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Innovating for Success in the Cannabis & CBD Categories
June 2019
© 2019 Ipsos. All rights reserved. Contains Ipsos' Confidential and Proprietary information and may not be disclosed or reproduced without the prior written consent of Ipsos.
We have come a long way on how our society views cannabis…
USA ranks second in consumption of cannabis, slightly behind Canada
12%24%23%22%21%20%19%17%13%13%13%12%11%11%11%10%10%10%9%8%8%6%3%3%2%1%
85%74%76%67%76%76%79%79%83%85%81%86%85%85%86%86%89%89%88%86%92%92%97%96%96%97%
All CountriesCanada
USIndia
South AfricaChile
SwedenBrazil
ArgentinaMexicoPoland
BelgiumColombiaGermany
ItalyAustralia
Great BritainPeru
SpainFrance
NetherlandsTurkey
HungaryRussiaSerbiaJapan
Total – YES, Use NO, Don’t Use
Source: Ipsos Global Advisor Omnibus December 2018
What is morally acceptable to use (in moderation)?
36%38%
41%41%
49%51%
54%65%
70%71%
74%
PornographyTobacco
Violent video gamesE-cigs/vaping
Online bettingCannabis
Casino gamblingOnline dating
LiquorBeer
Wine
% of Americans
Source: Ipsos Global Advisor Omnibus December 2018
Since 2004, “Cannabis” has progressively become a more common search term
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Google “Cannabis” Search TrendsUSA Data (2004 to Present)
Source: Google Trends
Support for legalization has increased steadily since 1969
0
10
20
30
40
50
60
1969 1972 1973 1977 1979 1980 1985 1995 2000 2001 2003 2005 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017
Support for Legalization of Cannabis in the USA (1969 to 2017)
Source: https://www.pewresearch.org/wp-content/uploads/2018/10/FT_18.10.09_MarijuanaUpdate_topline_for_release.pdfIpsos data from 2017: https://venturebeat.com/2017/12/06/u-s-pot-industry-high-tech-high-finance-and-high-times/
What’s driving the increased social acceptanceof cannabis, and how can it inform innovation strategies?
Argentina
AustraliaBelgium
Brazil Canada
Chile
Colombia
France
Germany
Great BritainHungary India
Italy
Japan
Mexico
Netherlands
PeruPoland
Russia
Serbia
South Africa
Spain
Sweden
Turkey
US
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
0% 10% 20% 30% 40% 50%
Support for Legalization
Support for Using Cannabis for Medical Reasons andImpact on Support for Legalization
PolandPolandGermany
Belgium
Countries with higher support for legalization believe cannabis does more good than harm
Using Cannabis Does more Good than Harm
Source: Ipsos Global Advisor Omnibus (Dec 2018)
Argentina
Australia
Belgium
Brazil
Canada
Chile
Columbia
FranceGermany
UK
HungaryIndia
Italy
Japan
Mexico
Netherlands
Peru
Poland
Russia
Serbia
South AfricaSpain
Sweden
Turkey
USA
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
0% 10% 20% 30% 40% 50% 60%Support for Legalization
UK
ItalyBelgium
France
Hungary
Mexico
Australia
MexicoMexicoSpainUKUK
USA
Countries with higher support for legalization are less likely to believe cannabis leads to harder drug use
Cannabis Leads to Use of Harder Drugs
Source: Ipsos Global Advisor Omnibus (Dec 2018)
Belief that Cannabis Leads to Use of Harder Drugs andImpact on Support for Legalization
We also know that people are motivated by 8 fundamental core motivations
Ipsos data shows that consumers feel cannabis meets a wide variety of need states, for both medical and recreational reasons
MEDICAL NEED STATES RECREATIONAL NEED STATES
Source: Ipsos Cannabis Consumption Tracker (Sept 2018 to Feb 2019)
What are the key barriers to increased use?
But also some consumer tensions which can be addressed via innovation
“Too expensive”
“I don’t like the thought of smoking”
“I don’t like the smell”
“I don’t feel comfortable using it”
“I am afraid of the potential side effects”
Innovation can help address different need states to maximize reach andminimize cannibalization within your portfolio.
How is cannabis consumed? Let’s talk about formats.
67% 36% 24% 18% 17%BONG, PIPE, JOINT MADE
FROM BUDS/FLOWERS VAPORIZER EDIBLE PRE-ROLLED JOINT OIL
Most cannabis is being smoked as whole flower, but edibles are slowly gaining ground
Source: Ipsos Omnibus Data (Jan 2019)<15% not depicted
HOW CONSUMED/USED
Convenience is #1 reason for choosing to vape cannabis
44%
34%
29%
25%
20%
17%
17%
17%
14%
Convenience of use
It's my friend's preference
It's a healthier way to consume it
Allows me to manage my dosage better
Addresses my symptoms with fewer side effects
Convenience of buying (it's easier to find in this form)
Faster onset of effects
Allows me to easily share with others around me
Other
REASONS FOR VAPING CANNABIS COMPARED TO OTHER METHODS OF CONSUMPTION
Source: Ipsos Omnibus Data (Jan 2019)
Convenience is also #1 reason for consuming cannabis in edible form
38%
25%
19%
19%
18%
14%
12%
6%
11%
Convenience of use
It's a healthier way to consume it
Convenience of buying (it's easier to find in this form)
Allows me to easily share with others around me
Allows me to manage my dosage better
It's my friend's preference
Faster onset of effects
Addresses my symptoms with fewer side effects
Other
REASONS FOR USING EDIBLE CANNABIS COMPARED TO OTHER METHODS OF CONSUMPTION
Source: Ipsos Omnibus Data (Jan 2019)
Alcohol distributors are making a strong foray
into the cannabis market.
Interest is also high for recreational THC-focused product, but to a lesser degree
MEDIUM TO CONSUME THC FOR ALTERED MENTAL STATE
40% 33% 32% 28% 28% 22% 21%FOOD/
BAKED GOODSCOFFEE/
TEAWATER SODA/
SOFT DRINKSOTHER
BEVERAGESBEAUTY/SKIN PRODUCTS
ENERGY DRINKS
USA
Source: Ipsos Omnibus Data (Jan 2019)
37% 33% 29% 44% 41% 39% 28%FOOD/
BAKED GOODSCOFFEE/
TEAWATER OTHER
BEVERAGESSODA/
SOFT DRINKSBEAUTY/SKIN PRODUCTS
ENERGY DRINKS
Interest in coffee/tea/water based beverages is also very high for non-intoxicating CBD products, as are edibles
MEDIUM TO CONSUME CBD FOR MEDICINE/HEALTH BENEFITSUSA
Source: Ipsos Omnibus Data (Jan 2019)
Let’s talk innovation
Growing consumer interest and acceptance is driving rampant innovation
Retailers of all types are stocking their shelves, only creating greater incentive for new product development
Mom & Pop LuxuryMass Market / Big Box
So what does it all mean?
Inherent Potential of New Product Idea
Consumer Lens
Competitive Lens
How Potential Stacks Up To What Consumers Use Today
OUR PHILOSOPHY is that innovation must be evaluated through two lenses
Broad appeal does not mean “one size fits all”*Be relevant
Broad appeal does not mean “one size fits all”*Be relevant
Relevance alone won’t guarantee trial, especially with increasing fragmentation
Differentiate (and be relevant)
PRODUCTS WITH
54%more likely to achieve higher than expected trial
High Relevance and High
Differentiation
High Purchase Intent
34%more likely to achieve higher than expected trial
INDEX TO AVERAGE
TRIAL
*
Talking to “who matters” is important*Know your target
Spend your time and money wisely by getting close to the people that
matter most, your potential buyers and
target
To truly win, you have to move beyond initial trial and drive repeat business*
*To truly win, you have to move beyond initial trial and drive repeat business
Packaging matters more than ever*Don’t forget pack
Claims can educate on the category
Shelf standout encourages trial
Distinctive brand assets facilitate repeat
Inherent Potential of New Product Idea
Consumer Lens
Competitive Lens
How Potential Stacks Up To What Consumers Use Today
OUR PHILOSOPHY is that innovation must be evaluated through two lenses
Competitive context is key for a realistic assessment of performance*Consumers individually define the competition
(product most often purchased / used)
The Innovation is compared to real in-market products, defined by the consumer, including private label, niche brands, home remedies, etc. —NOT OLD IDEAS THAT NEVER LAUNCHED
The innovation and consumer-defined competition are assessed on the same KPIs, allowing us to benchmark the innovation’s performance
HOW CONSUMER
DEFINED COMPETITION
WORKS
Pay attention to regulation*
To recap…Be relevant anddifferentiated
Know your target
It’s about trial and repeat
Don’t forget pack
Assess with competitive context
Pay attention to regulation
Thank YouAny questions?