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Brands eye cannabis market

News, 15 November 2016

NEW YORK: Cannabis is illegal under US federal law but legal in eight states following votes last week, raising the possibility that brands may be tempted to enter this fast-growing market.

Drinks giant Constellation Brands has already said it is looking at a market that is predicted to grow from $6bn to $50bn over the next ten years.

"Why wouldn't big business, so to speak, be acutely interested in a category of that magnitude?" asked chief executive Rob Sands. "If there's a lot of money involved, it's not going to be left to small mom-and-pops," he told Bloomberg News.

"There are going to be alcoholic beverages that will also contain cannabis," he added.

The common view has been that cannabis users tend to drink less than mainstream consumers, but Sands wasn't so sure it was that simple.

"People who are using cannabis may be disinclined to drink as much as they might have otherwise, but maybe they weren't going to drink in the first place and then they drink something," he said. "Maybe the whole thing will work out synergistically."

Major brands could dramatically reshape the market, which is currently very fragmented and, from a consumer point of view, inconsistent.

"Right now, much of what's out there is unpredictable," according to Kedric George, VP/Marketing at ebbu, a "cannabis lifestyle brand" – with strains varying from grower to grower and store to store and users unable to confidently predict the product's effects.

"Cannabis is quickly becoming a legitimate consumer packaged goods product," he told Packaging World, "and the packaging and consumer experience should convey this idea".

But "a lot of the [legalised marijuana] manufacturers don't have classic brand marketing backgrounds", he noted.

ebbu has tackled its own branding "with a really rigorous audit process and creative positioning strategy, similar to a classic CPG project" – an approach it expects to keep it ahead of the competition and enable it to scale as the market grows.

Data sourced from Bloomberg, Packaging World; additional content by Warc staff