2020 to January 2022.

Sales of cannabis Beverages were introduced along with other Cannabis 2.0 products in the Canadian market around January 2020. Although some cannabis categories in Canada had a delayed start, we can see in the graph that consumers welcomed the introduction of this new form of consumption. Within the first year, the Beverage category increased to 1.8% of the total market by December 2020. Beverages continued to see significant growth in Canada throughout 2021 and by the end of last year, the category had reached peak market share at just over 2.1% in December 2021.

When we look at the US we see a slower, yet more consistent growth in market share for the Beverage category. Beginning January 2020 at 0.9% of the total market, the category reached just over 1.1% market share by January 2022.

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Growth in cannabis Beverage products in the US

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Now that we’ve looked at the Beverage category’s market share growth, let’s see how quickly Beverage products are entering the market. In this graph, we focus on the count of distinct Beverage products in several US markets. We can clearly see that in terms of the number of distinct Beverage product options, California is the defining leader. In the other markets, we can see the number of distinct Beverage products staying relatively stagnant or growing quite slowly. The story is different in California, which shows a significant acceleration of new Beverage products starting around February 2021. The growth of distinct Beverage product count nearly doubled in 2021, ending in December at around 530 offerings in California.

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Growth in cannabis Beverage products in Canada

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Comparatively, let’s look at the growth of product offerings in some Canadian provinces. The trend in these provinces is more similar to what was seen in California. The introduction of distinct cannabis Beverage products has been explosive since the introduction of the category around the beginning of 2020.

Starting very low in January 2020 in all four markets, we can see stable growth in distinct products throughout the first half of 2020. By October 2020, each market witnessed an accelerated pace of new Beverage products sold within the market. By the end of 2021, Alberta hosted just under 110 distinct Beverage products, the most of the four provinces in this graph.

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Beverage segments shares in the US & Canada

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Next, let’s see which segments are making up the greater Beverage category in both the US and Canada.

Starting with the US, the largest Beverage segment contribution came from Drops, Mixes, Elixirs, and Syrups, which made up 27.7% of total Beverage sales from January 2020 - January 2022. Carbonated Beverages were the second largest segment at just under 26% of total Beverage sales in the same time period. The Iced Tea, Lemonade, and Fruit segment also did well, accounting for 22.3% of total Beverage sales.

In Canada, Beverage segments tell a very different story. In contrast to the US, Drops, Mixes, Elixirs, and Syrups only made up 4.7% of the Beverage category. Carbonated Beverages, however, made up a staggering 51.5% of sales during this time frame. Another difference from the US is the strength of the Water segment in Canada, which accounted for 20.3% of sales in Canada but only 8.8% of sales in the US.

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Prices of cannabis Beverages in the US & Canada

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In this graph, we look at the average item price (AIP) of Beverages in the US and Canada to see how prices of these products have been impacted by the expansion of the category. This graph focuses on selected markets in the US and Canada (CA, CO, MI, NV, OR, and WA in the US and AB, BC, and ON in Canada).

Starting in January 2020, Canadian Beverage products averaged at $16.21 per product while Beverages in the US averaged at $14.40 per product. The AIP in Canada dropped quickly as the market scaled past the initial introduction of Beverage products. By January 2021, the AIP for Beverages in Canada dropped 146% to $6.58 per product. The AIP of Beverages in Canada has been stable since July 2020, hovering around $6 per product.

Looking at the AIP through the same time frame in the US, we can see that AIP for Beverages have been consistently decreasing as we see markets and new products introduced at an increased pace.

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AIP only tells one part of the story. Given the differences in regulations between THC potency limits between the two countries, we need to dive a bit deeper in order to compare costs of Beverage products in the US and Canada. To do this, we look at the equivalized price (EQ) per milligram of THC.

In this chart we can see that in both the US and Canada, the price per milligram of THC has consistently become cheaper for consumers. Given the limitation of 10mg of THC per package in Canada, it is not surprising that the EQ price is significantly higher than in the US. Whether a product contains 10mg or 100mg, Beverages can cost significantly more throughout the supply chain than other cannabis product categories.

Following the introduction of cannabis Beverages in Canada, we can see that the EQ price per milligram quickly reached a peak of $1.30 in July 2020. By January 2022, the EQ price dropped nearly 27% to $0.95 per milligram.

In the US, the trend is slightly more consistent given the longer and more established history of cannabis Beverages in legacy markets. Although the trend is a bit more stable, we are seeing significant strides in the decrease in EQ price per milligram of THC as new innovations emerge. Starting around $0.18 per milligram of THC in January 2020, we see that the EQ price has dropped almost 39% to $0.11 per milligram of THC in January 2022.

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Package sizes of cannabis Beverages

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Diving into package sizes within the Beverage category, we can see that products in the US clearly differentiate from those in Canada. This can mostly be attributed to regulatory differences. In Canada, Beverages are unable to exceed more than 10mg of THC per package. In many US markets, the limit is 100mg. This chart will be considering portions of units sold rather than sales.

Looking at Canada, we see that 57.4% of cannabis Beverage products sold in 2021 contained between zero and five milligrams of THC. The remaining portion of Beverage sales can be attributed to packages that contained 10mg of THC (42.2%). A very small portion (0.4%) of cannabis Beverage products sold contained various amounts of THC, ranging between 5mg and 10mg.

In the US we can see that just over half of cannabis Beverage units sold in 2021 contained 100mg of THC per package, which is the top-end limit in many markets. In contrast to Canada, we see much more variation in cannabis Beverage package sizes in the US. The second largest segment in the US are Beverages that contain 10mg of THC at 18.22%.

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The top Beverage brands in the US

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In these final two graphs, let’s look at some of the top players in the Beverage space. Here we look at the leading US brands, with data from CA, CO, MI, NV, OR, and WA.

When we look at the top 10 Beverage brands in these markets, we can see quite a competitive landscape. Between January 2020 and January 2022, consumers spent a collective $25.4 million on Major branded cannabis Beverage products and $23.9 million on Keef Cola products. CANN Social Tonics also did well in this time period, posting just shy of $20 million in sales. This is notable considering CANN’s EQ price is significantly higher than its counterparts at $1.43 per milligram of THC, with a unique approach of producing low-potency social tonics.

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The top cannabis Beverage brands in Canada

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Now let’s look at the leading cannabis Beverage brands in Canada. When looking at January 2020 to January 2022, we can see that XMG is clearly in the lead, posting nearly $16 million in sales since the launch of Beverage products in Canada.

Everie is the next leader in the Canadian cannabis Beverage space, with just over $7 million in sales during the same time period. You will notice that this chart does not include an EQ price for Everie and that is no mistake. Everie produces cannabis Beverages that only contain CBD, which means there is no way to compare price per milligram of THC for their products.

You may also notice that the EQ price for Little Victory and Quatreau’s Beverage products are slightly higher than others on this chart. This is because their product portfolios are more comparable to CANN Social Tonics in the US with Beverages that have low amounts of THC that are limited to around 2.5mg per package.

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Conclusion

Refreshingly fizzy or fruity, hot or cold, or even a tasteless water, there seems to be a cannabis Beverage suitable for any consumer who is thirsty for an uplifting drink. Do you need help assessing the opportunities in the Beverage space? Headset tools equip you with the knowledge and data you need to stay ahead of Beverages and other cannabis categories, such as sales dashboards to keep track of sales performance, demographic insights to understand consumer landscapes across markets, and marketing tools to help you target the right customers. Sign up for a demo to learn how you can always stay competitive in the cannabis industry.

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Key takeaways

• Since the launch of Beverages in Canada around January 2020, market share of this category has seen significant growth until reaching a peak of 2.1% of the total Canadian market in December of 2021. With a longer history of Beverages in the US, market share has experienced  slower, more consistent growth in the US over the same time period.
• The count of Beverage products have grown faster in California than any other US markets. By the end of 2021, California had doubled their product offerings to just over 530 distinct cannabis Beverage products.
• Segment shares are very different between the US and Canada. In the US, the largest Beverage segment is the Drops, Mixes, Elixirs, and Syrups, which made up 27.7% of total Beverage sales from January 2020 - January 2022. In Canada, Carbonated Beverages are the biggest segment, which made up 51.5% of sales during the same period.
• As the Beverage segment matures in Canada, prices seem to be stabilizing for the products. In January 2020, Canadian Beverage products averaged at $16.21 per product. By January 2021, the AIP for Beverages in Canada dropped 146% to $6.58 per product. The AIP of Beverages in Canada has been stable since July 2020, hovering around $6 per product.

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