Vapor Pens: An analysis of category & brand performance

Introduction

Vapor Pens are truly a "new school" category of cannabis products. Usually sleekly designed and made of metal or plastic, these products are pretty far-removed from the cannabis plant in its natural state. However, what they sacrifice in organic appeal, they gain back in convenience, portability, and the ability to provide customers with reliable, repeatable experiences. These features, along with the increasing sophistication of extraction methods and hardware technology, have driven the Vapor Pen category to a prominent position in both the Canadian and US recreational cannabis markets.

In this report, we'll explore the current and past success of the Vapor Pen category, along with pricing, segment, and package size trends, as well as demographic preference for vapes, and the rising success of proprietary hardware formats.

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Executive summary

So far this year (January - June 2021), Vapor Pens have been the second largest product category by total sales in the US, and the third largest category in Canada. Most Vapor Pen sales are driven by the Cartridge segment, with full gram package sizes making up 2/3 of the US market, and half gram products making up more than half of the total Cartridges sold in Canada. Vapor Pen prices have remained fairly stable in the US, but prices have dropped 23% in Canada since April 2020. When we look into different demographic groups, we find that younger demographics spend more on Vapor Pens, and Female customers in each age group have higher Vapor Pen wallet share than their male counterparts.

While the nearly universal 510 thread format makes up 70% of all Vapor Pen sales in the California market, brands with proprietary batteries and Cartridges are also gaining popularity. STIIIZY, for example, makes up 22.1% of total California Vapor Pen sales over the previous 90 days. In the same time period, Plug Play made up 3.6% of total California Vapor Pen sales.

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Methodology

All sales, market share, unit volume, pricing, and demographic data for this report is sourced directly from Headset Insights.

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Market share of cannabis categories in US & Canada

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So far this year (January - June 2021), Vapor Pens were the second largest product category in US cannabis markets, and the third largest in Canada by total sales. In the US, Vapor Pens captured more than double the market share of Pre-Rolls, the next largest category. Canadian Vapor Pen sales were nearly four times greater than Edible sales, the fourth largest category. While the category still trails far behind Flower in both markets (and just slightly behind Pre-Roll in Canada), it is certainly the most dominant and ubiquitous 'new school' product type.

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Vapor Pen market share trends in US & Canada

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On this chart of Vapor Pen market share over time, we can see some interesting trends in this category's popularity. The Vapor Pen category's market share in the US cannabis market grew steadily from 16.1% in January 2018 to an all time high of 24.1% (nearly a quarter of all US cannabis sales) in July 2019. During the summer of 2019 however, the now infamous 'vape-gate' caused a sharp decline in Vapor Pen sales and market share for the category, which bottomed out at a little over 18% for several months. After a modest recovery from vape-gate, US Vapor Pen share dropped again - although not nearly as severely - during the first few months of the COVID-19 pandemic. It could be that portability and convenience, the two major selling points of Vapor Pens, were not as important to cannabis consumers during lockdown. In 2021 so far, US Vapor Pen market share has been fairly stable at slightly over 20%, with a potential uptick as we have moved into the summer months.

After hitting the Canadian market for the first time in January 2020, Vapor Pens quickly established themselves as the dominant 'Cannabis 2.0' category in the market. After that initial rise, Canadian Vapor Pen market share plateaued at about 15%, then slowly rose to an all-time high of 16.5% in February 2021. In June of 2021, Vapor pens made up 16.1% of all Canadian cannabis sales.

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Vapor Pen market share in different states & provinces

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When comparing Vapor Pen market share across individual state and provincial cannabis markets, there are some significant differences. Pennsylvania stands out as the best market for vape brands with more than 1/3 of all sales to the category. This is partly caused by the unique regulations in this medical cannabis market that prohibit categories that are popular in other states, such as Pre-Rolls and Edibles.

California is the recreational cannabis market with the highest Vapor Pen market share while British Columbia is the lowest, with only 13.2% of sales to vapes so far this year.

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Sales of different Vapor Pen segments

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When referring to the Vapor Pen category at large, it is important to remember that we are primarily talking about the sales of Cartridges, as they contribute more than 90% of all sales within the category. All-in-one Disposables, where both the battery and cartridge are part of a single product, are the next most popular, but still make up less than 10% of sales in both markets. In the US, sales to All-in-one Rechargeable products (usually called 'starter kits' in which a cartridge and reusable battery are sold together), have declined from very small to miniscule over the years. In Canada these products are still relevant in the category, but sales are trending downward.

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Vapor Pen package size sales

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In the Cartridge segment, one gram products dominate the US market, with nearly 2/3 of total Vapor Pen units sold in this very popular package size. Half gram products contribute to much of the remainder of all Cartridge unit volume in the US, with only 0.6% of units sold having package sizes other than 1g or 0.5g.

The ratios of package size popularity are much different in Canada, with half gram products making up more than half of the total Cartridges sold. The 0.45g package size is also quite popular with 12.9% of units sold in the segment.

The package size landscape of the All-in-one Disposable segment is much more diverse with the majority of sales in both US and Canada going to half gram or smaller products. This makes sense, as these products are meant to be used and disposed of, perfect for first time vape customers or canna-tourists visiting a legal market.

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Average prices of Vapor Pens

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In the US, Vapor Pen prices have held quite steady over the last several years, with average Cartridge prices holding steady around $33-$35 and All-in-one Disposable prices slightly lower, between $28 and $31.

In Canada, on the other hand, Vapor Pen prices have been plummeting since the second quarter of 2020. The average price of a Cartridge in Canada has dropped by 23% since April 2020 (from $51.88 CAD to $39.78 CAD), and the average price of an All-in-one Disposable has fallen by a massive 43% from $46.35 CAD to $26.77 CAD over the same time frame.

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Which demographic groups prefer Vapor Pens?

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Vapor Pens are certainly a 'new school' cannabis category, and Headset's demographics data certainly backs that up. This graph shows the wallet share to the Vapor Pen category of various demographic groups defined by age and gender. This means that if an average member of the group had $100 to spend on cannabis, they would have spent X% on vapes.

Here we can see that the younger the customer, the more likely they are to spend more of their money on Vapor Pens. Gen Z customers spend more than 27% of their wallet on the category, making them the most important customers to any vape brand. As we move from younger to older customers, Vapor Pen wallet share steadily decreases with Male Baby Boomers as the only group with less than 15% of sales to the category. Notably, within each age group, Female customers have higher Vapor Pen wallet share than their Male counterparts.

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510 sales compared to proprietary Vapor Pen formats

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The Vapor Pen category is unique in the fact that it requires customers to commit, at least partially, to a hardware format. This is because most customers will purchase a rechargeable battery, and then use that battery to consume many Cartridges over time. Throughout the brief existence of legal cannabis, there has been one primary and nearly-universal format: the 510 thread. As shown on the top bar of the chart above, 510 thread products still make up nearly 70% of California vape sales.

However, there is a growing trend of Vapor Pen brands creating their own proprietary hardware formats in hopes of locking customers in to their unique product ecosystem. This risky and capital-heavy strategy has payed off for two brands in particular in the California Vapor Pen market. STIIIZY, in red, is the undisputed champion of this big move, with 22.1% of total Vapor Pen sales and 73.2% of all non-510 vape sales over the previous 90 days. Plug Play, while much smaller than STIIIZY, is still well ahead of any other proprietary Vapor Pen format, with 3.6% of total vape sales over the last three months.

To explore this data further, check out the Metadata dashboards in Headset Insights, or sign up for a demo.

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Customer retention for Vapor Pen brands in California

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As we saw on in the previous graph, the difference in total sales between the top two Californian proprietary Vapor Pen brands, STIIIZY and Plug Play, is quite large. However, both of these brands are equally successful in a different but important metric: customer retention rate. The biannual customer retention rate of the median Californian Vapor Pen brand is currently only 41%. Both STIIIZY and Plug Play have fantastic customer retention rates, nearly double that of the median Vapor Pen brand. This demonstrates that when successfully executed, the proprietary format strategy can help drastically increase customer retention for Vapor Pen brands.

Check out our previous industry report for more about customer retention, how to calculate and improve your customer retention strategy.

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Conclusion

As we've seen throughout this report, Vapor Pens are seeing a lot of success in the US and in Canada. Although Flower is still the dominant product category, Vapor Pens are in a  prominent position in both markets and will be an important category to keep track of. To monitor market growth of Vapor Pens and other cannabis categories and find opportunities in the industry, sign up for a Demo of Insights Premium.

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Key takeaways

• In the US Vapor Pens are the second largest product category, with 20.6% market share of total cannabis sales in the US. Vapor Pens are the third largest category in Canada, with 16.1% market share.
• When comparing recreational cannabis markets, California has the highest Vapor Pen market share with 22.6% of total sales going to Vapor Pens, while British Columbia is the lowest, with only 13.2% of sales to vapes so far this year.
• 90.5% of all Vapor Pen sales are in the Cartridge segment in the US, and 92.2% in Canada.
• The one gram package size is the most popular in the US, and makes up 65% of Cartridge sales. In Canada, the half gram package size is the most popular, making up 50.6% of Cartridge sales.
• Cartridge prices have held steady at $33-$35 USD in the US. But in Canada, prices have dropped 23% since April 2020.
• Gen Z customers spend more than 27% of their wallet on Vapor Pens. Vapor Pen wallet share decreases as we move from younger to older customers, with Male Baby Boomers as the only group with less than 15% of sales to the category. Within each age group, Female customers have higher Vapor Pen wallet share than their male counterparts.
• The 510 thread format makes up 70% of all Vapor Pen sales in the California market, but proprietary brands like STIIIZY and Plug Play are gaining popularity.

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