Portal - Company - Caviar Gold
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Company Name: Caviar Gold Categories: Other, Flower, Edibles, Concentrates Contact Info: |
Geographic Locations: California, Arizona, Colorado, Michigan, New Mexico, Oregon, Washington List of Brands and Subcategories: Cavi Cone Others: Pre-Roll Caviar Gold Flower Caviar Silver Flower Cavi Taffy Edibles: Sugar Candy Amber Fire Concentrates: Hash Oil Syringe |
Executive Summary
- Caviar Gold offers a diversified set of products. Their Cavi Cone pre-rolled joints are by far the company’s most popular offering, ranking 2nd in popularity amongst California pre-rolls
- The company’s flower and pre-rolls are infused with hash, making them extremely potent
- Caviar Gold is distributed throughout California but is particularly prevalent in Los Angeles
- Market share has been constant in 2016, but distribution has grown, particularly in the Bay Area
- Performance has been negatively impacted by promoters hacking their accounts and distributing low quality products under their brand name
- Caviar Gold is particularly popular amongst low income consumers and receives extremely high 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: Caviar Gold Performance in Major California Markets (August 2016): Others Category – Cavi Cones Pre-Rolled Joints
|
Market |
Percent of Dispensaries Carrying the Brand |
Brand Share of Category |
Brand Ranking in Category |
Change in Ranking Since January 2016 |
|
California |
26% |
2% |
2 |
+2 |
|
Sacramento |
13% |
1% |
11 |
-6 |
|
Bay Area |
17% |
1% |
16 |
-9 |
|
Los Angeles |
30% |
3% |
2 |
+1 |
|
Orange County |
20% |
1% |
11 |
No change |
|
San Diego |
31% |
2% |
2 |
-1 |
Geographic Distribution
Caviar Gold is California’s most widespread medical marijuana brand outside of the edibles market. It is the dominant company in pre-rolled joints with its closest rival in just half as many California dispensaries (and garnering less than a third of Caviar Gold’s market share). The company’s other products, including Cavi Taffy candies, Caviar Gold branded flowers, and Amber Fire hash oil concentrate have a much more limited distribution. Almost all the dispensaries that stock Caviar Gold products have Cavi Cones on their shelves, but only about 25% of these also stock one of the company’s other products on their shelves. This positions them in approximately 6% of dispensaries statewide, which is a relatively strong distribution for flower products, but very limited for sugar candies.[i] Amber Fire, with less than half the exposure of Caviar Gold’s edible and branded flower products, has even more limited distribution. These numbers, which are accompanied by very small market shares in their respective subcategories, demonstrate the degree to which the company relies on Cavi Cones.
At the regional level, Cavi Cones are the most prevalent in LA and have shown impressive growth in the Bay Area this year as well. They are in 30% of LA dispensaries, giving the brand undisputed leadership with 3 times the exposure of its closest rival in the state. In the Bay Area, competition is much tighter where Cavi Cone distribution grew by over 50% from January to August, but their closest rival grew even faster. Today, Cavi Cones are in 17% of Bay Area dispensaries and Top Shelf Extracts pre-rolls are in 15%. The companies have equal market share in the region.
Consumer Profiles
Caviar Gold customers tend to be males in their 30s and 40s who consume marijuana every day.[ii] About 46% of patients across California consume medical cannabis on a daily basis, compared to over 70% of Caviar Gold customers. The company’s customers also tend to have completed high school and attended 2 or 4 year colleges, though they did not necessarily graduate.[iii]
Caviar Gold customers also tend to have lower incomes than other patients with 22% having household incomes of less than $20,000, making them twice as likely as the average patient to be on the lowest end of the income scale. However, their employment rates are the same as patients across all brands.[iv]
The profile of Caviar Gold customers makes it an outlier among leading medical marijuana brands. Most brands tend to sell edibles which focus on more affluent, educated patients who prioritize discretion when making purchasing decisions. Caviar Gold customers represent a very different segment of the market. They tend to be more accustomed to smoking frequently and are less likely than the average customer to care about choosing a product that can be consumed discretely.
Figure 2: Average Income of California Medical Marijuana Customers by Brand
Purchasing Drivers
Caviar Gold customers choose the brand because they like its flavor, it offers an appropriate dosage, and they trust the company to provide a consistent experience. Flavor and dosage play key roles in driving consumers to brands across the market and Caviar Gold customers care about them almost exactly as much as the average customer of any other brand. However, customers are just as likely to say they choose the brand because they trust it as they are to say they choose it for flavor or dosage. Because of this they are outliers as accumulated trust in the brand plays a greater role in driving business to Caviar Gold than it does for the average brand.[v]
This is surprising considering a knock-off brand that distributed look-alike products filled with poor-quality cannabis caused enormous problems for the company in 2014 and 2015. Caviar Gold claims the problem originated when two promoters hacked its social media accounts and applied to license the brand in Washington (when that state legalized adult recreational use in 2014). In July 2016 founders used their personal social media accounts and the “originalcaviargold” Instagram account to distribute photos of documents appearing to show the lawsuit had been resolved in their favor, entitling the legitimate owners of Caviar Gold to $5 million in damages. In the absence of such problems, it is possible loyalty to the brand could grow.
Figure 3: Drivers of Caviar Gold Sales
Consumer Satisfaction
Caviar Gold receives positive customer satisfaction reviews. 63% of those who bought its products said they are extremely satisfied and this is higher than all but one other brand in the state’s medical marijuana sector. When compared to California’s most prominent brands, including industry heavy-weights like Kiva, Bhang, and Liquid Gold, only Korova’s baked goods have a higher satisfaction rate than Caviar Gold.[vi]
These high satisfaction levels appear to be translating into brand loyalty. A higher-than-average share of Caviar Gold customers said they are very likely to purchase the company’s products again. 40% of its consumers said this compared to just 30% for the average brand across the market.
There is a minority of customers who said they are extremely dissatisfied with Caviar Gold. Over 5% of respondents said this, compared to less than 2% for the average brand. This could be due to the continuing presence of cheap knock-off products at retail outlets, in which case the share of customers who expressed dissatisfaction should decrease to more standard levels.
Figure 4: Overall Satisfaction Levels across Leading Medical Marijuana Brands
Consumer Preferences
For every product characteristic surveyed, Caviar Gold customers are more satisfied than average. This is especially true for quality of ingredients, taste, and ability to produce the desired effects. More than 60% of customers surveyed in all of these areas said they were extremely satisfied, and most of the remaining customers surveyed said they were merely satisfied.[vii]
These strong reviews appear to be driving brand loyalty, with customers most likely to say taste and effectiveness (two of the highest-scoring characteristics of the brand’s products) are the reasons they buy Caviar Gold products.[viii]
When asked what they would change about the product, approximately half of the surveyed Caviar Gold customers said they wish the price was lower.[ix] Given the relatively low incomes of some Caviar Gold customers, their pricing structure might be problematic.
Figure 5: Statewide Brand Share by Subcategory (August 2016): Pre-Rolled Joints (Cavi Cones)
|
Brand |
Percent of Dispensaries Carrying the Brand |
Brand Share of Category |
Brand Ranking in Category |
Change in Ranking Since January 2016 |
|
Caviar Gold |
26% |
6% |
1 |
No change |
|
G Stiks |
13% |
2% |
2 |
+2 |
|
Presidential Rx |
6% |
2% |
3 |
No change |
|
Top Shelf Extracts |
12% |
2% |
4 |
-2 |
|
Tarantula |
5% |
1% |
5 |
No change |
Brand Portfolio and Competitors
Caviar Gold is facing the emergence of two competitors. They are very different companies, neither of which approach Caviar Gold’s market share statewide, but both are gaining in market share. One, G FarmaLabs (GFL) is a diversified company making a strong push to join the leading ranks of cannabis companies nationwide. The other, Top Shelf Extracts, is a smaller brand based in Denver that focuses on concentrates.
G Stiks (a GFL product) is the second-ranked pre-roll brand statewide but is nearly absent from the Bay Area. The rapid growth G Stiks has experienced in LA this year has come alongside strong performance from the company’s Liquid Gold line of chocolate products. Additionally, a growing in-house media operation (including a comprehensive daily newsletter dedicated to industry news from around the country) existing in-house grow operations, and plans for a large grow operation in Desert Hot Springs add to their growth. Caviar Gold is a familiar name among those in the marijuana subculture, but GFL is quickly becoming a more prominent brand able to appeal to a wider range of new customers. The threat from G Stiks is most prominent in LA, where the brand has nearly doubled its distribution reach from 7% of LA dispensaries in January of 2016 to 12% in August of 2016. Caviar Gold has seen flat distribution numbers over the same time period, but is still in 30% of LA dispensaries.
Top Shelf Extracts is a Denver based company that also offers shatters and waxes (in addition to pre-rolls). The company chose to enter California through the Bay Area, but its concentrates have not achieved much prominence. Top Shelf pre-rolls, in contrast, have taken advantage of the smaller set of competitors in this space and have achieved one of the top rankings in the Bay Area market.
Company positioning
Part of the reason for stagnant market share in 2016 may lie in the legal problems Caviar Gold faced in 2014 and 2015.Two promoters allegedly hacked into the company’s social media accounts, took control of their online presence, attempted to license the brand in Washington, and began to produce look-alike products filled with low-quality cannabis. A lawsuit was settled in favor of the original company’s founders earlier this year. As this problem is resolved and the brand’s image recovers, stronger growth may be expected but fundamental issues with the company’s portfolio and industry strategy remain.
Threats
Growth opportunities are not as promising for Caviar Gold as they are for other leading brands. This is largely due to the company’s roots in pre-rolled joints, which is very different from many of the companies that have emerged as market leaders. Designed as a way for groups to smoke large amounts of marijuana together, the brand’s marketing materials (most evident through its social media accounts) still focuses primarily on partying and group gatherings. This makes it difficult for the company to take advantage of a range of trends other marijuana companies have used to power growth. As the market moves away from smoking toward edibles, concentrates, and wellness offerings for health-conscious consumers, Caviar Gold could face a declining market share.
Branded flowers, Cavi Taffy edibles, and Amber Fire concentrates represent attempts to expand beyond pre-rolls into other product lines. Branded Caviar Gold flowers have been relatively successful, but the company’s other products have only achieved modest market share. Making an investment to improve them could be a risky proposition considering the competitiveness of the market. It is unlikely Caviar Gold has the resources necessary to significantly increase the market share of any these product lines.
Pre-rolls are limited to a smaller share of the market than sugar candy or concentrates, but Cavi Cones’ existing strengths afford the company a significant competitive advantage in the space. Unfortunately, a strategy focused on pre-rolls virtually guarantees Caviar Gold will not reach the same scale as leading brands that compete in larger, faster-growing market sectors like chocolates and concentrates. This suggests the company may be most valuable as an acquisition target for a larger company looking to capitalize on Caviar Gold’s reputation and statewide distribution networks. Many leading companies have established more professional brands that focus on the desired aspects of their products (like medicating properties and association with a healthy lifestyle). This could hurt Caviar Gold’s acquisition potential because other companies might believe association with Caviar Gold’s more party-focused brand could hurt their public image.[x]
Opportunities
Approval of the Adult Use of Marijuana Act (AUMA) by California voters this fall would have uncertain ramifications for Caviar Gold. Demand for pre-rolled joints is evident in recreational markets, so the company may have opportunities for a greater volume of sales in a post-AUMA recreational market. Branded flowers could also prove reassuring for new recreational customers drawn to the legal market in search of reliable quality. This suggests increased sales are likely, but it is possible Caviar Gold could actually see a decline in prominence if other companies, especially diversified operations that have already proven their ability to develop successful products across various subcategories, grow even[i] Leading sugar candy brands are in over 50% of California dispensaries. The flower market is much more fragmented.
[ii] At least 50% of Caviar Gold customers are in their 30s or 40s, compared to around 20% of all CA medical patients surveyed.
When asked how frequently they consume cannabis, 71% of Caviar Gold customers said, “Every day.” Just 47% of all CA medical patient surveyed said this.
[iii] When asked about the highest level of education they have received, 26% of Caviar Gold customers said they had finished high school, 33% said they had finished some 2-year college, and 9% said they had completed an associate’s or vocational degree. For the average brand, 26% of customers said they had finished high school, 25% said they had finished some 2-year college, and 12% said they had completed an associate’s or vocational degree.
[iv] 22% of Caviar Gold customers reported household income of less than $20,000. For the average brand, this share is 10%.
[v] When asked why they chose a marijuana brand, 34% of Caviar Gold customers said, “I liked the taste.” 35% of customers said this about the average brand. Another 29% of Caviar Gold customers said, “The dosage suited my needs/tolerance.” 27% of customers said this about the average brand. Another 29% of Caviar Gold customers said, “I trust the brand to give me a consistent experience.” 20% of customers said this about the average brand.
[vi] When asked to rate their overall level of satisfaction with a product, 63% of Caviar Gold customers said, “Extremely satisfied.” For the average brand, 46% said this. The share is 67% for Korova customers.
[vii] When asked to rate their level of satisfaction with the quality of ingredients in a product, 64% of Caviar Gold customers said, “Extremely satisfied.” For the average brand, 46% said this.
When asked to rate their level of satisfaction with the taste of a product, 64% of Caviar Gold customers said, “Extremely satisfied.” For the average brand, 54% said this.
When asked to rate their level of satisfaction with a product’s ability to produce desired effects, 60% of Caviar Gold customers said, “Extremely satisfied.” For the average brand, 49% said this.
[viii] When asked why they chose a marijuana brand, 34% of Caviar Gold customers said, “I liked the taste.” Another 29% of Caviar Gold customers said, “I trust the brand to give me a consistent experience.”
[ix] When asked what they would change about a product, 50% of Caviar Gold customers said, “I wish the price was lower.” For the average brand, 36% of customers said this.
[x] See https://www.instagram.com/caviar_bishop/ - this is the company founder’s Instagram account, but it became a de facto marketing channel during the legal dispute precipitated when two former promoters allegedly hacked into the brand’s official social media accounts and began using them to promote knock-off products.