Business Insider Journalist Jeremy Berke’s Cannabis Outlook | Infused Summer S’more Recipe | The Latest from Azuca
Business Insider Journalist Jeremy Berke’s Cannabis Outlook | Infused Summer S’more Recipe | The Latest…
According to executives from cannabis edibles manufacturers Wana Brands and Dixie Brands, the companies’ biggest takeaway in 2020 was that edibles—and particularly gummies—could continue their steady growth, even in the wake of a global pandemic.
“Over time, the gummy has continued to be a pretty massive part of the edibles industry,” Wana Brands Chief Marketing Officer Joe Hodas told Cannabis Business Times and Cannabis Dispensary.
Edibles represent roughly 15% of sales in the legal cannabis market, according to a recent webinar from BDSA. The U.S. edibles market is dominated by candy, which makes up 67% of edibles sales, according to the webinar, and gummies are the most popular form of candy, making up 85% of candy sales.
Despite limited travel and remote working conditions due to the COVID-19 pandemic, Wana was able to capitalize on the popularity of the gummies category this year through its launch in Oklahoma, Maryland and Canada, and it plans to launch into Florida and Missouri by the start of 2021.
To conduct the necessary training with its partners in the new markets, Wana created a video series covering product formulations, SOPs and more.
In addition to expanding to new markets this year, Wana also launched its new Quick line of fast-acting gummies in March.
“We partnered with a company called Azuca because they have a technology that allows … the cannabis molecules to be encapsulated in a way that does not get absorbed through digestion,” Hodas said. “You still digest the gummy as you would normally, but in terms of the activation of the cannabis, it goes directly into the bloodstream, so it gives an onset time for most people anywhere from 5 to 15 minutes.”
Gummies are also a major part of Dixie Brands’ product portfolio, and Andrew Floor, SVP of Marketing for Dixie’s parent company, BellRock Brands, said the company differentiates itself by ensuring the entire consumption experience is the best it can possibly be, rather than just viewing edibles products as a delivery vehicle for cannabis.
“Yes, we want to make sure we have the right potency levels and the right flavors in place, but then it’s also about, what’s the shape of the gummy?” Floor said. “What’s the size? How’s it going to be coated, and is that complementary to the flavors in the gummy?”
Floor said Dixie’s gummies experienced “fantastic growth” in 2020 despite this year’s challenges.
“We had the momentum, and then we rode the wave of increased purchasing and consumption of cannabis products,” he said. “For us, 2020 was primarily about making sure we could keep up with demand. It wasn’t about cutting corners. It wasn’t about finding a way to increase productivity at … the expense of the quality of our products. It was about, how do we integrate with the industry? How do we make sure we are doing everything we can from a safety perspective, from a supply perspective, to help our customers maintain their business and their supply for their consumer base, as well?”
According to Floor, “edibles are on fire,” and not just in newer and rapidly growing cannabis markets, such as California, but also in more mature markets like Colorado.
“We’re not even hitting our tipping point yet,” Floor said. “As the canna-curious start moving in, it’s the edibles and the gummies that the people are looking for. It’s an exciting product segment to be in right now.”
Dixie has expanded its edibles product line from its home state of Colorado and into Michigan and California, and the company plans to launch in Oklahoma and potentially Maryland next year.
Dixie’s THC gummy flavors, which include Sour Smash, Tropic Twist, Citric Blast and Berry Blaze, are meant to align with trends in the broader candy market, not just the cannabis market, Floor said.
“We don’t want to look at what everyone else is doing from a flavor perspective and put that into the market,” he said. “We want to open up new markets and bring new flavors into play. We are constantly looking at and keeping our finger on the pulse of consumer trends and behaviors outside of our industry.”
In January, Dixie will launch a new spicy mango flavored gummy to continue providing variety to its customers.
“They don’t want the same thing all the time, so I think providing variety and keeping the flavors on the cutting edge of consumer palates and consumer trends is the smart thing to do,” Floor said.
Edibles sales grew roughly 24% year-over-year from 2019 to 2020, according to BDSA’s webinar, and looking ahead to 2021, the Dixie and Wana teams don’t expect the popularity of gummies to slow down at all.
As it expands, Hodas anticipates that the market will continue to break out into two distinct categories: value brands and premium brands.
“I think that’s going to be a good thing for the gummy market as a whole because there will be price compression, and I think the ability for brands to identify with consumers against their strengths and differentiate from one another is going to be critical,” he said.
Wana aims to be a premium brand, Hodas added, and innovation remains a primary goal as the company heads into next year.
“With the launch of our Quick products and with a number of our products that we have in development that we hope to launch in 2021, innovation is going to be a huge, huge tentpole for us,” he said.
While it continues to innovate and grow in its current markets—including Arizona, where the company is excited for growth opportunities following adult-use legalization—Wana is also eyeing new states, including New Jersey, which also legalized adult-use cannabis in the 2020 election.
Wana will also continue its push for diversity and inclusion in the industry, building upon its Cannabis for Justice website that launched in September with resources for cannabis companies to broaden their understanding of social justice and systematic racism, and tools to make their companies more inclusive .
“We made a decision that this is a path we’re going down,” Hodas said. “Our customers don’t have to see eye to eye with us on that. They can make decisions as to what products they purchase, but we’re going to continue to focus on that into 2021, as well.”
The company also has its eye on the possibility of federal legalization, especially since the U.S. House voted to pass the MORE Act earlier this month to deschedule cannabis.
“I think cannabis for the foreseeable future, and not too much longer, will continue to be this game of ping pong until the new administration comes in and things begin to settle down,” Hodas said. “My hope and belief is that some good, hard work will go into figuring out, what is that path forward? And I think we’ll see some clarity there.”
And in the meantime, Wana will continue to evaluate its customers’ needs and meet those needs with product innovation.
“We don’t think of ourselves as a CPG company,” Hodas said. “We think of ourselves as a cannabis company, and I think that’s a big difference. We’re not looking to, what’s our next flavor? Or, are we going to get into chocolates? We’re looking at this as delivery systems, and what is the best delivery system that allows us to respond to our patients’ needs? And I think that’s going to drive our innovation pipeline for 2021.”
Floor said Dixie will continue to focus on bringing more exotic flavors to market to keep up with what he views as an important consumer trend.
“I think you’re going to start seeing the gummy elevate from old school sweet shop flavors into more mature, … adult flavor trends,” he said.
Floor also sees microdosing as another important trend heading into 2021.
“Right now, 10 mg [of THC] is the equivalent of a standard drink in the adult beverage world, but that’s still a lot for a lot of people, especially when you start thinking about the canna-curious and people who are looking to come into the category,” he said. “So, bringing those individual unit dosages down so that the consumer can be in more control of the effect that they’re feeling is one aspect of it.”
And while Floor said it is important to appeal to the canna-curious consumer who may be trying cannabis edibles for the first time, the industry is also slowly becoming more sophisticated, and more experienced consumers are demanding more from products.
“Let’s understand what they’re looking for and let’s make sure we’re delivering what they’re looking for versus just doing what we’ve always done,” Floor said.
Like Wana, Dixie aims to continue improving upon its products as it heads into 2021, and the company remains focused on R&D and exploring new technologies to meet consumers’ everchanging demands.
“I think it comes back to ensuring as deep an understanding of consumers as we can get,” Floor said. “I think we understand where they are now, but we also want to understand where they’re headed, so we can give them the flavors they want, the potency levels that they want and the entire consumption experience that they’re looking for.”