Applying robust panel data for insights into emerging consumer goods markets

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Transcript of recording with Alexandra Curley – generated automatically by HappyScribe which means it will be about 80% accurate – if you spot confusing errors, please email ray@new-mr.com. The timestamps are included to help you jump directly to a point of interest.

[00:00:06.660] – Alexandra Curley

Hello, I’m Alexandra Curley, and I’m a senior consultant at High-Yield Insights High is a strategic research consultancy with a presence in the US and Europe. We help consumer brands seeking advanced, data driven insights about the kind of market my background and market research began in 2004 with experience coming to you. I want to share Intel. I can providing research and insights in the global legal cannabis industry since 2013. Today, I’m going to talk to you about how we can apply robust panel data for insights into emerging consumer goods markets.

[00:00:39.750] – Alexandra Curley

And I’ll be drilling down into a couple of case studies from the legal cannabis industry. I will research that out to define and measure CBD users and prospective users. We wanted to identify the key drivers for adoption. We also wanted to identify mass market opportunities for CPG firms to integrate CBD products and innovate against this category. But we were also looking to understand the unique dimensions of a very fragmented cannabis market, including insights on the CBD usage and attitudes across states with adults use medical and limited cannabis programmes.

[00:01:16.280] – Alexandra Curley

Lastly, we ran our survey to over thirty five thousand adults in the US because we wanted to understand the impact of covid-19 on the consumer, the CBD consumer, so that we could provide recommendations on how pandemic response can help to acquire new customers focussed on health and wellness. The sample size allows for spotting and analysing niche opportunities such as CBD for exercise recovery, existing CBD buyers can inform innovation and brand positioning, and emerging brands and entrants can tap into unmet consumer needs and identify pockets for rapid growth.

[00:01:54.010] – Alexandra Curley

With over ten thousand respondents expressing an interest in trying CBD, that subset of data enables a detailed analysis of tomorrow’s adopted CBD products. Our research is very much focussed on needs, based and psychographics, and the resulting learnings can apply to any market and legal access to credit. The findings challenge common perceptions of what seemed to be well understood trends such as CBD for sleep. Although there are cultural differences in how people are able to meet the universal needs, whether that’s access to the Internet, range of shops, the impact of the weather on their lifestyles, a robust data sample enables us to view that data through multiple lenses.

[00:02:33.560] – Alexandra Curley

It’s an understatement to say the pandemic has created something of a shake up in our lives. And all too often we make assumptions of human behaviour without seeing the subtle but significant shift, creating a wedge between our perceptions and the on the ground realities. Therefore, having solid data that can be interrogated in a number of different ways will become more critical than ever before in spotting emerging opportunities. And this presentation today, we’re going to take a look at a couple of these universal human needs, sleep and health to understand how, particularly against the backdrop of a pandemic, people’s behaviours, aspirations and therefore product requirements are changing.

[00:03:13.100] – Alexandra Curley

Not only this, though, the way that people shop is changing and stepping aside from the obvious, spending less time and store doing more online. This is got a trickle down effect on how they select products for purchase. And as you’ll see later in this presentation, there’s a growing reliance on ask the audience with consumer reviews replacing in-store advice on impulse purchases. With our large sample size, we’ve been able to drill down into the established consumer segments within the CBD, such as the use of CBD for pain relief, for stress and anxiety, sleep issues all the way through to looking at those that are starting to emerge, driven by consumer behaviours such as substitution for prescription medications and then looking at things that are really unique.

[00:03:56.690] – Alexandra Curley

And I’ll give a little case study later on in this presentation about the use of CBD with an exercise recovery. People sleep has been disrupted by the pandemic. This is a universal fact borne out by respectable research and not only the US and Canada, but also within the UK, Asia and across Europe with limited initial availability. Just getting hold of legal CBD was in itself a novelty. But those days are now gone and the market landscape is evolving rapidly to better meet consumer needs and expectations.

[00:04:28.030] – Alexandra Curley

Consumers are beginning to demand more in the way of standards, quality and assurances, and their reasons for being in the market are increasingly diverse. Brand development and niche usage needs quality. Brands continue to tailor and tailor their products to ever more specific needs. And with the global market split between recreational, medical and wellness uses, CBD is now a very broad church with very different consumers. Homogenous cattle products haven’t got any place in the developed CBD market, and understanding who is using CBD and for what purpose is at the heart of cultivating the right community around the brand.

[00:05:06.700] – Alexandra Curley

Our research identifies a plethora of needs, and in our research into the use of CBD for sleep issues, we take a closer look at the prevalence of sleep issues and how this need differentiates these consumers from the rest of the CBD user base. Sleep is a struggle for large bodies of the population, and with the world in the grip of pandemic preceded by significant political instability and now facing a future of economic and environmental uncertainty, it isn’t surprising. The world over sleep has been compromised.

[00:05:37.090] – Alexandra Curley

Our services enables us to drill down to a of over fifteen hundred adults in the US who use CBD to manage the sleep issues. This has yielded some deep insights that we’re able to substantiate or disprove our current assumptions about who is buying CBD to help them sleep just over four in 10 CBD users by CBD to manage insomnia or sleeplessness, putting this in the top four conditions for which US consumers are using CBD with people across the world also seeing the state negatively impacted by the pandemic, it would be a surprise if they weren’t also on the lookout for some in-home natural remedies that help them catch a few more Z’s.

[00:06:17.530] – Alexandra Curley

It’s a fact that the connexion between sleep and stress are intertwined, and there’s also a very strong correlation between those who are experiencing acute levels of stress and anxiety and those who say that sleep has been affected. Women dominate the use of CBT supplements to treat sleep disorders. This is likely to be a reflection of the fact that women are more likely to suffer from insomnia owing to hormonal changes. And various studies have also suggested that women are more likely to suffer from stress and anxiety than men, which is also another common trigger for bouts of insomnia.

[00:06:50.170] – Alexandra Curley

But our research isn’t just about seeing who’s in the market. It’s also about understanding who isn’t. As we age are, sleep, quality deteriorates and in addition, we’re more likely to develop medical conditions that can disrupt sleep. We might expect that this would drive CBD usage and seniors and boomers. But instead our research highlights significant scope for broadening the user base to meet this need. This will, of course, include tackling the stigma attached to the cannabis health usage prevails amongst some older generations.

[00:07:22.810] – Alexandra Curley

CBD use as a sleep aid is currently dominated by adults from younger life stages, social anxiety, digital lifestyles and sleeping with their phones next to them is all driving these disrupted sleep patterns amongst a younger consumer base. Branding sleep AIDS to align with products seen in the broader health and wellness market could therefore be a bit of a misnomer. And it requires a younger feel to speak to the existing user base, but something more conservative and clinical to bring in the apps and elders.

[00:07:53.710] – Alexandra Curley

The CPG industry has been dominated by advertising and in mature markets is probably a few mainstream products that people haven’t heard or tried. Advertising has been the key to offer brand differentiation in marketplaces dominated by the big brands. But in an emerging market that is not only establishing a footing with the consumer but is also trying to emerge from its black market roots, traditional media has been less effective. We’ve assumed that CBD as an industry will simply follow in the footsteps of other CPG brands.

[00:08:23.660] – Alexandra Curley

But in fact, we’re seeing that the market is leapfrogging the path taken by CPG companies to present day, and it’s far more digital from the outset. In fact, one key finding for those brands preparing to launch their latest advertising campaign is that CBD duties aren’t influenced by the most traditional forms of advertising. Instead, they prefer to do their own research online, although it could be argued that the lack of traditional advertising has forced this behaviour upon them, it’s also shaped their path to purchase journeys.

[00:08:53.740] – Alexandra Curley

They want to know that a product really works before they buy it, and word of mouth is highly important. With crowdsourced consumer reviews making the difference between a sale and a side glance. However, a strong brand website is also more important than it might be for selecting what cereal they want to try next. Creating this clear pathway of education that leads to the brand website will be crucial in aid in the CBD, teachers and their investigation to find a solution and the perfect brand for them.

[00:09:21.550] – Alexandra Curley

Our research shows that product substitution rates are high, most notably for prescription products 40 percent of those who use prescription sleep aids saying that they’ve cut back as a result of using CBD. It’s a massive indictment of the positive effects of CBD on sleep issues. But taking this one step further, it’s got significant implications given that sleeping pills are one of the most commonly used medications in US. OTC sleeping aids in the US were worth four hundred two million dollars in twenty nineteen, and in Canada, an average of one in 10 people over the age of sixty five regularly use sleeping pills.

[00:09:57.970] – Alexandra Curley

In fact, the size of the European sleep AIDS market was worth an estimated 14 billion dollars in 2020. The market is predicted to show significant potential in the coming years, and this is set to create even more opportunities for brands looking to cash in on growing demand for natural sleep aids. The prevalence of a lack of sleep in current times creates new consumer interest in products that help them achieve the holy grail of seven to nine hours a night with rapid market growth.

[00:10:25.760] – Alexandra Curley

We know that CBT is gaining traction in the plant based wellness market, and we’ve predicted that it will have a notable impact on sales of more traditional remedies. However, we’ve now got the consumer data to show that this is already happening. It might be self reported, but the Internet is awash with testimonials of patients revelling in their reduction will complete halt to the use of pharmaceutical medications as a result of using CBD. Sleep is a key market opportunity, and it will see consumers approaching the issue across a variety of formats.

[00:10:58.070] – Alexandra Curley

This also brings the market into direct competition, not only from the prescription and OTC market, but also from global brands such as PepsiCo, which are looking into health and wellness concepts with and without CBD to target this need. State CBD is a young market and it lacks the level of brand tailoring available in more mainstream ethnic markets. How are the changes coming? And operators need to stay abreast of the CBD consumer and their differing needs. Referring back to Maslow’s hierarchy of human needs, health is seen as a safety need, but increasingly it’s becoming a physiological one as well.

[00:11:35.060] – Alexandra Curley

Governments all around the world are encouraging people to get outside, exercise, take a walk to help boost mental health as well as their physical well-being. And this is creating new opportunities for products and funds that will help to minimise injury, speed up the recovery process in terms of reducing inflammation or easing post workout aches and pains and improving muscle repair. Broader exercise trends show an increase in the market, and health and fitness industry still generates big bucks. Deloitte estimates that Europe’s health and fitness industry was worth some twenty seven billion euro in 2018, and globally, health and fitness clubs were estimated to reach estimated to reach almost 100 billion by 2020.

[00:12:17.390] – Alexandra Curley

For as a market matures, so too does the sophistication of its product offering. And we are currently observing a greater concentration of products in the post-war recovery sector. In time, we’d expect to see a more holistic approach from the CBD market with regards to pre during and post segmentation of products such as a shop to boost performance, CBD water to hydrate during the workout, and possibly replenishing snack bar to boost post workout recovery. Growing awareness of the health implications of obesity have definitely put a focus on health and wellness.

[00:12:52.730] – Alexandra Curley

But exercise and sport forming a central role in maintaining health in the US has been a rising presence of sports professionals such as Klay Thompson, Alex Morgan, Travis Pastrana and Paul Rodriguez launching their own cordylines Canadian rugby team. The Toronto Wolfpack was the first to launch a CVT product branded by a professional sports team closer to home in the UK and Ireland. We’ve seen a number of sports people from the worlds of football, rugby and M&A using, endorsing or launching CBC products.

[00:13:24.110] – Alexandra Curley

This is all helping to cement the role of CBD in workout routine, and the launches and topical drugs, for example, are helping to show its use in the role of physical recovery following exercise. It is estimated, however, that just over 50 million people in the U.S. and Canada get the recommended daily amount of exercise. However, just two percent use CBD in their workout routine. This represents an enormous opportunity for segment growth. So let’s take a quick look at what we’ve learnt from those who are already incorporating CBD into the exercise routines.

[00:13:59.420] – Alexandra Curley

According to the US Census Bureau, in twenty nineteen, almost one in five Americans aged 15 plus engaged in sports and exercise every single day. It’s rising faster amongst women, but a higher proportion of men incorporate a daily physical activity into their lifestyles with higher engagement. It follows, then, that men are more likely to use products that boost their sporting performance and recovery. It’s also dominated by younger cohorts having grown up in a social media environment. Public image is more important to the younger cohorts who like to share videos and pictures of their workouts.

[00:14:34.040] – Alexandra Curley

They’re also more likely to post about products they use to help them achieve the health and fitness goals as an emerging market. CVT products are still typically more expensive than other CPG products available, and therefore higher income households are more likely to experiment with these lifestyle products. They dominate uses of CBD for exercise recovery. It’s a fact that the standards of the CVT industry are sadly not on par with the established consumer goods markets, but the legal cannabis industry is straddling the line between the dedicated long term users and the newbies, who are perhaps looking for more reassurances from the well-known brands.

[00:15:11.750] – Alexandra Curley

There is a consumer perception that big brands will legitimise the market, but also that they’re going to make this to corporate. This is telling us that consumers want the reassurances from the big brands, but they’re not yet ready for this to become just like any other market. When you think of the people who use consumer goods to aid their exercise, you might first think the products they use in waters, juices, protein shakes or perhaps energy. But our research is showing that this market is much further behind in the consumer product relationship, the use of CBD for exercise.

[00:15:46.790] – Alexandra Curley

Recovery is dominated by males and data showing they tend to be more daring and more likely to try new products within the cannabis industry. They’re also more likely to be the early adopters. And as a result, product repertoire is high, with 50 percent of the CBD for exercise or recovery uses being current users of products across four or more market categories. Interestingly, they are less likely to consume CBD in the drink format, with sports drinks being consumed by fewer than four in 10.

[00:16:17.610] – Alexandra Curley

However, once the gyms re-open, this could become a good opportunity to put CVT sports drinks in front of the target audience who are keen to try and the consumer who uses CBD for exercise. Recovery is different to the general consumer. They’ve got higher expectations of products and brands, and they place a high priority on healthfulness. They’re keen readers of labels, and it’s likely that CBD on its own will not be enough to entice sales. Blending with other functional ingredients could help to steal Shatov, an already established market, given the higher than average propensity of consumers to also use dietary supplements and products with enhanced ingredients such as protein.

[00:16:56.130] – Alexandra Curley

Although there is a belief that specialist brands know more about the market, the CBD for exercise recovery, Yusa welcomes the presence of bigger brands and I hope they’re going to improve those standards. In the short term. We expect to see M&A within the sector with larger brands purchasing the most reputable names to learn the standards of those big brands to the specialist knowledge of the indie operations. For the moment, this market is dominated by male users. But as more women take up exercise, we see a point in the future where brands and packaging take on a much more gendered spirit.

[00:17:29.310] – Alexandra Curley

For now, the market looks different to how we think it might post pandemic, where opportunities for retail of sports recovery products will increase significantly. Current opportunities for product use, such as in gyms, fitness classes are all curbed. This presents challenges the market and it is shaping consumer behaviours. Our research was conducted six months into the pandemic and it will be important to track consumer behaviours in the coming years to understand which habits formed during the pandemic are here to stay and which will return to their old ways.

[00:18:02.110] – Alexandra Curley

The research in the CBD market is currently dominated by adhoc surveys of customer lists, but it tends to offer skewed take of consumer insights. Broader research that explores the consumer and context is absolutely critical to getting a true picture of the CBD consumer and ensuring that researchers don’t just look for data to support their assumptions, but rather seek out objective data that will help the industry to grow in a much more organic fashion. This is a market that is currently driven by manufacturers.

[00:18:32.320] – Alexandra Curley

They are incorporating ingredients that allows them to make the product benefit claims to help drive understanding and demand sleep, pain relief and antianxiety a key cases in point. But as consumer usage starts to evolve, we’ll see more segments forming. But these these are more consumer led rather than manufacturing that take substitutions of OTC and prescription medicines or alcohol drinks, for example, the manufacturers hands are tied on what claims it can make, and this will limit innovation in many segments.

[00:19:03.580] – Alexandra Curley

However, with online reviews and word of mouth things such a pivotal role in this industry, we can expect to see those niches open up further. But this time is being propelled by consumers. Thank you for listening. If you have any questions or you wish to get in touch, please don’t hesitate to let me know.