Portal - Company - Bhang
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Company Name: Bhang Categories: Edibles, Concentrates Contact Info: |
Geographic Locations: California, Arizona, Colorado, Michigan, New Mexico, Nevada, Oregon, Washington List of Brands: Bhang Subcategories: Edibles: Chocolate, Oils & Sprays Concentrates: Cartridges |
Executive Summary
- As of August 2016, Bhang is the 4th most popular edible brand and 8th most popular concentrates brand in California
- Bhang’s performance was negatively affected by a raid on an important supplier in early 2016, as well as a legal battle with investor Mentor Capital
- Bhang’s chocolate bars are in approximately 33% of California dispensaries and their cartridges are in more than 10%
- Bhang relies less on word of mouth and more on traditional and POS advertising to promote their brand
- Bhang’s customers resemble the average medical patient and their products generate strong satisfaction ratings
Methodology
Our company profiles leverage our multi-source methodology to give you the most complete view of each company from all sides. The insights provided on consumer demographics and feedback stems from Brightfield Group’s survey of more than 1,200 California medical patients in 2016. Detailed information on precise questions providing each graph and data point can be found in the report's endnotes. Market share and distribution data is based on our brand tracker, which analyzes digital menu audits from more than 1,200 dispensaries and delivery services throughout the state on a monthly basis. This is then evaluated with select POS data, survey data and interviews with dispensary owners which are used to weigh our algorithms.
Figure 1: Bhang Performance in Major California Markets (August 2016): Edibles
|
Market |
Percent of Dispensaries Carrying the Brand |
Brand Share of Category |
Brand Ranking in Category |
Change in Ranking Since January 2016 |
|
California |
32% |
3% |
4 |
No change |
|
Sacramento |
44% |
5% |
5 |
No change |
|
Bay Area |
25% |
2% |
5 |
-1 |
|
Los Angeles |
27% |
2% |
7 |
-1 |
|
Orange County |
66% |
11% |
1 |
No change |
|
San Diego |
33% |
3% |
8 |
-4 |
Figure 2: Bhang Performance in Major California Markets (August 2016): Concentrates
|
Market |
Percent of Dispensaries Carrying the Brand |
Brand Share of Category |
Brand Ranking in Category |
Change in Ranking Since January 2016 |
|
California |
12% |
0.8% |
8 |
No change |
|
Sacramento |
8% |
0.6% |
18 |
-1 |
|
Bay Area |
10% |
0.2% |
32 |
-16 |
|
Los Angeles |
9% |
0.5% |
16 |
No change |
|
Orange County |
34% |
2.4% |
3 |
+1 |
|
San Diego |
13% |
1.1% |
7 |
-1 |
Geographic Distribution
Bhang is among California’s most widespread brands in two major categories of the medical marijuana market (edibles and concentrates). The company’s edible offerings have been more successful with about 32% of the state’s dispensaries carrying them, compared to about 12% for its concentrates products. This reflects the fact California’s concentrates market is much more fragmented than its edibles market.[1] It also suggests Bhang’s cartridge products, which are newer than its edibles, face more intense competition as they enter the concentrates market. Bhang started the year strong as the second most widespread cartridge brand, but as vaping becomes more popular a flood of competitors have been able to expand rapidly, taking advantage of the disruptions in Bhang’s supply chain caused by the Med-West raid. Five competitors have overtaken Bhang in distribution in 2016.
In 2016, Bhang began the year as one of the lead companies in the chocolates market. In this space, only Kiva is more widespread. Bhang’s 2nd place position in chocolates is assured for now, but the company’s distribution is stagnant and two diversified powerhouses,
G FarmaLab’s Liquid Gold and Venice Cookie Company, are rapidly growing. Both companies have reduced Bhang’s chocolate distribution by approximately 50% since January. Analysis of the edibles market, which allows for consideration of Venice Cookie Company’s baked goods products, suggests that Venice Cookie Company already has a wider distribution network than Bhang in California.
Nevertheless, with distribution trailing only industry leaders Cheeba Chews, Kiva, Korova, and Venice Cookie Company, Bhang is an edibles leader. On a national level, Bhang is prevalent in more states than the other market leaders in California.
Consumer Profiles
Bhang customers tend to be married and consume marijuana more frequently than the average patient in California.[2] They generally live in middle-income households, which is a normal characteristic of cartridge consumers but abnormal for leading chocolate brands.[3]
Like most patients who purchase chocolate or cartridge products, Bhang’s customers choose its products because they taste good and offer the ability to consume marijuana discretely.[4] For most leading brands in both of these subcategories, word of mouth advertising and brand loyalty are nearly as important as taste and discretion in driving customers to a brand. Bhang customers are different however, with less than 10% of them saying they chose the brand due to recommendations from friends or because they already trust the company to provide a consistent experience.[5] This suggests that Bhang has been more successful at building brand awareness through widespread product placement in retail outlets and the generation of media coverage.
Figure 3: Average Income of California Medical Marijuana Customers by Brand
Figure 4: Drivers of Bhang Sales
Consumer Satisfaction
Bhang customers give outstanding reviews of the company’s products. 86% of them say they are very satisfied with Bhang products, well over twice the amount of customers who say this about the average brand in California’s medical marijuana market.[6] These industry-leading satisfaction levels appear to be driving brand loyalty as 71% of Bhang customers say they are very likely to purchase Bhang products again. This is also more than twice as high as the average.[7]
Figure 5: Overall Satisfaction Levels across Leading Chocolate Brands
Consumer Preferences
Bhang’s customers like that the brand produces great tasting products in sleek, professionally-designed packaging.[8] However, Bhang’s chocolate products show some weaknesses when customers are asked about the consistency with which these edibles produce the desired effects. The comparisons are particularly revealing when feedback from Bhang chocolate customers is compared to feedback from Kiva, Liquid Gold, and Venice Cookie Company customers. Most people who buy chocolate products from these brands say they are extremely satisfied with the effects they feel after consumption. Customers who buy Bhang products are much more likely to express they are merely “somewhat satisfied.”[9] This is surprising given the company’s extremely high levels of overall satisfaction and may provide the company some guidance on improvements that could be made to power continued growth in the face of increasing competition from other chocolate and cartridge brands.
Brand Portfolio and Competitors
This has been a tough year for Bhang. Distribution and market share have declined since January while a range of competitors have surged in the rankings. Six rivals have already overtaken Bhang’s cartridges in market share, and its chocolates could lose their number 2 ranking next year under current trends. Bhang’s performance was negatively affected by a raid on Med-West, one of their key suppliers in San Diego during January 2016. Furthermore, Bhang lost a lawsuit against investor Mentor Capital, requiring the company to return a $1.5 million investment (plus interest) and denying Bhang’s requests for damages. These complications for Bhang have resulted in declining share for both chocolates and concentrates.
Bhang faces competition in all the subcategories in which it is present. Bhang has done very well in oils and sprays with its sublingual spray offering, but this subcategory represents only a small part of the market and pales in comparison to subcategories such as sugar candy, baked goods, and chocolates. In the larger chocolate and cartridges subcategories, the company has seen its market share decline since early 2016.
Figure 6: Statewide Brand Share by Subcategory (August 2016)
Oils and Sprays
|
Market |
Percent of Dispensaries Carrying the Brand |
Brand Share of Category |
Brand Ranking in Category |
Change in Ranking Since January 2016 |
|
|
Bhang |
8% |
16% |
1 |
No change |
|
|
Care by Design |
5% |
15% |
2 |
No change |
|
|
Tetra Labs Gold Mist |
5% |
9% |
3 |
No change |
|
|
Jambo Superfoods |
1% |
3% |
4 |
+1 |
|
|
Absolute Xtracts |
1% |
2% |
5 |
+16 |
|
Cartridges
Bhang was in 2nd place by market share in the cartridges market at the beginning of 2016, but has been steadily displaced by growth from a range of other brands. In January 2016, a key Bhang producer (Med-West Distribution) was raided by the police and all assets and properties seized. Since the raid, the company’s distribution has suffered and market share has declined. This has allowed Bhang’s competitors to increase their presence in the market.
Over the same time period, California’s cartridges market has become more competitive. In January, Eureka Vapors dominated the subcategory with more than twice the market share of Bhang, but since then Eureka’s market share has stagnated as other brands have posted strong growth (four other brands now exceed 5% market share). This represents significant consolidation since January when no company other than Bhang and Eureka exceeded 3%. These numbers reveal a growing market in which Eureka and Bhang continue to increase their revenue but are seeing competitors emerge.
O.penVape, Kurvana, Delta 9, Jetty Extracts, and Honey Vape are the cartridge companies that have experienced the strongest growth in 2016. O.penVape and Delta 9 have achieved top 5 positions by brand share in cartridge markets in both Los Angeles and the Bay Area. The others rank between 6 and 10 in both markets. All 5 companies have increased their market share in both regions since January 2016. Bhang has seen its market share in cartridges decline in both regions since the beginning of the year. These numbers prove market conditions do allow statewide expansion and Bhang is being outperformed by its competitors.
Figure 7: Statewide Brand Share by Subcategory (August 2016)
Cartridges
|
Company |
Percent of Dispensaries Carrying the Brand |
Brand Share of Category |
Brand Ranking in Category |
Change in Ranking Since January 2016 |
|
Eureka |
15% |
10% |
1 |
No change |
|
Honey Vape |
13% |
7% |
2 |
+3 |
|
O.penVape |
19% |
7% |
3 |
+83 |
|
Kurvana |
12% |
6% |
4 |
+3 |
|
Jetty Extracts |
11% |
5% |
5 |
+3 |
|
Bloom Farms |
12% |
5% |
6 |
+6 |
|
Heavy Hitters |
8% |
3% |
7 |
-4 |
|
Bhang |
10% |
3% |
8 |
-6 |
|
Dank Tank |
5% |
2% |
9 |
+8 |
Chocolates
Bhang’s position is stronger in chocolates, but it is the only one of California’s top 10 chocolate companies that has lost market share since January. This has not led to a drop in the rankings as it did in the cartridges market. This is primarily because Bhang started from a stronger position and there are not as many chocolate brands experiencing growth in market share. In January, the California chocolate market was dominated by Kiva’s 34% market share. This is followed by a second tier composed of Bhang at 14%, Liquid Gold at 6%, and another group of 7 brands with between 1% and 2.5% of the chocolates market. Market share for each of the companies hasn’t changed much, but Liquid Gold has increased to 8% while Bhang has fallen to 13%. Two brands have broken out of the third tier and grown to 4% (Venice Cookie Company) and 3% (Altai). These trends suggest a stronger set of competitors is emerging in the chocolates market.
At the regional level, Bhang faces different types of competition in different parts of the state. Big brands like Liquid Gold, Venice, and Altai are the main threats in the Los Angeles chocolate market. Venice and Altai are also growing quickly in northern California, but the main threat to Bhang in the area comes from regional brands like Day Dreamers and Cali Gold (both of which are nearly as widespread as Bhang in the Bay Area).
The product portfolios offered by leading chocolate companies tend to focus on chocolate bars, smaller bite-sized chocolate products, or a mixture of both. Bhang, Liquid Gold, and Day Dreamers all focus on chocolate bars, while Kiva and Venice Cookie Company offer chocolate bars and smaller truffle-like products. Altai offers smaller products including bon bons, chocolate coins, chocolate-covered cherries, espresso beans, and almonds. It is unlikely Bhang’s product portfolio is the cause of the company’s declining performance in 2016.
Figure 8: Statewide Brand Share by Subcategory (August 2016)
Chocolate
|
Company |
Percent of Dispensaries Carrying the Brand |
Brand Share of Category |
Brand Ranking in Category |
Change in Ranking Since January 2016 |
|
Kiva |
52% |
36% |
1 |
No change |
|
Bhang |
30% |
13% |
2 |
No change |
|
Liquid Gold |
22% |
8% |
3 |
No change |
|
Venice Cookie Company |
19% |
4% |
4 |
+1 |
|
Altai |
9% |
3% |
5 |
-1 |
Company positioning
Bhang has a strong brand, strong distribution, consistent presence in the cannabis industry media, and a strong position in California’s important chocolate market. A huge majority of people who try the brand say they are very likely to do so again.
Competitive advantages
Bhang has a solid set of advantages over its competitors. Likewise, it has a good opportunity to continue its push into the fast-growing cartridges market while holding onto a strong position in chocolate and a number one position in edible oils and sprays.
Threats
The Med-West raid proved to be a major setback for the company in 2016, particularly in the cartridges space. While the company has other producers that allowed for a continued, more limited distribution, this supply chain disturbance created an opportunity for Bhang competitors to gain market share and win over loyal Bhang dispensaries and patients. However, this should not be viewed as a long term setback.
Opportunities
Given the company’s solid foundation and positive consumer feedback, coupled with the still highly fragmented nature of the California cartridges market, the company has the ability to compete for the top ranking in cartridges in the state in 2017.
Unlike some of its competitors (especially Bay Area local brands) Bhang has experience in recreational markets outside of California. This would give the company an advantage during the potential transition to recreational sales in California. Combined with Bhang’s existing distribution network and brand recognition, this would position the company among the top tier of those most likely to take advantage of a post-AUMA recreational market. In fact, Bhang is present in more states than any other leading brand and claims to be the first international cannabis company.
[1] The state’s leading concentrates brand, Moxie, is in 14% of dispensaries and has 1.9% of the concentrates market. The leading edibles brand, Cheeba Chews, is in 55% of dispensaries and commands 7.2% of the edibles market.
[2] When asked how often they consume marijuana, 86% of Bhang customers said they do so 5 or more days per week. Across the market, only 65% of all CA medical patients report medicating this frequently.
71% of Bhang customers reported being married, compared to just 31% of all customers surveyed.
[3] 14% of Bhang customers reported household incomes higher than $75,000 per year, compared to 25% of all customers surveyed. Kiva, the leading chocolate brand in California, draws nearly half of its customers from households making over $75,000 per year.
[4] When asked why they purchased a product, 33% of Bhang customers said, “I liked the taste.” Another 23% said, “It was the most discreet way to consume marijuana.” These are similar to the numbers for average chocolate and cartridge brands.
[5] When asked why they purchased a product, only about 10% of Bhang customers said, “My friends purchase the same product” and another 10% said, “I trust the brand to give me a consistent experience.” For the average brand, 20% of customers say, “I trust the brand to give me a consistent experience” and 18% say, “My friends purchase the same product.”
[6] When asked to rate their level of overall satisfaction with a product, 86% of Bhang customers said, “Very satisfied.” For the average brand, 46% of customers said this.
[7] When asked if they would purchase a product again, 71% of Bhang customers said, “Very likely.” For the average brand, 31% of customers said this.
[8] When asked to rate their level of satisfaction with a product’s taste, nearly all Bhang customers said, “Extremely satisfied,” compared to just 54% of customers for the average brand.
When asked to rate their level of satisfaction with a product’s packaging, Bhang customers almost unanimously said, “Extremely satisfied,” compared to just 37% of customers for the average brand.
[9] When asked to rate their level of satisfaction with a product’s ability to produce the desired effects, most Bhang customers said, “Somewhat satisfied.” Only 37% of customers said this for the average brand, while 49% said, “Extremely satisfied.” For Kiva, 47% said, “Extremely satisfied” and 41% said, “Somewhat satisfied.” For Liquid Gold chocolate products, 52% said, “Extremely satisfied” and 26% said, “Somewhat satisfied.” For Venice Cookie Company, 43% said, “Extremely satisfied” and 47% said, “Somewhat satisfied.”