Focus on Foodservice Reaps Big Rewards

GET PREPARED FOR THE POSSIBILITY OF SELLING CANNABIS

Growing the CBD category now can put c-stores in prime position to capture cannabis sales if the product becomes legal.

Don Burke • MSA

The eventual possibility of selling cannabis

is highly appealing to many convenience store retailers. With typical declines in tobacco sales, more fuel-effi cient and electric cars impacting fuel volume, and the pandemic impacting foot traffi c, this opportunity cannot come fast enough.

Currently, the sale of cannabis is fully legal in 17 states and Washington, D.C., and in another 32 states has been decriminalized, meaning there is no possibility of arrest for possessing a small amount of cannabis. Even better, the number of states that are loosening their cannabis laws keeps growing. But none of this matters as convenience retailers will not be able to sell cannabis until it becomes legal at the federal level.

There are encouraging signs that the current administration is interested in making this happen, but it’s unlikely to happen soon. So what is the convenience retailer to do?

START WITH CBD

One opportunity is to position your outlet as a destination for currently legal cannabidiol (CBD) products produced from hemp.

Management Science Associates’ (MSA) research has shown that the cannabis consumer is very similar in profi le to the CBD consumer, so building a presence among this target group now with CBD will likely yield stronger cannabis sales when the time comes.

Notably, the CBD/cannabis consumer is also very similar to the typical convenience store shopper — younger, male, and either in a blue-collar occupation or a student, making

the task of appealing to this audience all that much easier.

It’s also interesting that the top reasons for using cannabis are very similar to the top reasons for using CBD — mostly for the release of pain, to help with stress and anxiety, and for relaxation.

Developing your location as a destination for CBD will keep this consumer coming back when cannabis is available for the very reasons they will be shopping your store today.

If you are wondering what type of CBD items to stock that may also appeal to the cannabis purchaser, note the graphic showing the preferred methods of consuming cannabis on the next page.

Why Use Cannabis? (SLIDE 1) Why Use Cannabis?

© 2020 Management Science Associates, Inc. All rights reserved.Source: 2020 Management Science Associates Inc. Source: Survey data from surveys conducted in 2019-2020

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Cannabis Usage Forms (SLIDE 2) cannabis usage forms

§ Smoking cannabis is the most popular form of usage, followed by Edibles and CBD.

Source: 2020 Management Science Associates Inc.

© 2020 Management Science Associates, Inc. All rights reserved. 2

Source: Survey data from surveys conducted in 2019-2020

The good news here is that many of these product forms are also some of the more popular forms of CBD. Smoking cannabis is the preferred method of consumption (fl ower/bud and pre-roll), and one of the faster-growing CBD items in the convenience channel today is the rolled CBD cigarette. The top-selling CBD convenience

item is the gummy, and this product form is also one of the top product types in the cannabis edible category. Further support for building your CBD business today, in preparation for the legalization of cannabis, is that in those states where cannabis is fully legal, CBD usage levels are also stronger. The stronger usage levels of both cannabis and CBD in CBD & Cannabis Usage by State Cannabis Legality (SLIDE 3) cBD & Cannabis usage by state cannabis legality states where cannabis is fully legal suggests convenience • CBD and Cannabis usage are highest in fully legal cannabis states. retailers that build a strong CBD business today will not only fi nd that their CBD business expands, but that they already have the right consumer audience for signifi cant cannabis sales when it does become legal at the federal level.

© 2020 Management Science Associates, Inc. All rights reserved. Source: Survey data from surveys conducted in 2019Source: 2020 Management Science Associates Inc. -2020 Don Burke is the senior vice president of Management Science Associates (MSA), a leading-edge data management and analytics fi rm. Burke has 20-plus years of CPG experience working across the cannabis, tobacco, grocery, confectionary and beverage categories. He can be reached at DBurke@msa.com.

THE CBD OPPORTUNITY: CBD IN C-STORES

Targeting the wellness customer can help convenience stores grow the CBD category.

Mike Kostyo • Datassential

When you think about ways you can meet your customers’ health needs, you may immediately think of offering options like natural foods, clean labels, fresh options and products that are low in sugar or sodium — “health foods,” in other words, many of which are focused on physical health and weight loss.

But for the majority of consumers today, emotional and mental health are top of mind, even above physical and nutritional health goals. As consumers continue to prioritize their emotional and mental health, c-stores have an opportunity to meet those needs with functional products, including cannabidiol (CBD) products.

For our “New Foundations in Health Keynote Report,” Datassential recently surveyed consumers on which attributes they consider to be important to their overall well-being. According to the report, nearly two-thirds — 65% — said that emotional and mental health were important to overall well-being. That was the top answer, scoring higher than family relationships, physical health, financial health, and what consumers eat and drink. And that number increased to 70% of consumers in the Gen X generation.

Clearly there is an opportunity to meet these well-being needs, particularly as consumers start driving and traveling again. Getting back to “normal” is bound to add some new stresses to their lives, on top of the lingering impacts of an already stressful year.

MARKETING CBD

We also know that consumers are open to purchasing cannabis and cannabis-derived products like CBD at c-stores. According to our research, 70% of consumers said they are extremely or somewhat likely to purchase these products at c-stores.

But when you look at your CBD offerings, is it clear to your customer that your product mix is designed to meet these need states?

To drive home the message, take advantage of manufacturer and distributor marketing materials and signage that showcase clear functional benefits to the customer, including terminology like “stress reducing” and “relaxing.” You may also consider separating CBD products that are clearly designed for the wellness consumer from those that have more “in-yourface” branding.

There are opportunities for both CBD supplements and CBDinfused food products. Consumers ranked “eating right” far higher than “taking vitamins and supplements” when asked what they believe contributes most to a healthy lifestyle, so functional CBD food products aimed at emotional and mental well-being can resonate with consumers.

A CBD drink or chocolate bar aimed at reducing stress can be a “self care” opportunity for consumers and prompt an impulse purchase. It can also be an easy way for them to incorporate functional options into their regular routine: 82% of consumers said they believe functional beverages can help them stay healthy without having to radically change their diet, according to Datassential’s “Functional Beverages Report.”

Meanwhile, though consumers prefer to manage their health through food, 63% of consumers reported that they take daily vitamins or supplements. When marketing CBD supplements, consider options that are “natural” or “clean label,” as 83% of consumers noted they are at least somewhat interested in cleanlabel supplements.

The lesson is clear: Many of your customers are prioritizing their mental and emotional well-being today. Now it’s time to meet those needs.

Mike Kostyo is the resident trendologist and senior managing editor at Datassential, a market research company that helps food & beverage companies of all sizes and segments innovate, sell and plan for the future, backed by the best data in the industry. He can be reached at mike@datassential.com.