Why Gen Z Could Drive the Cannabis Beverage Boom

Thomas Wesley Pentz, commonly known as the American DJ, “Diplo,” is teaming up with retired professional skateboarder turned Hollywood producer Robert Dyrdek to create new THC-infused beverages called Leisuretown. The unexpected pair is eager to debut their new summer seltzers to bring a refreshing, unique taste to their fans and consumers.

This is just one of the latest entrances of cannabis beverages into mainstream culture. And beverages are definitely becoming mainstream: data from Headset shows that cannabis beverage sales on 4/20 this year increased by 176% in the US in comparison to the four previous weeks.

The adoption shows a new market trend as more consumers turn to something that seemed almost impossible just years ago: drinking cannabis. And it’s younger audiences that might lead the way.

Research from New Frontier Data shows that Gen Z, Diplo’s primary fan base, prefers cannabis over alcohol. Specifically, the survey found that 69% of Gen Z respondents (age 18-24) would rather consume cannabis. That’s not surprising, considering Gen Z respondents are also the most likely to say they never drank alcohol.

It seems that younger consumers are drinking other beverages instead. Gen Z consumers over-index when purchasing ready-to-mix-in and ready-to-drink products compared to older generations. We’ve also seen hard seltzers, flavored seltzers, and other types of beverages already establish a popular category where cannabis beverages can fit.

As cannabis beverages become more popular and more widely known - and easier to buy! - the seltzer flavors could prove to be an easy transition.

The New Cannabis Consumer

Just as Gen Z has been called “digital natives,” because they don’t remember a time before the internet, this generation can be said to be “cannabis native.” Young Americans are growing up at a time when a stigma around cannabis no longer exists the way that it did for previous generations.

That doesn’t mean that they’ll be consuming cannabis the same way. When it comes to cigarettes, smoking has become less popular than ever. One survey found that 64% of Gen Z have never smoked cigarettes or cigars, by far the highest percentage among the generations surveyed. While many younger consumers still buy flower, tapping into new audiences could mean putting an emphasis on different forms of consumption in the future.

This conscientious lifestyle could be an opening for low-dose cannabis beverages especially. An analysis from Research 3 Insights states, “Brands should take note of this conscientious drinking trend as 60% of Gen Z/Millennials expect and would be more interested in companies that increased their offerings of lower ABV/health benefits products.”

In the cannabis industry, there’s a common rule of thumb: 20% of consumers are responsible for 80% of the spending. To really grow, businesses now need to start thinking about how to reach new cannabis consumers who might think about cannabis in different ways.

Gen Z will soon become a dominant force in the market. Given their different attitudes on smoking and familiarity with flavored seltzers, it will be interesting to see if cannabis beverages have a White Claw moment in the near future. At this point, it seems that all it would take is the right cannabis advertising campaign.

Our Takeaways

1. Low-dose THC beverages can open new markets.

To a certain audience of younger, more casual cannabis consumers, flower, pre-rolls, and vapes may be less appealing. When it comes to cannabis advertising, this is important to keep in mind. Product or dose-specific ad strategies and creative could help break into new markets and new customer groups. Maybe it will even reverse the THC content wars. That said, flower buyers are the bread and butter of most cannabis businesses today and we expect that to remain true.

2. Beverages offer an alternative channel for social consumption.

While the emerging industry of consumption lounges may emphasize social smoking, it’s likely that cannabis beverages will play a big role as well. Especially in states where indoor smoking laws prevent consumption. Without laws preventing cannabis consumption indoors, we may pour ourselves a cold glass of cannabis sooner than we think.

3. Product Familiarity = Opportunity.

Just two years ago, sales of hard seltzer giant, White Claw, boomed to the point that the trendy drink had a shortage in the United States. Zara Flynn, a marketing partner at creative agency Rothco, explains, “It was not about going with what the beer industry is doing right now. It was about breaking all those norms and creating something fresh and unique.”

Want to learn more about how to advertise to new cannabis consumers? Sign up for a demo of the Surfside Platform!