Portal - Company - Korova
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Company Name: Korova Categories: Edibles, Concentrates Contact Info: |
Geographic Locations: California, Washington List of Brands: Korova Subcategories: Edibles: Baked Goods, Savory Snacks Others: CBD Oil Extracts |
Executive Summary
- Korova is the leading baked goods company in California and the 3rd strongest edibles company
- Korova specializes in high potency products, including its signature 1000mg brownie
- Distribution is strong throughout the state, but somewhat lower in Los Angeles
- Korova consumers tend to be middle income, heavy cannabis users in their 20’s and 30’s
- Consumers look to the brand for a consistent experience with high potency products
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: Korova Performance in Major California Markets (June 2016): Edibles Category
|
Market |
Percent of Dispensaries Carrying the Brand |
Brand Share of Category |
Brand Ranking in Category |
Change in Ranking Since January 2016 |
|
California |
44% |
5% |
3 |
No change |
|
Sacramento |
54% |
7% |
2 |
-1 |
|
Bay Area |
53% |
7% |
2 |
No change |
|
Los Angeles |
46% |
6% |
3 |
No change |
|
Orange County |
55% |
7% |
4 |
-1 |
|
San Diego |
57% |
7% |
3 |
No change |
Geographic Distribution
Korova is among California’s most widespread brands of edible cannabis products. Only 2 other brands in the edibles space, Cheeba Chews and Kiva Confections are present in a greater number of California dispensaries. However, these brands do not compete with Korova for customers because they specialize in different subcategories of the edibles market and appeal to consumers with different consumption habits.
Within the baked goods subcategory (where it competes most heavily) Korova has a distribution advantage over its competitors. The company’s products are in nearly 3 times as many California dispensaries as are products from Trikom Treats and TKO Edibles, the 2nd and 3rd leading brands in the baked goods subcategory.
Consumer Profiles
Korova customers are primarily in their 20s and 30s who consume marijuana very heavily.[1] They are disproportionately Hispanic, mostly college-educated, and have household incomes around the California median of $62,000.[2]
Approximately 66% of Korova customers use cannabis 5 or more days per week, and they do so in large doses. This contrasts with other leading edibles companies, including Kiva Confections, whose customers are just half as likely as Korova’s to consume cannabis 5 or more days per week.
Purchasing Drivers
Korova consumers choose the brand because they are seeking high-potency cannabis products and trust Korova to consistently deliver desired results.[3] With Korova’s marketing materials built around the “unrivalled potency” of its products, it is not surprising nearly 100% of Korova consumers who purchased the company’s Black Bar (with 1000mg of cannabis) said they made their choice based on the product’s high dosage.[4]
These potency levels illustrate the importance in choosing a trustworthy product. This works to Korova’s advantage considering many of their customers are young professionals who are not able to afford bad cannabis experiences. Brand trust plays a larger role in driving customers to Korova than it does for the average product in the marketplace. Korova consumers also said taste is an important consideration in their purchasing decisions, but the results were not considerably higher than other products in the edibles category.[5]
Figure 2: Average Income of California Medical Marijuana Customers by Brand
Figure 3: Drivers of Korova Sales
Consumer Satisfaction
Korova has impressive satisfaction ratings. However, more than 90% of Korova’s customers said they are satisfied with products from other leading edibles brands.[6] The share of Korova’s customers who report being “extremely satisfied” is greater than their competitors with approximately 66% of Korova consumers fall into this category. This compares with only 47% of Venice Cookie Company consumers and 33% of Kiva Confections consumers.
Korova has consumers who are significantly more loyal than average. For the average California medical marijuana brand, 60% of customers said they are likely or very likely to purchase its products again. For Korova customers, this number is significantly higher at 78%.
Figure 4: Overall Satisfaction Levels across Leading Medical Marijuana Brands
Consumer Preferences
Consumers rate Korova’s products highly, especially with regards to taste. Customers are more likely to be extremely satisfied with the taste of Korova products than customers of other brands.[7] Customers also reported higher satisfaction levels than are generally seen in other brands when asked about dosage, effects, quality of ingredients, and package size and labelling.[8] When asked about price, satisfaction rates were somewhat lower, but still higher than the average brand.[9] There is also a demand for high-potency products, with about 28% of Korova customers saying they wish the company’s products came in higher dosages. [10]
Korova customers do not have significant disappointments about the company’s products. When asked what they would change, Korova customers are nearly twice as likely as the average customer to say they wish product pricing was lower.[11] With approximately 50% of the company’s customers saying this, it is the most common complaint about the brand. However, this is a common occurrence observed in the industry. In the absence of strong concerns about a company’s products, customers generally express a desire for lower prices.
Brand Portfolio and Competitors
California’s edibles market has a top tier of 3 companies that have achieved at least 5% market share within the category. These companies, Cheeba Chews, Kiva Confections, and Korova offer specialized products that are not in direct competition with one another. Each has a dominant position in the subcategory in which it specializes (sugary candy for Cheeba Chews, chocolate for Kiva Confections, and baked goods for Korova). Six other companies make up a second tier with 2-3% market share. Only one of these, Trikom Treats, focuses primarily on the baked goods subcategory. Another, Venice Cookie Company, is a diversified company with strong offerings in baked goods. No other edibles company has more than a 1% market share.
Edibles brands in the top tiers experienced stable market share during the first half of 2016 with one notable exception: Trikom Treats surged from a 0.3% market share in the edibles category in January to over 2% of the edibles market, as well as a 10% of the baked goods subcategory by August 2016. Korova remains dominant in baked goods with a 26% market share of the subcategory, but the gap between the brands could diminish quickly if Korova remains stable and Trikom Treats continues to grow at the same rates.
Trikom Treats differs from Korova by concentrating on less potent products (generally lower than 100mg) and less professional packaging. The average price of Trikom Treats’ products is just over half the average price of Korova products (likely due to Trikom Treats’ lower dosages). Unlike Korova, Trikom Treats has been more successful at increasing brand share outside Los Angeles and the Bay Area than it has been inside these two major markets. Despite Trikom Treats’s rapid growth in the baked goods market, the company is not likely to pose a threat to Korova due to low overlap between their customer bases. However, Trikom Treats’s relatively low doses and noteworthy Cannabis Coconut Oil product (used for creating home-made edibles) could give the company an advantage over Korova if the two companies begin to compete for brand share in a legalized recreational market. Korova would likely have to make more extensive changes to its product line to comply with regulations governing a recreational market (primarily those regarding dosage size).
Kaneh is another quickly-growing baked goods brand and is pursuing the same demographic of heavy users as Korova. With professional packaging and baked goods available in a range of sizes and potencies (including 500mg and 1000mg) it is possible Kaneh could reduce Korova’s customer base. However, with the two companies’ products selling at roughly the same prices, there does not appear to be a convincing reason for Korova consumers to switch brands.
Figure 5: Statewide Brand Share by Subcategory (August 2016)
Baked Goods
|
Brand |
Percent of Dispensaries Carrying the Brand |
Brand Share of Category |
Brand Ranking in Category |
Change in Ranking Since January 2016 |
|
Korova |
44% |
26% |
1 |
No change |
|
Trikom Treats |
18% |
10% |
2 |
+2 |
|
TKO Edibles |
16% |
5% |
3 |
-1 |
|
Kaneh |
9% |
4% |
4 |
-1 |
|
Venice Cookie Company |
10% |
2% |
5 |
+5 |
Company positioning / Competitive advantages
The defining feature of Korova products is their high potency. Over 50% of the company’s sales come from products with more than 250mg of THC, including the Black Bar (1,000mg) the Fifty One Bar (500mg) and a range of other products with 250-300mg. The Triple Chocolate Brownie and Chocolate Chip Cookie both have more standard potency levels (150mg) but only represent approximately 30% of the company’s sales. This product portfolio allows the company to attract a core group of relatively affluent customers who consume marijuana heavily and are willing to pay for a consistently high-quality experience.
Threats
Korova has had success using their strategy to build a dominant position in the baked goods market, but brand share appears stagnant and their strategy only offers a limited range of options for further growth. Improving geographic distribution to reach more consumers who fit the company’s existing customer profile, expanding their reach to heavy cannabis consumers in new demographics, or capturing new consumers who live in areas where Korova products are already available are their best options for growth. If Korova does not successfully pursue at least one of these strategies, it will be vulnerable to companies like Kaneh reducing its customer base and market share.
If passed, the Adult Use of Marijuana Act (AUMA) would legalize possession and sale of up to 28.5 grams of marijuana. However, in Colorado, regulations for the recreational market barred the sale of edible products containing over 10mg of THC. If a similar dosage restriction is enacted in a California recreational market, Korova would be at a disadvantage relative to other edibles companies that already produce low dosage products.
Opportunities
Growth opportunities could come if California legalizes recreational marijuana. If California voters choose to adopt AUMA on November 8, 2016, Korova and other cannabis companies would have a significant opportunity for growth. It is unknown which companies would be best positioned to take advantage of this because regulations will not be decided on unless the measure passes.
[1] Over 60% of Korova customers surveyed were in their 20s or 30s, and 67% reported consuming marijuana 5 or more days per week.
[2] 34% of Korova customers reported their ethnicity as Hispanic or Latino, compared to 23% of all CA medical patients surveyed.
44% of Korova customers reported having completed at least a bachelor’s degree, compared to 31% of all CA medical patients surveyed.
28% of Korova customers surveyed reported household incomes between $50,000 and $74,999, compared to 21% of all CA medical patients surveyed.
[3] When asked why they chose a product, 28% of Korova customers said, “The dosage suited my needs/tolerance levels.” For the average brand, 27% of customers said this. Another 39% of Korova customers said, “I trust the brand to give me a consistent experience.” For the average brand, 20% of customers said this.
[4] In Brightfield Group surveys, nearly 100% of customers who purchased Korova’s Black Bar said they did so because, “The dosage suited my needs/tolerance level.”
[5] When asked why they chose a product, 39% of Korova customers said, “I liked the taste.” For the average edible brand, 35% of customers said this.
[6] When asked to rate their level of overall satisfaction with a product, 93% of Korova and 94% of Venice Cookie Company customers expressed satisfaction.
[7] When asked to rate their level of satisfaction with the taste of a product, 80% of Korova customers said they were extremely satisfied. For the average brand, this share is 54%.
[8] When asked to rate their level of satisfaction with a product’s dosage, 67% of Korova customers said they were extremely satisfied. For the average brand, this share is 43%.
When asked to rate their level of satisfaction with a product’s ability to produce desired effects, 67% of Korova customers said they were extremely satisfied. For the average brand, this share is 49%.
When asked to rate their level of satisfaction with the quality of ingredients in a product, 60% of Korova customers said they were extremely satisfied. For the average brand, this share is 46%.
When asked to rate their level of satisfaction with a product’s package size, 53% of Korova customers said they were extremely satisfied. For the average brand, this share is 38%.
When asked to rate their level of satisfaction with a product’s package labelling, 60% of Korova customers said they were extremely satisfied. For the average brand, this share is 37%.
[9] When asked to rate their level of satisfaction with the price of a product, 40% of Korova customers said they were extremely satisfied. For the average brand, this share is 34%.
[10] When asked what they would change about a product, 28% of Korova customers said, “I wish the dosage was higher.” For the average brand, 16% of customers said this.
[11] When asked what they would change about a product, 50% of Korova customers said, “I wish the price was lower.” For the average brand, 36% of customers said this.