Cannabis-infused beverages is predicted to have an CAGR of between 15% and 25% over the next five to seven years.
That’s good news for Canopy Growth, which has been heavily invested into the category. But this summer, its “Just hits Different” campaign has been showing how the company’s approach to marketing beverages have evolved over the last two years.
Consumers can visit one of more than 1,400 Canadian cannabis retail locations to try a non-active flavour samples. In store, Canopy is showcasing Tweed, its 5 mg THC segment leader, and Deep Space, a high potency 10mg THC brand, along with Quatreau and Ace Valley, plus new offerings under the Vert Solstice and Eclipse brands.
“Making new customers aware of cannabis beverages continues to be our number one focus,” says Mark Lee, director of mainstream & value brands at Canopy Growth, who tells strategy it is running one of the largest non-active sampling product education programs the category has ever seen and that it will continue to test out-of-store executions that drive new consumers to store.
After cannabis-infused food and beverages were legalized for sale in late 2019, it was several months before products actually began to hit store shelves, as many producers needed more time to get product quality and beverage taste up to consumer standards.
Canopy Growth was one of the first producers to get its cannabis beverages into the market, and Lee admits its approach has changed drastically since then. A big assumption many companies had was that beverages would open up the cannabis category to new customers who may have been adverse to other product formats.
But Lee says it is existing consumers driving the highest volume of beverage sales, rather than those new to the cannabis category overall. So, it is taking a similar approach to how it markets its other products.
Through its purchase analysis, Canopy Growth also found that beverages are basket-builders, and that it’s seen them purchased most frequently with products from the flower and pre-roll categories. However, unlike those, its beverages can be consumed on a variety of occasions and Lee tells strategy that because of this, its “Just Hits Different” campaign speaks to current cannabis customers and focuses on what makes its beverages different and better, and what sets it apart, occasion and flavour.
“If you think of it like trying alcohol for the first time – you don’t know what to try, how to buy it, how you’ll feel, or how much to consume – most new consumers require some education before they can start to evaluate their options.”
Consumers can zone out with maximum potency Deep Space, or socialize with lower THC citrus-forward Tweed beverages. Canopy’s new Vert Solstice and Eclipse beverages, meanwhile, are geared toward how current consumers use cannabis throughout the day – either as a mid-day pick-me-up or part of their evening routine. These two are also occasion-focused: with flavours like citrus and ginseng in the morning and lavender at night, for example.
“We believe that beverages, more than any other format, are about enjoying the journey,” Lee says, compared with taking a puff and how cannabis is traditionally consumed.
The launch of the Quatreau premium sparkling water line into the U.S., in particular, taught Canopy that while mass awareness-driving campaigns drive lift, maximizing spend efficiency by improving its customer targeting and being closer to purchase remains an opportunity, Lee says.
The maturation of its targeting strategy has driven significant changes to its media mix.
“With the focus on current cannabis consumers, we have doubled down on in-store marketing, shifting spend away from out of store,” Lee says. “One example of this is our increased investment in our fridge program, a decision driven by insights that told us that displaying beverages near cash is critical to fueling basket growth and that serving the beverages chilled helps meet consumer on the go expectations.”
Retail growth continues to be the priority representing the highest importance (accounting for 88.3% of Ontario volume in Q3 of 2022) and largest absolute growth (up 4.1% in Ontario during the same period). Focusing on key stores has helped prioritize efforts to efficiently drive growth within the expansive national network. Ecommerce, meanwhile, continues to fuel 13.3% growth and represents unique product opportunities in select provinces as well.
SOURCE: Strategy Online