The cannabis market has received a bit of good press recently, as Coca-Cola said it is “eyeing” the cannabis-infused drink market, following Constellation Brands investment in Canopy Growth last month.
But it’s one sub-sector of the market, cannabis concentrates, which may be the true star of the show.
Cannabis market intelligence and consumer research firm BDS Analytics has issued a new report showing that cannabis concentrates are expected to hit sales of $2.9 billion in 2018, up 49 percent year over year. That would make the concentrate market the second largest, behind only flower, according to the report.
“As the cannabis industry matures, we’ll likely see new product categories catch fire with consumers,” said Troy Dayton, CEO of the ArcView Group in a statement. “Concentrates are the first category to do that, but it’s just the beginning of a revolution in how cannabis is consumed now that it’s becoming legal around the world.” Arcview partnered with BDS on the report.
By 2022, concentrate sales are expected to nearly surpass flower sales in terms of size, at $8.4 billion, compared to $8.5 billion for flower sales.
“For consumers, it’s a discreet and healthier choice that will likely make cannabis consumers of people who would never dream of inhaling smoke,” Tom Adams, Editor in Chief of ArcView Market Research wrote in the report. “That will cause the category to represent ever more retail display space, and likely spawn vape-only stores and on-premises consumption venues.”
Adams added that concentrates are able to cut costs at different parts of the supply chain, making them more efficient to extract and distribute.
“But the main savings will be at the agriculture level, where expensive warehouse and greenhouse grows designed to provide pretty buds give way to traditional outdoor growing of a commodity crop. The cost savings—and broader consumer appeal of concentrates—will prove critical as the legal market struggles under the weight of heavy tax and regulatory loads to compete with the illicit market,” he wrote.
The concentrate market, which includes products such as vaping, is expected to grow to 27 percent of all U.S.-related cannabis sales in 2018. That’s a stark contrast from 2014, when it was just 10 percent of cannabis sales, indicating healthy and growing consumer demand for these products, experiencing 70 percent annual growth.
Of that exceptional growth, 58 percent of spending will come from prefilled vaporizers, deemed to be a “market dominance likely to grow over the next five years.”
“Technology is revolutionizing a product category that began as hand-rubbed hash in the Middle East centuries ago,” said Adams in the statement.
Adams continued: “We believe the growth of the concentrate market will continue as the cannabis industry evolves and consumers look toward new and innovative delivery methods that fit their lifestyles.”