Price Matters to Consumers Buying Cannabis, But So Does Quality
THC is, naturally, the biggest driver.
A new, in-depth report on cannabis pricing suggests that consumers in the United States and Canada consistently factor price into their cannabis choices, but they're willing to pay more for superior products.
The report, titled “Price. It’s complicated. How cannabis pricing differs from other consumer goods,” is a collaboration between BDSA, Deloitte Canada and Hifyre. It analyzes the similarities and differences between cannabis and traditional consumer packaged goods, including factors such as brand loyalty, and projects the overall global cannabis market to reach more than $62 billion by 2026, more than double 2021’s estimated global sales of $30.6 billion.
“Market growth brings opportunity, and we continue to see more brands and products entering the market. At the same time, though, consumers, manufacturers, and retailers are getting more sophisticated,” said Kelly Nielson, BDSA’s vice president of insights and analytics, in a press release. “In order to be competitive, it is important to understand how pricing plays a role in the decision-making process, and how pricing and product benefits can be leveraged to maximize potential.”
THC still the biggets factor
Among the key findings of the report is that although THC content is still the primary driver of sales in the U.S. markets, low price was consistently identified in the top three drivers of product choice for consumers, with 27% of respondents saying price influences their purchase decision, just behind taste. In Canada, low price was the leading influencer of product choice, with 34% of consumers stating it matters the most.
However, consumers are apparently willing to pay more for products they consider superior. As an example, the report points to live resin sales in California. These products are often more expensive, but considered to be higher quality than other concentrates, and have risen to 33% of total vape sales in the state, up from 8% in 2019.
Brand loyalty, not so much
However, unlike other CPG categories, brands do not yet command a premium price as U.S. consumers do not include “reputation of a brand” among even the top 10 factors on their purchase. Only 18% of those surveyed say brand reputation influences their product choice. Survey data found that consumers are more likely to choose a product that is either a brand they have used before (25%); a brand recommended by an employee (21%); or a brand that has been recommended by a friend or family member (20%).
The report also found that while prices vary across each state market — in August 2021, the average price of flower was $1,600 per pound in Oregon, but only $900 per pound in Colorado — the laws of supply and demand “are, as ever, fundamentals,” with prices dropping as supply increases in new markets.