Customer Analysis: Understanding cannabis consumer behavior

Introduction

The ultimate goal of Retailer Premium is to help cannabis store owners better understand their business with data. Using Headset data to know what to sell is crucial, but understanding your customers through data is just as important. In this report, we take data from Retailer Premium’s Customer Analysis dashboard to demonstrate what data can reveal about consumer behavior. For example, there are a lot of nuanced differences in generational data. Older generations tend to prefer wellness oriented products, while younger generations more often purchase recreational products. Diving deeper into the data, we can see that Male Baby Boomers are much more interested in Pre-Rolls than Vapor Pens and have the highest overall wallet share for Flower at 43.2%.

With Customer Analysis dashboards, you can also look at demographic data in the context of brands. Since our sales data can be broken down to the brand or even SKU level, we can understand what brands are popular with which people. In Washington State, for example, it seems that Baby Boomers over-index for a very specific set of brands. This type of insight into customer behavior is an example of the practical applications of this data, since a Washington state store owner can use this information to reach an older audience by knowing exactly what category, and even what brands, need to be promoted.

The data in this report includes snapshots from the most recent market data to demonstrate how the Customer Analysis dashboard can be used to understand demographic trends, shopper behavior, and more. There is much more that can be done with Retailer Premium, schedule a demo with us to learn more.

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Executive summary

This report uses Headset’s new Customer Analysis tool, part of Retailer Premium, to provide detailed insights into customer behavior within various regions and sales categories. The Customer Analysis tool examines everything from generational differences in total market share to gender and generational preferences within specific categories, such as Vapor Pens. This report explores brand-level analysis of the California Vapor Pens market in order to demonstrate how sales data can reveal previously obscured trends. While this report is especially useful for cannabis retailers, it also offers new insights for those interested in how different generations and genders are participating in the cannabis industry and how these trends have changed over time.

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Methodology

Data for this report comes from real-time sales reporting by participating cannabis retailers via their point-of-sale systems, which are linked up with Headset’s business analytics software. Sales data is cross-referenced with our catalog of over 500,000 products to provide detailed information on market trends. Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider.

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California cannabis market share by demographic group

In the most recent closed month (August 2020), we see that Millennials were a majority of the market in California. More specifically, Millennial Males contributed to the most sales with 37.5% of the market share. This also implies that 62.5% of the market are not Millennial Males, which can be a lot of market share to consider when planning promotions.

California wallet share by generation

Different generations of cannabis customers spend their cannabis wallet very differently. In general, inhalable products tend to be more popular with younger age groups, while older age groups tend to prefer non-inhalable. Baby Boomers are the exception with the highest wallet share to Flower. Flower has almost always been the largest category by sales volume in recent years. However, the Gen-Z age group’s preference for Vapor Pens may soon outpace Flower as the top selling category in California.

Vapor pen market share by demographic group in California

This graph compares the August 2020 total market share of each demographic group to its corresponding market share within the Vapor Pen category in the same time frame. Indices, in orange, show the relative difference between these two values. If the index is over 100, then that customer group buys relatively more Vapor Pens than the average. If the index is less than 100, that means they buy relatively less Vapor Pens than the average customer. Millennial Males are the largest spending demographic group, but this group also slightly under-indexes in the Vapor Pen category. Millennial Females, conversely, slightly over-index in this category. Interestingly, Females have a higher index towards Vapor Pen share than Males in every age group except for the Silent Generation.

Top vapor pen brands & demographic share in California

This graph looks at the demographic share of the top 5 selling California Vapor Pen brands in August 2020. The most notable difference between these brands is that the Gen Z and Millennial age groups contribute an enormous proportion of sales to the top two brands, STIIIZY and Raw Garden. Because Millennials drive the majority of Vapor Pen sales and Gen Z has the strongest over-index of any age groups to vapes, Vapor Pen brands targeting these groups could potentially see strong sales. While Heavy Hitters and ABX, ranking 3 and 4 respectively, under-index to Gen Z and Millennials, they are still successful brands in the California vape market and have strong over-indexes to both Gen X and Baby Boomers. This shows that even within a category, there are brands that resonate best with different types of customers.

Gender sales share by category in Washington

This graph is an example of how the Insights Demographic dashboards as well as Retailer Premium Customer Analysis dashboards can help to get a better understanding of who an Edible customer is in Washington. We can see that Female customers contribute to the minority of sales to each category, but there are significant variations in the ratio of Male to Female sales across categories. For example, Males over-index to Concentrates and Flower, while Females over-index to Tinctures, Topicals, Pre-Rolls, Edibles, and Capsules. Beverages and Vapes are close to the total market averages, which means that they are equally attractive to both Male and Female groups.

Cannabis market share by gender in Washington

In general, Females contributed to a higher proportion of sales in Washington than in California, with 35.2% in Washington versus 31.5% in California. Females in Washington has a strong over-index to Edibles, which indicates that they are more likely than Male customers to choose a product from this category.

August 2020 Washington Cannabis Market Share by Generation

When looking at how generational groups consume Edibles, we see that Millennials are the highest contributing customers in the market, totaling 49.2% of all cannabis sales in August 2020. Older generations were also a bigger part of the Washington market than the California market, with 14.2% of August sales in Washington going to Baby Boomers and the Silent Generation versus 11.9% of sales in California. While Millennials and Zoomers contribute to almost 50% of all Edible sales, they also under index for Edibles, meaning that any individual customer in these generational groups will be less likely to choose an Edible.

August 2020 Washington Edible Brand Category Share: Total Market vs Baby Boomers

This graph shows the top 10 Edible brands in Washington in August 2020. The dark purple bars show their market shares within the edible category while the light purple bars show their wallet shares among Baby Boomers and Edible purchases. The index shows the relative difference between these two values. This type of analysis is available in Retailer Premium and can help a dispensary understand which brands, within a given category, are appealing most with a certain subset of their customers. In this case, we see that if an average Washington retailer wanted to drive more Baby Boomers to their store, promoting Edibles might be a good decision since Baby Boomers disproportionately contribute more wallet share to the Edibles category. However, promoting certain Edible brands over others may make a significant difference since certain Edible brands attract relatively more revenues from Baby Boomers than other groups.

Conclusion

While there were many broad trends in the Vapor Pen and Edible categories in Washington and California, this report showed that there is significant variation and nuance when exploring consumer data more specifically. The data in Retailer Premium’s Customer Analysis dashboard can help you keep track of these trends as they occur so that you can make better educated decisions about promotions.

About Headset

Headset is a consumer data analytics platform that provides market intelligence for the cannabis industry. Our extensive Market Reports deep-dive into specific categories and aspects of the industry to help businesses better monitor the market and perform exhaustive category analysis. Reports are generated via aggregate, real-time transaction data to get a unique and thorough analysis of what’s happening in the cannabis industry as the data becomes available. Headset offers three distinct products that help retailers, dispensaries, brands, product manufacturers, distributors, and investors move ahead in the industry