Antarctic IPA - Brands in Cannabis, Part I | The Bengal Bite 🐯

Let's assume we are all sitting down with friends for a beer (feel free to switch out “beer” to your beverage of choice, bourbon, champagne, La Croix, etc). You’re by no means an expert on said beverage but years of experimentation have informed your decision on what types and brands you tend to enjoy.

Suddenly your friend hops up and says “You have to try this new kind of beer I just picked up - it’s an Antarctic IPA!” 

“Antarctic IPA?,” you say to yourself, “How curious? What exactly is that?” Based on your friend’s enthusiasm and your own thirst for knowledge, you agree to try a glass (how could you not?). You take your first sip and “WOW!” you exclaim. This is really fantastic! It's a new taste and a different experience compared to any other beers or IPAs you’ve tried. In short - you very much like it!

So picture yourself in this position. Where would your mind go next? You’d probably ask for the bottle so you can check out the brand name and then pretend to examine it in a way that makes it look like you are getting any relevant information (you’re not). Once you put down the bottle post examination, what is the voice in your head likely to say?
 

Voice #1 ) “This brand of Antarctic IPA is all I’m drinking within this new genre of beers that I didn’t know existed until 5 minutes ago! They have won my support and in return, I will only buy this beer and brand!”

Voice #2) “Wow this Antarctic IPA is great stuff! I sure am glad my friend recommended it to me and I can’t wait to try some more IPAs and other beers from the Antarctic.”

In our opinion, the affinity for brands doesn’t begin or end in a vacuum. Customers pick brands on a relative basis once they’ve tried other products in that category. Very few people decided to fall in love with a Porsche without first subconsciously comparing it to the many experiences they had driving other cars. In the same context - once you’ve been made aware of “Antarctic IPA”, and decided that you enjoy it - you probably want to try some different types and experiment before settling in on a definitive brand of choice, or if you’re like us with beer, Hazy IPAs in particular, continue on the endless quest for perfection through constant “tasting.” 

The parallels between the example above and the new cannabis consumer who is trying a new product or form factor for the first time are strikingly similar. Building brand affinity among consumers who are new to the product is extraordinarily difficult when they have nothing in their internal database to compare it to. Oftentimes, even if the interaction with the product was delightful, it emboldens the customer to try other types in order to experience more of that category. Eventually, they may come back around to the first brand that they enjoyed but it's often a long and circuitous path. “Brands” in cannabis will eventually be a huge business - the way that we get there will be highly unconventional.

This Week's Bite:

• President Biden, please just take a look at the data: In a world where Americans can barely agree on anything, other than maybe their dislike of politicians, there is one clear unifier—weed. The latest surveys put support at over 60% for national recreational cannabis legalization, and 90% for national medical marijuana legalization. With even “conservative” states like Montana getting ready to pass cannabis legalization via their legislature, it's perhaps time that the Federal government follows suit and allows Americans the freedom to enjoy cannabis for recreation. (FiveThirtyEight | Pew Research)

• Legalization barriers poised to keep falling: The wave of legalization that is sweeping the United States is growing to a tsunami! Already this year New York, Virginia, and New Mexico have legalized cannabis, and Rhode Island, Connecticut, and Delaware could be up next. It is also a possibility that we might see the larger markets of Pennsylvania and Minnesota open up to recreational legalization, but it's less of a certainty given Republican control of the local legislatures. (Marijuana Business Daily)

• Sunny findings on American cannabis consumption: Not only do Americans on the whole support legalization of cannabis, but they are also more likely to consume cannabis personally. Since 2018, the number of adults in the U.S. who consume cannabis has increased by 56%. That means 25% of all Americans have used cannabis within the last year. Before we know it, a nice pre-rolled joint will be a great housewarming gift anywhere in the States. (Cresco Labs) 
   

• Branding starting to pay off for cannabis companies? While no brands in cannabis can truly say that they carry national cache, some companies have developed beachheads in the United States’ largest cannabis markets. It is noteworthy, however, that only 2 brands control over 50% market share -- Major, a 100mg THC cannabis beverage available in Washington State, and local dispensary-branded cannabis in Colorado (so not actually a brand at all). Limited brand penetration in and across markets shows that there is still a lot of white space available in cannabis. We believe that this competitive landscape will continue to allow for rapid market disruptions. (Marijuana Business Daily) 

• Jay-Z's PR team hits high gear for Monogram push: Following his success in brand building in the wine & spirits industry, Jay-Z set his sights on the cannabis industry with the launch of his cannabis brand, “Monogram”. This launch follows an investment in The Parent Company (NEO:GRAMF) and his inclusion on The Parent Company leadership team as “Chief Visionary Officer.” With previous celebrity endorsements in cannabis falling flat, it is still to be seen whether or not Jay-Z can bring credibility to this newly merged company and give their falling stock valuations support (GRAMF is down 42% since its high in January, in comparison to just a 10% decrease in MSOS under the same time period). Will consumers be willing to pay a premium price not only for premium cannabis but for the “Good Life” as designed by Jay-Z? (GQ | PR Newswire)