Although cannabis and hemp have been historically used for hundreds, if not thousands, of years, the legal and regulated industry is still in its infancy.
With many major markets throughout the world implementing some sort of cannabis and hemp regulation in their jurisdictions, an increasing number of investment capital is being funneled into marketing and advertising. Many sectors of the industry are over-saturated with products, such as flowers and CBD oil, so reaching the consumer and becoming a brand with staying power is becoming an increasingly competitive scene.
So now investors are beginning to ask new questions. Instead of “how much flower can you grow?” or “how much oil can you produce?”, they’re asking “how are you going to sell your products to the growing and ever-changing demographic of cannabis consumers?”
This means companies will need to give a lot of thought to their marketplace reputation and how consumers view their business. As much as we want to be drawn to good products and have it be that simple, the truth is, we all gravitate to certain brands because of the image, style, and message being conveyed by the company. Everything from their social media posts to they type of packaging they use plays a part in the bigger picture of building a brand.
“As cannabis becomes legal and the industry matures, the importance of branding moves to the forefront. And it’s not just about attracting and retaining customers,” says Derek Riedle, Publisher of Civilized. “A quality brand is the invisible connection a company has with its audiences and stakeholders. It’s how trust is built, stigmas are reduced and perceptions are changed. It’s informed by a company’s look and feel, of course, but also by what a company does: how they communicate and how they conduct themselves. Being socially responsible is an essential pillar the development of a strong brand and continued social license.”
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The Cannabis Market in Numbers
2019 was a big year for cannabis and hemp sales across the globe. Worldwide, legal cannabis sales reached almost $15 billion, which represents an annual growth rate of 46 percent. The largest market is still the U.S., with California leading the way. 2019 saw roughly $12.2 billion in legal cannabis spending, rising at a CAGR of 22.7% from 2018.
The estimated number for 2020 is $16.2 billion, and by 2024 the market should reach roughly $31.1 billion in total legal sales. As far as hemp goes, the market is expected to be worth upwards of $20 billion in the next four years.
Around the world, Canadian sales are expected to reach $6.2 billion in 2024, with a CAGR of 48.4% from 2018. In Europe, spending on legal cannabis has reached an estimated $547 million in 2019 and is forecast to but up to $3.4 billion by 2024. Germany and U.K. are expected to be at the top end of the European cannabis market, followed by France, Italy, and Switzerland.
Latin America has also seen a surge in legal cannabis sales, with a combined $113 million in 2019, and an expected CAGR of 62.7% by 2024, bringing their total sales to an estimated $1.2 billion. As of now, 78% of these sales are coming from Mexico and Uruguay.
The Evolution of Cannabis Branding
Cannabis branding as we know it today didn’t develop overnight. Thanks to the decades-long war on drugs and all the government overreach surrounding cannabis, the main component of cannabis branding is approachability and public perception. While some brands make the stoner stereotype work for them, others are steering away from that by trying to turn their company into a “lifestyle” or “wellness” brand, focusing on the all-natural health angle.
Another aspect to cannabis market is differentiation. Cannabis and hemp equals big money, so naturally, there’s more brands and companies than anyone knows what to do with, and the number continues to grow. Successful branding will make your product and company stand out from the rest, which can be hard to do in today’s market.
Cannabis branding will also continue to evolve as far as the language, imagery, and advertising channels that can be used. For example, Colorado has banned outdoor marketing for dispensaries and other cannabusinesses. In California though, billboards can be seen on most major freeways and highways. Most states don’t allow televised marketing campaigns, but will permit commercials during major events such as the superbowl.
Bottom line, the industry’s evolving and the rules are always changing to cannabis and hemp brands/owners must take it upon themselves to stay up-to-date on local policy and be fully aware of their advertising options.
Things To Keep In Mind When Building Your Brand
When it comes to building a brand, there are a few things to make note of that can either make of break you. First and foremost, you need to know your audience. “The first step is to determine where you stand in the marketplace and to understand who your customer is,” says healthcare branding expert Matthew Dinnerman. “To do so, a company leader must uncover what is most important for driving growth and analyze how the product or service is actually viewed by consumers via an in-depth competitor analysis,” he continued.
Next you need to find your purpose. You need to figure out what you can offer the consumer, what will be your core values, and develop your mission statement. The innate philosophies are the foundation of branding, it shows your potential customers what your company or organization truly believes in.
After you’ve figured out who you are and what you do, the next step is to get creative. “A brand’s visual vocabulary will be reflected in your colors, fonts, logo and overall style,” says branding and marketing specialist Raquel Baldelomar. “The brand’s voice should be distinctive, resonate with your customers, be consistent and stay true to your company’s values.”
Then, you will need to promote your brand/business as much as possible, and you’ll need to find the best avenue though which to accomplish this. Depending on what you’re advertising, you could use social media, television, billboards, printed media, and more.
“To remain competitive, companies must routinely analyze and refine their brand to ensure it’s delivering on the promises of what the company stands for. One of the benefits of digital advertising is the ability to track, target, and test new strategies and tactics,” added Raquel Baldelomar. “Your brand identity should not just be a mission statement on the wall and logo. Your brand is a reflection of your thinking, your character, and your values.”
An Investor’s Guide to Cannabis and Hemp
Final Thoughts
If one thing can be taken away from this article, let it be this: the only way to experience some longevity in cannabis and hemp industry is to have a quality product coupled with successful and unique branding. The cannabis / hemp market is competitive, and you’ll have to differentiate yourself from the competition if you want to be successful.
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