Branding pays off for marijuana corporations

As the recreational marijuana industry expands and matures, branding will be an important strategy for companies competing for market share.

Companies that build identities that resonate with consumers while meeting their needs will continue to grow – even as the industry’s rapid expansion eventually slows.

Building brands that connect with buyers takes time. But this work is already paying off for some companies in California, Colorado, and Washington.

Analysis of marijuana analytics firm Headset’s market share data for the first quarter reveals some clear winners, particularly in consumer product categories like food and beverages.

While these segments do not have the total market share that flowers have, they tend to be dominated by fewer brands compared to flowers in the analyzed states.

Beverage sales are dominated by two or three brands, often responsible for 50% or more of sales in a state.

Washington state’s two largest beverage brands account for 77.2% of sales, led by Major, a local brand that launched in 2019 and accounted for 50.9% of that state’s beverage sales in the first quarter of 2021.

Stillwater, Colorado led beverage sales for the first quarter with 39.4% of sales, while CANN Social Tonics had 23.4% of sales in California.

Launched in 2019 as a micro-dosed THC drink with CBD, CANN Social Tonics rose to become the top drink brand spot in California in about a year.

The company entered the market with less than 0.1% of the category’s sales, ranking 15th. However, by the fourth quarter of 2020, it had reached 20.6% of the beverage market.

This underscores that there is a lot of room for market disruption from sophisticated brands meeting consumer needs.

In this case, a marijuana-infused drink marketed as “light and uplifting buzz” found its target.

The top brands in other categories like concentrates, flowers, and vape are often more spread out among brands.

In California, 28 brands accounted for the highest 50.7% of flower sales, compared to two brands that accounted for 49.2% of edible sales.

The flower category has also increased competition from house or private label brands in many markets.

For example, house brands accounted for 63% of Colorado flower sales for the first quarter of this year.

But some regional brands have caught on.

Pacific Stone in California was the top flower brand in the state with 4.7% of sales in the first quarter.

Some states, like Washington, don’t allow house brands, so Phat Panda can lead the flower market there with 7.7% of flower sales.

Top brands have slightly more market shares in the concentrate and vape categories, but rarely generate more than 15% of sales.

The STIIIZY vape brand is the exception and leads the California vape market with 20.2% of sales.

One way to expand a brand’s dominance in a category is to expand the product offering within the category.

The number of products doesn’t necessarily translate into a bigger market share, but it doesn’t hurt.

In the analysis of the three states, leading marijuana brands tended to have more product offerings compared to other brands in this category.

Marijuana branding, branding pays off for marijuana companies

But there are outliers.

Uncle Arnie’s Iced Tea Lemonade is a one-product brand in California that made 5% of total first quarter beverage sales in the state.

In contrast, the Cannavis Syrup brand had 39 items over the same period and accounted for 3.6% of total sales.

The market leading CANN Social Tonic had 16 products.

Andrew Long can be contacted at [email protected].

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