Brendan Mitchel-Chesebro, a seasoned analyst at BDSA, a global firm in cannabis market research, explores 2024's cannabis consumption trends and how brands are tackling economic challenges through innovation, premiumization, and consumer-centric product development for continued growth and profitability in a competitive market.

The Rise Of Premium Cannabis Products

The cannabis industry faces price compression, severely affecting brand profitability. Brands are adapting strategies to counter these challenges, with some opting for premium offerings to stand out in the market.

Mitchel-Chesebro highlights the success of proprietary strains and high-quality inputs like rosin and live resin in attracting experienced consumers willing to pay a premium for superior taste and effects.

Furthermore, products designed to deliver specific mood-oriented effects are gaining traction, as they meet consumer demand for personalized cannabis experiences.

"Consumers are more drawn to those types of products.. willing to pay more for products that consistently deliver on that," he adds.

Adapting To Economic Pressures: Strategies For Survival

Mitchel-Chesebro points out that automation and technological advancements in cultivation and manufacturing are key strategies brands lean toward for cost efficiency. Moreover, targeted promotions and discounts have become a nuanced art for retailers, aiming to drive sales without eroding profit margins.

"Price compression has had a huge impact... with low single-digit margins back in mid-2021," Mitchell-Chesebro noted. During this peak in legal cannabis demand, fueled by pandemic consumption patterns, sales later fell and inflation worsened the industry's slim margins. 

"Promotions are great... but you don't want to be discounting so much that you're decreasing your overall profit," he adds. 

Innovation In Product Packaging

An interesting trend emerging in the cannabis market is the consumer shift towards larger pack sizes, particularly in flower and pre-roll categories.

This shift reflects a growing consumer preference for value, balancing cost with quantity and potency.

"One-ounce flower packs... went from making up roughly 6% of total flower sales to roughly 10%," Mitchel-Chesebro reveals, indicating a significant market shift towards bulk purchasing.

Consumer Preferences And Brand Loyalty

Brand recognition and loyalty play crucial roles in consumer purchasing decisions, ranking as the fourth most cited driver of product choice.

"24% of consumers cited brand recognition as their product choice driver," Mitchel-Chesebro notes, emphasizing the importance of consistent and specific product experiences in building brand loyalty.

This focus on reliability and effect-based marketing strategies underpins the evolving landscape of consumer preferences in the cannabis market.

Furthermore, according to BDSA's data, 26% of US consumers choose retail locations for their preferred brands, while 37% stay loyal to products and strains that prove effective.

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