ds analytis’ · the more open the market, the more products, education, de-stigmatization and...

2019 BDS Analytics

BDS ANALYTICS’

Top Ten Cannabis Market Trends for 2019

Presented by:

Roy Bingham| CEO and Co-Founder

[email protected]

Jessica Lukas| VP, Consumer Insights

[email protected]

2019 BDS Analytics

2018 PREDICTIONS

https://bdsanalytics.com/bds-analytics-top-10-cannabis-market-trends-2018/

https://bdsanalytics.com/bds-analytics-top-10-cannabis-market-trends-2018/

2019 BDS Analytics

The State of Legal Marijuana Markets: Prohibition is Ending

2019 BDS Analytics

2018 Second Best Year for Legalization Ever in U.S.

2019 BDS Analytics 5

$3.4$4.7

$6.6

$9.2

$12.2

0

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2014 2015 2016 2017 2018 2019 2020 2021 2022

Historic Global Legal Cannabis Spending ($USD Billions)

Growth: 38% 40% 39% 33%

The legal global industry has grown at a 38% 4 year CAGR to $12B

Source: Arcview & BDS Analytics Cannabis Intelligence Briefing


$3.4 $4.7 $6.6$9.2

$12.2$17.1

$21.5

$26.6

$31.7

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35

2014 2015 2016 2017 2018 2019 2020 2021 2022

Historic and Projected Global Legal Cannabis Spending ($USD Billions)

We project a 26% CAGR for the next 4 years to $32 Billion


Growth: 38% 40% 39% 33% 39% 26% 24% 19%


$3.4 $4.7 $6.6 $8.6$10.5 $13.1

$15.8$19.1

$22.2

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2014 2015 2016 2017 2018 2019 2020 2021 2022

Global Legal Cannabis Spending by region ($USD Billions)

USA Canada ROW

The USA will continue to be the world’s largest market


2019 BDS Analytics

Although the top six markets account for 2/3 of USA 2018 dollar sales, it’s no longer a “Western State” phenomenon

8

Up and Coming Major States:

FLMAMINY?NJ?

WA $1B

OR $700M

CA $2.5B

AZ $700M

CO $1.5BNV $600M

2018 Dollar Sales

2019 BDS Analytics

Legal Cannabis is…

Evolving

2019 BDS Analytics

Market share is shifting, as seen in Colorado over the past 4+ years

*BDS Analytics GreenEdge POS Retail Data

2019 BDS Analytics

Across the total US, this trend will continue

Source: Acrview & BDS Analytics Cannabis Intelligence Briefing


With Concentrates and Edibles to see continual growth and market share gains in outyears


2019 BDS Analytics

But flower is not dead


2019 BDS Analytics

Now what?BDS Analytics’ Crystal Ball

2019 BDS Analytics

BDS ANALYTICS’ 2019 Cannabis Market Trends

In no particular order…

Out and About—SOCIAL CONSUMPTION EMERGES

Drink Me—THE RISE OF BEVERAGES

Boom(ers) Baby—THE AGING CONSUMER

Blurred Lines—REC or Med…it doesn’t matter!

THE Cannabinoid (for now)—CBD CBD CBD

All in the Name—BRANDS FURTHER SOLIDIFIED

Ease—CONVENIENCE IS KING

In Control—GROWTH OF CONSISTENT, LOW-DOSE, DIALED

Discerning Tastes—REFOCUS ON THE CORE

Value Equation—DECLINING PRICES

2019 BDS Analytics

Social Consumption Emerges

OUT AND ABOUT

2019 BDS Analytics

32% consume BEFORE getting together with others

28% attend a public event (concert, sporting event, etc.) after consuming

18% consume in public places

71% Consume for

Social/Recreational Purposes

2019 BDS Analytics

Social Occasions are already relevant

2019 BDS Analytics

The Rise of Beverages

DRINK ME

2019 BDS Analytics

Cannabis Beverages: a small, yet growing portion of Edibles

Candy, 44%

Tinctures, 17%

Chocolates, 15%

Infused Foods, 11%

Pills, 7%

Beverages, 5%

2018 YTD Tracked Edible Sales: $612M* (15% of total sales)

2022 TOTAL USBDS Analytics’ Projections

*BDS Analytics Retail Sales Tracking Data: AZ, CA, CO, OR**Beverage projection is preliminary and may change in the coming months with additional research and modeling

Edibles: $3.4BBeverages: $374M**

2019 BDS Analytics

The Aging Consumer

BOOM(ers) BABY

2019 BDS Analytics

BOOMERS:An important and growing segment, BUT they do not fit “neatly” in a box

2019 BDS Analytics

Boomers are SIGNIFICANTLY

MORE…• Medically Motivated• Likely to consume to replace Rx/OTC• Likely to want to ease aches/pains

67% of Boomer Consumers consume for Health/Medical Reasons

2019 BDS Analytics

BUT they also want to...

RELAXUNWIND

AND HAVE FUN

59% of Boomer Consumers consume for Social/Rec Reasons

2019 BDS Analytics

Rec or Med…it doesn’t matter!

BLURRED LINES

2019 BDS Analytics

Majority agree with some form of legalization

~80%of US and CAN adults agree there should be some form of legal marijuana usage

agree marijuana has medical benefits57% in CAN

64% in US88% Consumers in Med/Adult States

BDS Analytics Consumer Research: US adults 21+ and CAN adults 18+


$5.9 $4.3 $5.3 $6.3$7.1 $7.7

$2.6 $6.7

$9.1$11.5

$13.8$15.7

0

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2017 2018 2019 2020 2021 2022

Projected US Legal Cannabis Spending ($USD Billions)

Medical Adult-Use

In our conservative models, Adult Use sales drive growth in US and CAN



$0.6 $0.6 $0.6 $0.6 $0.5 $0.5

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2017 2018 2019 2020 2021 2022

Projected Canada Legal Cannabis Spending ($USD Billions)

Medical Spending Adult-Use Spending

AND Canada will grow to $5.4B by 2022, with most coming from Adult UseMore conservative than some are forecasting because of limitations like no extracts, potency limits, government ran/operated, etc. As restrictions are lifted, the market size will grow


2019 BDS Analytics

Spectacular growth of Adult Use markets since opening


$0

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ion

s

CO - AdultUse

CO - Medical

WA - AdultUse

OR - AdultUse

OR - Medical

2019 BDS Analytics

$-

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AZ – Medical ($Millions)

Medical Markets thrive in the absence of an Adult Use market

AZ Medical


2019 BDS Analytics

Recreational & Social71%

Health or Medical56%

33% US Consumers

28% CAN Consumers

Consume for both Recreational & Social

AND Health or Medical reasons

BUT looking at Medical Channels vs. Adult Use Channels is not that simple

BDS Analytics Consumer Research across Cannabis Consumers: US adults 21+ in Legal Level 1 States and 18+ Total Canada

2019 BDS Analytics32

MED/ADULT STATES PAST 6 MONTHS

RESTRICTED STATESPAST 2 YEARS

The more open the market, the more products, education, de-stigmatization and greater acceptance of health or medical cannabis use “for me”

Base: US, Q3 2018

0%

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Level 1 Level 2 Level 3 Level 4 Level 5

Recreational/Social Health/Medical

2019 BDS Analytics

Even among Pain Management Cannabis Consumers, consumption is multi-faceted

Recreational & Social73% Pain Management Consumers

Health or Medical66% Pain Management Consumers

Quality of Life46% Pain Management Consumers

Base: US Level 1 and 2 States, Q1 2018

58% of past 6 month Consumers are

PAIN MANAGEMENT CONSUMERS

2019 BDS Analytics

It is NOT just about THC—CBD is exploding

2019 BDS Analytics

THE Cannabinoid

2019 BDS Analytics

Q3 2018C11H. Which of the following products containing non-psychoactive hemp, hemp extracts, CBD, or cannabis terpenes have you consumed? BASE: Based on weighted completes of adults living in CanadaBased on weighted completes of adults living in the US

Consumption of non-psychoactive Hemp/CBD is much more prevalent among cannabis consumers

% of Adults who have consumed non-psychoactive hemp/CBD

% of who have consumed Hemp/CBD ProductsBy Consumer Type

Rejecter Acceptor Consumer

Indicates significantly higher at 95% CI

2019 BDS Analytics

In the US, non-psychoactive

hemp/CBD product purchasing largely falls in ingestibles (or edibles) and

topicals

Top Categories Purchased (outside of dispensaries):

Ingestibles: 53%• Oils, Tinctures• Food• Pills, capsules, tablets• Supplements/Vitamins• Beverages

Topicals: 24%• Creams, balms, salves• Beauty Care• Skin Care• Patches

Inhalables: 11%

Other: 12%

Base: Total US and Total CAN, Q3 2018

2019 BDS Analytics

What we see in consumer claimed purchasing in the general market mirrors regulated dispensary channel dollar salesThe dispensary channel AND shoppers are a lead indicator of where the CBD market will go

High CBD, 9%

Non-CBD, 91%

ALL BDS ANALYTICS’ TRACKED DISPENSARY CHANNEL 2018

Ingestibles, 54%Concentrates,

28%

Topicals, 14%

Others, 5%

DISPENSARY CHANNEL HIGH CBD MARKET SHARE 2018

*TOTAL DOLLAR SALES 2018 AZ, CA, CO, OR

BDS Analytics 2018 YTD (through Oct) GreenEdge Retail Sales Data

Up from 5% in 2017

2019 BDS Analytics

Consumer education is needed

How much do you agree or disagree that...?

There are no differences in the effects of CBD or THC

Any product containing hemp will cause effects such as feeling high, relaxed, sleepy, etc.

69% incorrect or do not know




Base: Total US and Total CAN, Q3 2018

2019 BDS Analytics

ALL IN A NAME

2019 BDS Analytics

Branded products continue to see tremendous growth—~45% of sales

81%74% 68% 62% 56%

19% 26% 32% 38% 44%

2014 2015 2016 2017 2018

41

Colorado Cannabis Retail Dollar SalesBranded vs. Generic Products


2019 BDS Analytics

Branded products continue to see tremendous growth—~45% of sales

81%74% 68% 62% 56%

19% 26% 32% 38% 44%

2014 2015 2016 2017 2018

42

Colorado Cannabis Retail Dollar SalesBranded vs. Generic Products


COLORADO EDIBLE SALES:96% BRANDED

2019 BDS Analytics

Some brands take the express route to the top

0%

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2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3

Market Share Trends of Top Five CO Edible Brands

2019 BDS Analytics

The battle is on for brand share leadership

61%

35%

39%

65%

Q3 2015 Q3 2018

Top 5 Brands share in concentrates CO %

Others

Top 5

2019 BDS Analytics

Convenience is King

EASE

2019 BDS Analytics

Location is key when

choosing a dispensary

2019 BDS Analytics

50% are LARGELY influenced by the convenience of the consumption form when choosing a product

THUS DOLLAR SALES….VAPE +67%EDIBLES +28%

…qualifying as a top 5 influencer

2019 BDS Analytics

The ULTIMATE Convenience:Delivery matters across all industries; Cannabis is no different

2019 BDS Analytics

Growth of Consistent, Low-Dose, Dialed

IN CONTROL

2019 BDS Analytics

33% of Edibles Consumers prefer Low-Dose (<10mg)

40% of Edibles Consumers have chosen products based on CBD content …of these, 27% PREFER 10:1 or HIGHER

Micro (<2.5mg): +108%Low (>2.5, <10): +71%Edibles: +28%

High CBD: +67%

2019 BDS Analytics

Consistency AND trust matter; Consumers want a good experience

Among Consumers… Top Hurdles Among Non-Consumers…

#1:It does not fit my lifestyle

#2:I don’t like how it makes me feel

2019 BDS Analytics

Consumers are STRONGLY influenced by familiarity/recommendations…It is something I have used before (60%),

Friend/Family Recommendation (45%), Budtender Recommendation (41%)

2019 BDS Analytics

Refocus on the Core

DISCERNING TASTES

2019 BDS Analytics

DISCERNING consumers are influencers, early adopters, and lead indicators

Willing to Spend MORE for Quality

Keep up with the LATEST

Technology

Care that Products are

LOCALLY Grown

Prefer LOCAL, NATURAL,

ORGANIC, SOCIAL INTERSTED

Brands

2019 BDS Analytics

DISCERNING consumers are influencers, early adopters, and lead indicators

More likely to be influenced by…

Processing Method, Terpenes, Additional Cannabinoids, Growing Methods, Where Grown, Natural/Organic, Packaging

2019 BDS Analytics

Declining PricesVALUE EQUATION

2019 BDS Analytics

Price is still the #1 driver of consumer product

choice

2019 BDS Analytics

Oregon has seen steady declines in flower price per gram

$-

$2.00

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Average Retail price of flower in Oregon $ per gram (pre-tax)

$4.27

$9.27

2019 BDS Analytics

All category prices have steadily decreased in CO –concentrates down 2% in 3 years

$-

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Average Retail price of concentrates in Colorado (pre-tax)

$23.97

$30.14

2019 BDS Analytics

But in California the already high prices continued to rise and actually rose faster after January 1, 2018.

$-

$5.00

$10.00

$15.00

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$25.00

Average Retail price of edibles in CA (pre-tax)

$14.43

$20.93

2019 BDS Analytics

Fewer, Bigger, Better (???)

2019 BDS Analytics

BDS ANALYTICS’

2019 Cannabis

Market Trends

In no particular order…

Out and About—SOCIAL CONSUMPTION EMERGES

Drink Me—THE RISE OF BEVERAGES

Boom(ers) Baby—THE AGING CONSUMER

Blurred Lines—REC or Med…it doesn’t matter!

THE Cannabinoid (for now)—CBD CBD CBD

All in the Name—BRANDS FURTHER SOLIDIFIED

Ease—CONVENIENCE IS KING

In Control—GROWTH OF CONSISTENT, LOW-DOSE, DIALED

Discerning Tastes—REFOCUS ON THE CORE

Value Equation—DECLINING PRICES

$100 off any report purchase with WEB100

2019 BDS Analytics

It’s a New Game:What does that mean for your business?

Presented by:

Roy Bingham| CEO and Co-Founder

[email protected]

Jessica Lukas| VP, Consumer Insights

[email protected]

ds analytis’ · the more open the market, the more products, education, de-stigmatization and...

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