Cold Open On Target’s Timing

SPEAKER_02 0:00

Get back to target. I think they're made a great move, right? You know, with Texas and Florida, they've got higher concentration of stores, and they're both positive towards carry ATHC. So it's a great move. Also, we talked about why they're doing it now with six months to go. And but if you think about the seasonality of Beval, we're about to hit Christmas time. The July 4th weekend is the Christmas time of Beval. So it makes sense that they are going to try and go to highly dense places with lots of people. They have lots of stores to hit that July.

Ben Larson 0:50

Welcome to episode 137 of High Spirits, the show where cannabis and beverage industry insiders pull back the curtain on what's actually happening in the market. I'm Ben Larson.

SPEAKER_00 1:02

And I'm Anna Ray Grabstein. And every Tuesday. Every Tuesday, we seek to have the kind of conversations that matter, the ones happening in the boardrooms and the back hallways.

Ben Larson 1:16

It is May 12th, 2026, and we have an incredible guest for you today. We have Jason Zelensky of Nielsen IQ. We're going to dig into everything data, the beverage category, convenience, and all things happening in the marketplace. So before we get there, Anna Ray, how's your week going?

SPEAKER_00 1:39

It's good. It feels like it barely started. The weekend was really busy. I went to a pirate birthday party on Saturday for a toddler. It was great Mother's Day too. Were you good to your wife on Sunday?

Ben Larson 1:54

I I think so. Uh I didn't see her for a day, and I was surrounded by a bunch of kids and reorganized our garage, uh, which is filled with baby stuff. So um yeah, I was very tired by the end of the day. She seemed happy, so I think I think I did my duty.

SPEAKER_00 2:12

Amazing. Awesome. Yeah. Well, um, let's get started with some cannabis industry news, shall we?

Ben Larson 2:19

Let's show.

SPEAKER_00 2:20

All right. I saw that Cultivated broke the story this morning that the owner of MJ Biz, uh, which has been Emerald X, sells their whole portfolio to a business called Apollo, uh Global Management. They're a large asset manager. Um and Apollo is also acquiring another event business called QuestX, and they're going to combine it with Emerald. It remains to be seen what will happen with MJ BizCon. They haven't said anything positive or negative, but also of note, um, Emily Lewis, who many people in the industry have known as the SVP of MJ Biz, uh, recently announced that she had left the company a couple weeks ago. So it'll be interesting to see what happens. Uh just yesterday, people were calling me to plan events for for Vegas. And uh little questionable. Who knows?

Ben Larson 3:13

Yeah, yeah. I I for some reason thought that MJ Biz had already been through this, and and now I'm questioning my my finger on the pulse of history here. Um but I think the biggest gripe of MJ Biz over the last several years has been kind of the that losing of the pulse of what's going on in in the industry. And hearing that a private equity firm is gonna come in and take it over and combine it with something that's not cannabis. Uh I they're gonna have to try really hard to to re-engage the community. And I don't know if that's the solution. So Godspeed, good luck. I, you know, I don't know. I yeah, I'll still probably be in Vegas in November or December, whenever it's happening. Uh so you know, it's just but like my my my confidence in it being successful from a business perspective is it's not high.

Target Expands Hemp THC Beverages

SPEAKER_00 4:11

Yeah, I agree. It's it's complicated because there's a level of tradition. So many of us have been going to Vegas after Thanksgiving to see our peers for so many years that it just becomes muscle memory, but the event itself hasn't really delivered. And most of us have been not spending a lot of time there over the course of the other years and doing other types of events. And that doesn't support the MJ Biz business necessarily, but we got to get our own business done, right? So that's right. Good. Let's move on to um to our next story. Uh, many people have probably seen the headlines. They've been in lots of mainstream media that Target is betting big on THC beverages and is expanding um to 300 plus stores across three states. Target confirmed that it's expanding its hemp-derived THC beverage program beyond Minnesota and is rolling out to over 300 stores across Florida, Texas, and Illinois. The company is stocking beverages up to 10 milligrams. And uh that is actually double the potency of its initial of its initial beta launch in Minnesota. And the move is striking for its timing, uh, since there is a federal provision that's going into effect in November that would effectively prohibit these beverages. And uh the fact that this$107 billion retailer is expanding into the category six months before a potential federal ban, I don't know. I'd I'd say it's either a calculated hedge, a bet on a congressional delay, or both.

Ben Larson 5:48

Yes, and I I I'm elated, right? Like to get Target more invested in the space just draws more eyeballs, not only their own, but the consumers, right? And it there's also a parallel effort happening right now of like trying to push the grassroots recognition of like, you know, this category that you do enjoy is at threat of going away. And so more exposure for more programs like that, uh, you know, it's it's only going to help uh you know draw more focus to the conversation in in the coming months. And it's it's critical right now. You know, we're we're anticipating more effort from a legislative standpoint in getting um getting language across that helps preserve this category. So uh I don't know. I'm it's still like a weird place. I've seen the the all the LinkedIn posts and sitting in California, it's very depressing uh to see Target having uh end caps of of THC beverages and still not to be able to get anything here in California.

SPEAKER_00 6:58

Well, you know, the the last few weeks we've really focused on the rescheduling news, which is much more about the regulated and adult use cannabis markets. But this is an important conversation to have, and we have a great guest lined up to talk about it because the reality is that Target is not going to take this risk and give these products shelf space if they don't think that there is real opportunity. And uh even with a six-month potential window that could close at the end, Target thinks that it's worth it for whatever reason.

SPEAKER_01 7:30

Yeah.

SPEAKER_00 7:30

And that just speaks to how important and impactful this category has become and how many consumers uh are comfortable and curious with the category. So we're gonna get to dive into more of that today with our guest.

Ben Larson 7:45

Yes, amazing. Uh turns out people like to get high.

SPEAKER_00 7:52

Especially in the beverage format. Yes.

Ben Larson 7:55

Yeah, yeah. Well, I, you know, I I think, you know, as we've talked about a lot, especially when we're talking about the dispensary channel and and legacy consumers or just experienced consumers, you know, they often explore well beyond the beverage category. Uh, but for the new consumers or those just looking for a beverage replacement, we're not talking about a replacement when it comes to cannabis products. We're talking about a an adult beverage um alternative. And the consumer is very much looking for that. We've seen all the trends in alcohol. Um, people are searching for something different. And it turns out, I mean, at least in my own journey, I have a challenge paying top dollar for something that has just flavoring in it. No offense to all the great non-alk products out there, but I just left always wanting a little something. And it turns out THC is a good little something.

Meet Jason Zelensky From NielsenIQ

SPEAKER_00 8:49

A little something, something. A little something, something. Let's cue up our guest because he's going to be able to give us lots more information on this. Uh, today's guest has spent two decades at the intersection of retail and data, starting with a decade in merchandise operations at Walmart and Sam's Club, then building expertise at Nielsen IQ, working with leading retailers across grocery, drug, and convenience channels. He's now the VP of North American Retail at Nielsen IQ and has become one of the loudest voices making sense of the THC beverage explosion in mainstream retail. He recently presented data that had the industry buzzing at the CSP Cannabis Forum, and we wanted to invite him here to talk us through it. So we are really excited to welcome Jason Zelensky to the show. Welcome, Jason.

SPEAKER_02 9:38

Awesome. Thanks, Anna Ray. And I was like, man, who is this guy? We should all be listening to him. Happy to be here.

Ben Larson 9:45

Well, we should all be listening to you. I I know it wasn't just at the CSP conference where you've really started catching people's ears. Um, you know, we were talking about it at a Canada Bev summit at the beginning of the year. Um, just as people who have grown up in the cannabis industry, we've always had this conversation about how hard data is. And like Nielsen was always like lauded as that that that's where we want to get to. And and we had some early announcements in the space about partnerships with like headset, and and yet still today, we we still hear these challenges, especially in the cannabis space, but it's not just cannabis. And and um I think that's probably where like is a good place to start the conversation is just a good foundation of understanding data and the and the different types of data out there, and and so I guess I'll start with the question of why historically has data in cannabis been so hard, and how does that kind of translate and bleed over into an emerging market like hemp beverages?

Why Cannabis Data Has Been Messy

SPEAKER_02 10:52

Yeah, oh that that that's a great question. And so uh when we think about cannabis, you know, sold through traditional dispensaries, um the the big thing that we we have found there is uh at first it was you know lack of a standardized payment system. And if you think about the way that Nielsen, you know, how we get data and other data providers is usually versus getting shipment data, we get POS data. And then we get it from uh from our retailers. We also have many other data sets where you know doing panel or web scraping or or such, but the the core business is based off of uh that POS data. So uh in the dispensary space, POS data um was uh a little hard to get uh uh at first, and you can make some partnerships, but then if you take it to the next step, once you get that POS data, you have to be able to decipher it. And so unlike the traditional CPG world where you have a UPC, uh universal product code on uh the majority of your products, that you know, it's it's a registered product, you know what it is. Cannabis products tended to be uh a little bit more um lighter in the amount of information that would come with them, and they would not be standardized from one dispensary to another. So it was it was very, very difficult to try and aggregate that data to get the type of insights that a retailer or a manufacturer would use, then to make a business case or you know, explore the space more. Uh you combine that with a little bit of you know, what is the appetite for uh major CPG to invest in trying to see those insights? And your your tail becomes a bit long on how how long is it going to take us to you know to get to that gold standard of data.

SPEAKER_00 12:34

Well, so then if cannabis data was a little bit messy, I'm wondering at what point did THC beverages uh derived from hemp in sort of non-cannabis regulated channels show up on your radar and make you think that this is something that we should be paying attention to and that Nielsen should be reporting on?

SPEAKER_02 12:54

Yeah, that is a fantastic question. So uh it started showing up about three years ago. Um the sales started before then, but um, what typically will happen is we don't know what a product uh is, you know, because uh we don't have a relationship with that CPG vendor. Um think about the the major PAC bed vendors before they launch a product, they send us all the information about that product. So by the time it comes through the register, we know exactly what it is. It falls neatly within our syndicated hierarchy and it's reported into the space. We had a lot of new launches of very regional players uh that were happening in grocery. Actually, grocery was one of the first spaces to keep that into um uh not just uh hemp derived beverages, but they were doing a lot in CBD um and other uh THC products in HBC, actually, it was really like we're we're receiving it. And uh, because we didn't have those kind of relationships, it took a little bit longer for us to send an auditor, go find the product, and then start coding it. And at the time, the auditors weren't really paying attention that this has THC in it. You know, this is a this is a different kind of product. It was more of you know, this is a skin cream or this is a relaxation um gummy or tincture or you know, what have you. And it wasn't about until about two years ago, uh, so 2023, that um beverages really started hitting the floor. And beverages started hitting, um, and we could talk about why beverages is becoming this this key way of ingestion for consumers. Um, but when beverages started hitting, it was a lot easier to kind of figure out what was different about these products. We started getting those THC codes. And then, you know, Ben, you were talking about I was at the cannabis forum uh six weeks ago, but I was at the cobalt forum a year ago. At that cobalt forum, I I started saying, look, these are things we're seeing in in the THC space, it's growing at like 300%. Um, anywhere it's being distributed, you know, you're getting greater sales per item than you are in beer, it's totally incremental. When I when I started saying those things, a lot of the manufacturers started coming to to Nielsen saying, please take my product images, please code my products. And when that happened, then we're off to the races. Because now we have like uh what I would say a very, very good product set of just about everything that's selling as far as beverages goes. We also have good uh representation in the uh you know, the vapes and the papers we are seeing THC have direct paper out there, uh the gummies and um and other THC products. But you know, it's been in the past year that we've been really able to get that that really good data. So I think I have to go back full circle into you know um you know what the dispensaries, you know, they we still have yet to get that kind of relationships with us, the manufacturers that are distributing the cannabis for these products um that we do now in the that TAC hemp derived space.

Retail Channels And Growth Patterns

Ben Larson 15:51

Awesome. Um just because uh even I had a steep learning curve in this and just understanding the the sections of retail. Can we can you you mentioned grocery and how that kind of really like kick kicked things off? And then we hear about liquor and convenience. And are those three kind do those three kind of cover the major like retail uh categories? And and what are the main differences between those? Like how do you clearly draw the lines as a lay person? Um, you know, our our audience, so to speak, that doesn't live this every day.

SPEAKER_02 16:28

Yeah, that that's a great question. And so uh yeah, those three channels uh are are where we see now, of course, mass is becoming quickly the fourth channel because uh you talked about Target, and so we would consider Target a mass retailer. Um and so there is now a fourth player, uh, you know, a fourth horse in the race, I guess we could say. Um, but uh if we look at like, you know, what what's the definition of these channels? So the liquor channel is um uh it's stores that primarily 90% or more of their business is based in the Beval space. So that's that's what a liquor store is. And so you know you could think of uh you know, Total Wine More, Bevmo, ABC Liquors. Um, you know, there's a those are like the bigger chains, and of course, there's lots of mom and pop liquor stores out there. The convenience store is a smaller format store, so it's something between 750 square feet uh to a shy of 10,000, although you know there are some that are maybe 60,000 travel center uh monstrosities, we could say. But you know, the convenience store is that smaller format store, may or may not have gas, it's going to be open extended hours, and then the selection of goods that you would find inside of it, you know, you have the six major categories of tobacco and candy and sulfur stacks and pack bev uh and beer, of course. And then you have uh you know some household items. Grocery, uh that would be your your standard supermarket. So if you're thinking about uh you know the kroger's of the world, um, I'll I'll just go kroger's that I think be a nationally recognized brand. Um, you know, it's it's it's the grocery store.

Ben Larson 18:00

And and then that that growth rate that you spoke to, are are we seeing that across all these various categories? Like is there one where maybe it's performing better than the other?

SPEAKER_02 18:11

Yeah, so we could talk about absolute volume and then we could talk about the growth, the growth state that we're in here in 2026. So if we think about absolute volume, the liquor channel is by far the largest, um, the largest volume. They were early entrance and um they have a lot more control uh uh over their sets. Of course, you know, they're age-gated to walk in. Um, and they they really embrace that that THC space. And they are selling, um, they are selling more uh THC beverages than the other outlets combined. Um right now their growth is kind of you know it's it's still going, but it's plateauing, but that's because they got into the game a long time ago. Um by a long time by being coke, like which leaves so long ago, right? Um and then uh when you think about uh grocery, um there are some early regional adopters. Um uh and they they have started to plateau on those who are in uh offerings product uh two years ago or offering, and there hasn't been a lot of increased distribution, you know, in that channel. So they're they're starting to, you know, they're still showing positive increases, which is great in the retail world uh today, um, but they're not growing at the you know the 100 to 200 percent. Then we look at the convenience channel. The convenience channel is still posting like triple digit growth. Um that is really coming through distribution. So uh if you read the news, you can see you know, um, Circle K, you know, the number two player uh in the US, they're continuing to go into more and more, you know, their um like like target is. Um, and other convenience retailers are still adding this to their set that did not have it before. And so if we look at the the market today, it's actually only about 10% of convenience is carrying a THC beverage. That sounds like a really low number, but you gotta remember, like like half the country, you can't carry a THC beverage in convenience anyway. So, you know, so you so 10% is you know, it's 10% of half. And if we look inside the states that it is legal, it's like 52%. So it's roughly half of convenience stores are selling where it's legal. Um, but that that distribution continues to grow. You know, every quarter, I'm thinking it's going up like half a point of distribution, it's getting into more doors, and as it gets into more doors, it becomes more normalized, people get more comfortable, and uh, you know, and they're engaging with the product. And then you know the last was mass, you know, that's mass retailers. So that would be your you know, your Walmart, your your targets uh of the world. And you know, now yeah, targets, targets in the game. And I, you know, you made some uh you talked about the news uh that that came out, I think, uh late last week, early this week. And I think it's a great move on their part. And I'm um maybe talk about it. But um, yeah, those are the channels that that we're measuring.

Dose Shifts And What Actually Sells

SPEAKER_00 21:00

Amazing. Well, you're you're getting our you're getting our brains wet with a little bit of data. I wanted to talk about more. Uh guys. I've got some data that you guys provided that shows that 28% of US adults have tried a cannabis-infused beverage, and that 50% of US adults would be interested in trying uh a cannabis beverage. And that comes up to about 74 million adults have tried this these type of beverages, and then 130 million would be interested. But you actually know what those what those people are purchasing, uh, what the what the potency looks like, what the pack size looks like, frequency. Love for you to dive in and give us some of what you consider to be the most impactful arguments that show how important this category uh has been over the past 12 months and what it's becoming right now, even in the face of potential prohibition.

SPEAKER_02 21:55

Right. Um, yeah, it's that's a great question. So if you um if you break Down the the types of THC and I'm going to focus in on beverages right now. You know, there are other products that are in the store. So, you know, the gummies, the vapes, and and and what have you, but we do find that beverages has taken off any preferred way that your burgers want to uh ingest or in uh buy uh THC products. And that makes total sense, by the way. And um, I'll I'm gonna go on a tangent, I'll come back to you just in a second. But if you look at um like like packaged beverage, what's going on in a non-alk or non-THC package beverage, um, and you're looking at like flows in a rapid uh hydration or high protein, you know, protein is getting is getting into everything. Well, protein's been around for decades, right? You know, powdered whey protein has been something that, you know, back in the 80s that you you buy. Um, and why is it now that it's getting the beverage? It's because it's easy. You know, people people could have done it these other ways, but as soon as you put it into a beverage, it quickly comes the way that um that people are just they normalize part of a routine. I just walk in, grab it, I drink it, and this is great. I think THC is following in that suit of like um, I don't want to say a bitch gold, but like a way, uh just a this easy barrier uh to uh to entry of like how how I could have this product. Right. So they're consuming THC beverages, and we when we kind of break that down of like, you know, what kind of beverages are they looking to consume or how are they looking to consume it? You know, once again, a year ago when um it was still kind of early in the in the convenience space um in the grocery space, and we found that that five milligrams was was the way that uh the majority of the sales were going. It was it was over 35% of the sales were were at five milligrams. Today, however, you know, we're we're finding that 10 milligrams is the way that they would. I think that's distribution. Once again, that that is just a form of like when people were dipping in their toes, they went for that really low dose of of five milligrams. But since then, um more normalized, coming more accepted. People have started doing that trial repeat, and they're they're they're moving into that 10 milligrams, and that that we're binding is to be like that that um that place where uh it's the mode cover and we're getting the most amount of sales going less target. What are they doing? Oh yeah, they're capping it at 10 milligrams. They're oh when we think about like the the type of drinks that they're drinking, we're finding that soda right now is the primary way that uh people are consuming. They're they're they're aligning it, you know, the other packaged beverage that they find in the cooler. You know, after soda gets in the seltzers, then then we get into teas and mocktails. Um, but soda is the primary uh way. And then it's uh it's a 12-ounce can, right? That's the uh I I already use the 12-ounce can. Actually, I don't want that number I might have to check. I don't have that on the top, but I think it's the 12 or 16 ounce can is the way that they're looking at it. And when you're convenienced, they want it cold. Um now that's just uh an extension of the the concept of the cold vault that you know uh convenience is very about I'm going to immediately can consume whatever I'm buying, by immediate, I mean within an hour or not, but they're gonna be at the door and they're they're gonna start consuming, although you never know. Um, but they're gonna buy the you know they're gonna buy this product within the hour and they want it cold, which is another reason why convenient once they started just uh distributing the product saw great success. Early on in convenience, there actually was a bunch of stumbles. They were doing the the bitter four packs that cost$30, they were warm and customer and they they kind of sat on the shelf for a while um before they really started getting in into that mainstream.

Ben Larson 25:41

The uh the consuming within the hour of purchase is such an interesting opportunity. Uh, we've talked about this in the past just because um, you know, we we don't have a lot of discovery opportunities with with TAC products historically, you know, especially when we're relegated to the to the dispensary channels. Many of the laws that were implemented around the states, you know, didn't really think about where people are going to consume these. Like they weren't allowed to consume them on the street. Oftentimes they weren't even allowed to consume it in their own homes if they were renting. And so this concept of being able to walk into a convenience store, grab something, and then be consuming it within the hour is just a really kind of interesting dynamic that that gets us to that point where 50% of Americans do have the opportunity to try this. And so um that's just really exciting. So you talked a lot about form factors and even kind of flavors. Uh let's talk about the consumer. You know, who are these people that are actually buying these? Like is it is it the soccer moms that people always like to cater to, or you know, is it everyone over 21? Of course. Uh of course. Yeah. What are you guys seeing?

SPEAKER_02 26:57

Yeah, so um it it really is the cross-section of America. So I'd love to tell you that there is this this core consumer, and any given um time period that we run the data, we we basically get a cross-section of America. If you think about the convenience store of the grocery store, everybody goes into a convenience store or a grocery store. I think it's like 98% of America, you know, is gonna go into a convenience store uh you know uh every month. You're gonna you're gonna capture just about all of America. Um, the same thing with groceries. Everybody's gonna be shopping at a grocery store. And so you will get, you know, the you will get the millennials or the you know the the legal Gen Z that can go in and and buy this, um, you know, as as they try and redefine their life and you know, and how they're engaging in um uh in products that, you know, like be if you bring to a party or you know, you're gonna be very social. Um, you know, as they're looking at that, you know, they're engaging, but you also have the the Gen Xers like myself, but you've got the baby boomers. You know, I we were giving a um a talk at the Nat show last year about like you know what's happening in Beval. Uh was I was one of my thought leaders and and she was calling it, you know, like uh there's this old, it's called the old lady, you know, these old ladies, they call it their bitch juice, you know, it's like and they're drinking it too. So, you know, there's I would love to tell you, like, oh, hey, the demographic that you should be aiming for is a 35-year-old, you know, uh Caucasian woman with two children, but it's really it's everybody. And you know, like you said, Anna Ray, you know, 50% of America wants to try this within the next year, and America has the ability to do so.

SPEAKER_00 28:35

Well, so let's dive into having the ability to do so and retailers making decisions to carry these products. We've we've alluded to Target, we talked about it at the top of the hour. It's a big deal. Uh, and there's still a lot of retailers that are not in the game yet. And a big part of what you do is try to help retailers identify trends, understand where there could be exciting new opportunities for them to grow and to better serve consumers. Basically, like stay at stay at the front of the line when it comes to what consumers are looking for. And I'm wondering what that's like for you right now. As you and Nielsen IQ broadly are introducing this category to um all these different channels of of retailers. What is the key points that you're helping them to explain about what they can expect getting into the category? And then if you can weave that into what level of understanding do folks have about the policy challenges that are ahead for the category as well.

SPEAKER_02 29:38

Yeah, so the big the big one is the the regulation um by state and then federally. So there are still um some major retailers out there that have not quite become comfortable enough saying that you know this this is legal federally, uh, which is something that you know we are a data uh company and we're an analytics company. And so, you know, I can give them the insights and I can uh but we're not lawyers, right? Um and we always recommend, you know, you got to talk to your lawyers. Um that's the where we we partner with some of the other, like CABA, um, you know, to bring in the data to say, look, you you can do this, and and you don't believe me, I mean just look at your competitor, they're doing it. Um, but also like navigating, you know, what state, you know, can uh can they statefully go into? And this is actually you can get back to Target. I think they're making a great move, right? You know, with Texas and Florida, they've got you know, that's higher concentration of stores uh for Target, and they're both, you know, uh pod uh towards carrying THC. So it's a great move. Also, you know, um talked about you know uh why they're doing it now with you know six months to go. And you know, if you think about the seasonality of Beval, we're about to hit Christmas time. You know, July 4th weekend is the Christmas time of Beval. So it makes sense that they are gonna try and go to highly dense places with lots of people, they have lots of stores before to hit that July. What happens after July? You know, we'll all but everybody's gonna be racing to get to that July because that is that's gonna be the Christmas uh for the category. Uh I okay. So all right, uh back to the you know what we could tell uh you know the retailer. So really it's you know, are you in a location, you know, that that would allow this and is favorable to you? Because there is some states that even though THD might be legal, it's not legal for convenience to carry it. Maybe it's just liquor that can carry it, or you know, maybe it's just grocery. And there's a lot of um, and then there's also shifting, you know, shifting plates that are happening, you know, state by state. Um, once again, I think you know, Florida is just a great, great state uh because it's just in THD, um, I would say stable, you know, for quite a while. Um, and so that you know that that makes it a great move. So what do we do is we go in and we try and tell them, look, this is a trend, it is still growing. And if you look at kind of the incrementality of it all, and that's really what retailers want to know. They want to know, is this incremental or am I just robbing Peter to pay Paul? That's the if I put this on the shelf, am I just like taking away from equal dollars and units of my beer or product or my spirit or wine? You know, they just come in and buy THC. Have I really gained anything? And and so we are showing them that no, this isn't an incremental sale. Like there's you know, the um there's been some softness in some of the Bebel categories, and that's not just a THC phenomenon. Uh the THC is not coming in and and all of the the softness that you're seeing is due to THC. There's a little bit of that. Yeah, we're seeing some transference, but the the THC customer can be net new and can be incremental. And we also have done a lot of studies where uh mostly on on-premise, though, and um, and we find that the the cannabis user, not just THC, but the cannabis user, what's the number one thing they do? They drink beer, you know. Like that's you know, after they consume some uh some cannabis, that they then go drink beer. So, you know, you you can actually build a basket and you can get total incrementality out of it. And that's what the retailers kind of want to know is like, hey, is incremental. First, they want to know am I gonna get in trouble for doing it. Once you can get past that barrier, they want to know is it incremental, and then they have to start working it in. Well, what do I what do I cut? And that's where they you know, like get outside this THQ space and we get into overall category management of like, how do you find the space, especially in your convenience store? I mean, Target, endless shelf, you know, Kroger, endless shelf. You know, they've got all the space in the world, but you're talking about 5,000 square feet and uh six categories make up eight 80% of your business. You really gotta get in there, you know, and justify, like, hey, how do I add this product? And then you get to that next, well, how's it gonna get to my store? And so I think that there's been a lot of you know, a lot of the the distributors have started putting this on their trucks, which is great. You know, we're not at three tier yet, but it's now on those trucks. You know, you can you can uh you can get them to distribute it to your store. And we're finding that the manufacturers who have the relationship going with those distribution partners that are already going to the stores, those are the ones who are kind of rising to the top because again, the retailer is more comfortable. Not saying that you can't do uh, you know, um direct to the store again. You know, if you if you do that, then you have to have some sort of um give that some sort of program of like, well, how is it gonna get on the shelf? Convenience stores, again, that's my specialty. You don't have the man hours to continue stock. So they they're gonna need help getting this product up and making sure it's merchandised in a way that um you know that that um that resonates with the customer, it's you know, it's in a space that you could clearly identify that it's a THC product, that it's not an energy drink, or you know, it's not an RTD. And so that the the cons the person who buys it is consuming it with the knowledge that yes, I am buying uh a THC beverage. I know I just kind of went all over the place on that one, but uh great.

SPEAKER_00 34:50

Yeah. As a follow-up, I'm thinking if if I was a convenience store who heard your pitch and thought, okay, now it's finally time, I'm ready to uh explore THC beverages. Would you give them direction in terms of how to build that shelf, in terms of what are the different categories or brands that would potentially fit in their region? Uh, who are the brands that are winning with different types of consumers? How do they choose where to start? Or are they just leaning on the distributor to say, this is what's on our truck? So here's what we're gonna put on your shelf.

SPEAKER_02 35:23

Yeah. It can go either way, right? So some will some will say I have a category captain, and they'll be like, I'm just gonna lean on my category captain. Um, other uh convenience retailers or grocery retailers are like, no, no, I own my set, it's my set. And so then they start looking at our data. Um, and they use some of our advanced analytics. And what what they can then do is they can then make that justification of okay, what categories can I, you know, can I shrink um and not lose sales? And you know, we have those those type of analytics where we can show that, you know, if you if you reduce this one product, all the demand of that product just shifts into another one, you're not actually going to lose a customer. Um, and then you could bring in this incremental product, which is gonna uh add a customer. And so um we don't uh we won't draw their planogram for them, although we do have uh solutions that will draw the planogram if they so choose, but usually they'll use our data to find out well, what is selling in my area. And so one of the things that we recently launched was we really got into state granularity because THC is kind of falling in those lines where every state has its own product. So you might have like a really popular soda brand, they've got a UPC for every single state because they actually have to comply to that state's regulations. And so in that sense, we were able to show a retailer, you know, in the state of Georgia, this is what's selling, you know, this is what the customers, you know, if you have this product on your shelf, they're more likely to be comfortable with it because they've seen it on other shelves. Here's here's the long tail. If you want to go after, you know, somebody that may not have that distribution and get into a uh a new player kind of relationship. Um, and they trust us with that data because it's not that the distributors are um are evil or you know, not telling the truth, but again, we are an unbiased third party. We don't, you know, we don't have real skin in the game of of trying to sell one product versus another. We're gonna give you the data as it lays, and then we're gonna help you make the you know the decision that that's best for your stores.

Ben Larson 37:27

The the aspect of the fragmentation of of all the regulations across the states is is really interesting. You know, I was talking to one of the brands and they said every time they launch a new SKU, it's like it's actually six or more um because of the different labeling, the different serving and potency requirements. Um, so yeah, just really interesting to think how that explodes uh from a data perspective.

SPEAKER_02 37:54

That's well, yeah, and it's well you think about like a root beer, like you know, you can have this root beer THC beverage, right? But there's 26 versions of that that one root beer beverage, which we have coded them all, right? No, but then we have to aggregate them all to say, like, okay, well, root beer is selling at, you know, like it is like the you know, like one of the top flavors that that people are engaging in. Sorry, Ben, I didn't cut you off.

Ben Larson 38:16

No, no, that's great. I I do want to go back to this uh incremental uh growth that that this is driving, because I think that was one of the big hurdles the category faced early on, and in often in the form of opposition from from the alcohol industry. But it does seem like that message has gotten across to to the alcohol industry, largely, um, especially with distributors and retailers, that this is incremental growth on top of alcohol. And at the same CSP event that we were at a couple months ago, um, we had retailers showing slides where their alcohol sales actually increased alongside uh the THC uh beverages increasing. So setting alcohol aside, there's a bunch of other categories, and and one, you know, one of the opportunities and challenges that cannabis faces is it often gets kind of uh dropped into many different buckets, you know, be it functional or wellness or or that kind of thing. And I'm curious from your perspective, how are how are these different uh beverage categories influencing the opportunity for for the THC beverage uh category?

SPEAKER_02 39:28

Yeah, um that's uh let's see if I can unpack this question for you. Um so the thing that we um right now we have THC set up as an attribute versus a full category. And so um it depends on how we slice the data. Um the majority of it falls um under um what we call beverages, and so um it's just in that uh kind of the same place that carbonated beverage or water would fall in there. The majority of THC products fall there. Uh, there are some that fall under HBC, even though they are beverage, and because of the claims that they're making and the you know, like it's like it to help you sweep or to relax you, you know, there are some of these THC beverages that are really like getting into that um that that health and wellness space. And so, you know, they're falling under there. And so um that's why, you know, if you're talking about trying to pull THC data, there's also a really good data scientist that can help you out with that one because uh because you just want to make sure that we aren't you're not leaving anything you know on the uh on the ground while you're trying to to aggregate, you know, and find out what is really selling in in the THC space. So uh as far as you know, like what um, you know, what are people trying to solve for, or you know, what are they, you know, like why are they using this and you think about the functionality? The number one thing we found out in our studies, um, not from product claims, but we've asked people, you know, why are you drinking this beverage? And the majority of them say relaxation. That's the that's the number one uh thing that we get. And then you know the the second one is you know, like a more of a like a social, like and using this to you know to to do something social. But the first, the the top reason is actually relaxation.

SPEAKER_00 41:11

So as it relates to state by state regulation and target choosing these states that it just decided to launch into, we we know that that hemp beverages like regulated cannabis have really started to become more of a a state by state business, different from the way that it started and different from a lot of the excitement at the beginning was about that, oh, there isn't state by state right uh regulations. And so we can just have one label and be able to do interstate commerce and move around. And it's become a little more complicated. Manufacturing is still able to travel over state lines. Uh, but outside of outside of the states specifically that Target just chose, I'm wondering if you can talk about some of the biggest and most popular states of where these beverages could have taken hold. Uh and and maybe what that says about the consumers in those states, or maybe it's the regulatory environment. But where are these things hottest and most popular?

Hot States Plus July Fourth Rush

SPEAKER_02 42:09

Yeah, you got it. I don't have my full state list in front of me, but I'll give you like some of the the top ones, right? And uh I'm just gonna go out on the limb and just say, hey, I'm from the great state of Maine. That's where I live. And Maine is actually a top state. So I'm I'm just gonna plug Maine. There we go. Um, other great states, uh North Carolina is a is a state that that's uh in the top five. Minnesota um is a is a state that's in the top five. Uh Georgia is in the is in the top five. So what we see if we um I know I don't have the map in front of me, but I can visualize it, is we've got like this kind of like uh Atlantic corridor, um, the states along the Atlantic where it's legal are doing very well, and Minnesota um is doing really well. And one of the things you talked about, Ben, before is we were uh when we're looking at state performance when um uh again, uh BeVAL has been a little soft uh across the nation. And Minnesota being one of these right top THC states, we're actually finding that beer is now making this this comeback in Minnesota. So they're both showing positive increases. Um so just to kind of uh tack on to what you were saying there, whereas the entire category is still being uh a little bit soft, um, but there are some states where even though that's a top THC state still growing, you know, we're finding that that beer is also growing in the state as well.

Ben Larson 43:29

So, you know, we we we obviously have talked about and all know about this kind of impending deadline of of November 12th, right? And I it's very mixed messaging because it's you know you have target and convenience pouring in and people are excited about growth. It sounds like it's still growing. Um, but I'm sure people are looking at the data and adapting and and preparing for you know either the scenario where this category gets saved. Or the category goes away. And are you seeing any adjustments here at the beginning of the year? Or are we still at the beginning of the year? I guess it's May now. Um, towards the middle of the year. Um, are are people starting to adjust the way that they look at the data and use it um to start to prepare for for any potential change?

SPEAKER_02 44:22

Yeah. So uh what we what we do is uh you know we measure you know how many doors it uh that the product is in, so distribution. And when we look at the the main channels that we're covering, so you know the the four that we uh said at the beginning of the hour, so in liquor, in convenience, uh in grocery, and in mass, uh those numbers are just going up. They uh every week they're they're like going up just like a tenth of a point, a tenth of a point, a tenth of a point. Uh, we have yet to see uh the distribution numbers go down. So they're just getting into more doors. Now, not only that, um, you know, we have total distribution points. So, how many products are they putting on the shelf? They're actually putting more products on the shelf too. So uh we're seeing uh breadth and depth of the uh of the product continue to grow. My uh belief is that we're gonna, that's gonna ride at least until July 4th. No matter what happens, unless there's a complete ban that just comes out of nowhere, no matter what happens, I believe that we will get at least through, you know, the first couple weeks of July, because again, that that's gonna be Christmas for the category. And then after that, we will, that's when we're really gonna see what's gonna happen, you know. Because you you if you think about, you know, how long does it will it take a retailer to get out of a product, you know, they'll probably give themselves a three-month window. So if we're kind of walking backwards, then August is gonna be that that real that that month that's really gonna be telling. Like we don't know what's gonna happen by August, then retailers will probably start pulling back um and working on their exit strategies. That makes sense.

Ben Larson 45:51

Yeah, it's good it's good to keep July 4th in mind as as uh as an important benchmark.

SPEAKER_00 45:57

How invested is Nielsen in any type of policy outcome? Are you guys getting involved in DC, uh locking arms with other trade groups that are trying to protect the category or at a minimum just tracking it? What does that look like?

SPEAKER_02 46:11

Yeah, so um, as I said uh somewhere in the call, you know, we're the unbiased third party, and that's kind of where where we have to stay. Um, so I will go out on the like, you know, I'm as with personal opinion, you know, not a representative of the company, I believe in the category and I, you know, and I and I bullish for it. But you know, Nielsen at you itself, you know, we we are here to measure and we are here to you know show the world what customer wants. You know, there are entities out there like um Hava or Nax or you know whoever, you know, they they they use our data and if they want to use our data to show legislation, like the growth and the opportunity and you know, and the consumer, then you know, uh we we share that data. But as far as like you know, us using a political action group to make a stand on it, no, we're uh we don't care.

The $11B Forecast And Ban Damage

Ben Larson 47:00

But you might make predictions. Like if I looked at data all day, every day, I might, whether, you know, whether it's a Nielsen stance or otherwise, um let's let's approach it a different way. Um so one of the conversations that we have a lot within the category is like the inevitability of it. Like we we we hear these numbers, we see the interest, and whether it happens by November or two years from now, like the category seems like it has has drawn, right? And in general in this country, the can consumer eventually gets what they want. And so that being true, and and we've heard numbers, you know, whether it's with whether it's a uh a quarter billion or a billion, you know, in sales somewhere there. That's it's a big range, but that's what we've heard. Quarter billion to a billion. If that's at the current, you know, what do you see based on how you've seen trends of of different categories through all these different uh you know retail outlets over the years? How big do you think this industry can get? You know, we're we're hearing crazy numbers, you know, like you know, one in four people trying it, one out of or half the country wanting to try it, um, the the sell-through rate, the growth rate, you know, if we were to fast forward past yeah, if if we're to if we were to fast forward past the next say three years, you know, what do you imagine the the the opportunity being here?

SPEAKER_02 48:32

Yeah, so I I had a little bit of a technical difficulty, but I'm pretty sure you're asking me to predict the THC beverage market in the United States. Oh, I'm gonna start and so I think that right, fantastic, right? All right, so like if we do real back of the napkin math, right? And let's say we get to 100% distribution and um you know and acceptance uh of the product. So I can easily see, you know, uh where you know the number is like five billion. That's gonna be my number, right? You know, um uh that that I would go to in the uh in the convenience space. Uh convenience making up half of what you the XAOC, the all other channels are doing. So okay, that's that's another five billion, right? Um liquor, I don't think that liquor, you know, has the the that runway um you know to increase you know that much more. But let's just say you get another billion, eleven billion dollars. There you go. That's your number, eleven billion dollars. 11 billion. And I get that, you know, just number how important. Yeah, it's well I look at it just like kind of taking the beer and and like what that's the size that that beer category and how it's interacting with THC. That's kind of how I get there. Um, and then I just look at you know, where's you know how much sales we're getting with the distribution we have today? You drag that out, probably get to$11 billion. Um, with again that's 100% distribution, everybody is holding hands and and it, you know, it's being you know, there's no no like third channels are getting locked down and of other channels. Um, because when you lock out channels, you know, and you decrease distribution, of course you decrease exposure and you decrease sales.

SPEAKER_00 50:13

If if the November ban stays and it takes some other policy process following November for the category to be reinstated, because I'm sure that there's a lot of people that it won't be ready to give up and will keep fighting to be able to reintroduce these products. How much does that hurt the opportunity and the inevitability of that$11 billion market opportunity in terms of if we go dark and the and the cans leave the shelf and it takes some amount of time to come back? What what do you think that looks like? How much does it really hurt it?

SPEAKER_02 50:49

Uh well, a lot. Um, so you know what what will happen? The the band will go into place and there will be those those manufacturers that will be able to adjust and survive off of the dispensary model, you know, where they, you know, that there were there were um cannabis beverage and th beverages in the in the traditional dispensaries before at the state level. So there will be those who will be able to survive off that model. The rest will will have to fold, um, they'll they'll have to close their doors um because they just you know with no sales you can't maintain. Um and what that'll do is once we then get back into the the legality of it all, we're gonna have to start over. Um because the you know some of the the production and capabilities will will have and the you know the distribution network uh agreements will will not be in place. So that that'll put it back by like a year. So let's say let's say the ban happens, and then two years down the road we we wake up and we find out that this was the right thing or that was the wrong thing to do, and the right thing to do is you know stop this prohibition, like uh uh what we're doing today or what we're gonna do, um, then it would probably take you know another two years of ramp up um to you know things on the shelves, get retailers to engage back in it, um, and then another couple of years, you know, to to really get back mainstream. So what you would do is you would turn this kind of like um you know, this three-year to 11 billion to like seven years to 11 billion, yeah, uh is probably what would happen.

Ben Larson 52:23

Back of the knocking math. What do you what do you what do you think is gonna happen? Just out of curiosity.

SPEAKER_02 52:31

I can tell you what I hope is gonna happen. I don't, you know, like uh if you're asking me to predict politics uh and I was accurating duty stuff, I'd be on a different podcast.

Ben Larson 52:40

Um I'm just taking Paul. I'm just taking a Paul.

SPEAKER_02 52:45

I'm gonna put out into the universe that I am hoping that cooler heads will prevail. You know, they'll see they'll see A, this is what uh their constituents want, and B, there is revenue here, you know. So it's it's a it's a double whammy. It's like, you know, we have the ability to um have sales, get taxes, and it's what your consumers want. Um so hopefully those two things will um as I said, allow the cooler heads in Washington to prevail, and you know, we'll we'll we'll get a pass. That's that that's what I'm hoping for. Um, but yeah, you never know.

Ben Larson 53:21

Sales, taxes, jobs, revenue, yes, all the things.

SPEAKER_02 53:26

All the things, right? Exactly. So you know, like we we we uh America has come has you know done very, very well getting very, very focused. And we do need uh, you know, expansion on this on the things that we do, you know, in order to keep people employed.

SPEAKER_00 53:43

There's there's been talk over the past year or so about well, you can't put the toothpaste back in the tube, but it seems like the government's trying to put the toothpaste back in the tube pretty aggressively, and and it's it's a hard thing to do, and it's and it's gonna make a mess.

SPEAKER_01 53:58

That's about we'll see.

Last Call And Three Action Steps

SPEAKER_00 54:02

Um, you know, Jason, you have shared some really great insight with us today, and we're really appreciative. Uh, it's time for our last call. So we want to turn the mic back to you one more time for a final message for our listeners. Advice, call to action, closing thought. What do you got for us?

SPEAKER_02 54:18

All right. Once again, I had that technical difficulties, but I think you're asking for that call to action. So um the the call to action when uh we're talking about um I actually have more than one, right? So I'm gonna make my public service announcement. I told, you know, I said at the beginning of the call, like, look, I had a I've gotten exposure and all manufacturers start sending us product. Um, and by product is being images. If you're listening to this and you have not done that, please find Nielsen or or look me up. I don't know if my contact is going to be in the show notes, you know, and we will get just make sure we get your your product coded. If you're a retailer and you're thinking about getting into this category, the ones that have gotten into the category are seeing great success. Again, you can talk to me and I can help you out uh in in making that business case. And then and then for the the uh the industries out there, you know, the ones who are, you know, Ben, you were talking about the ones who are on Capitol Hill, you know, use data, you know, use the data um in addition to you know uh the other strategies that you're using to try and convince you know lawmakers to you know to get us um you know to get us past that that November deadline. And so I guess those are my three call dash and you know, you use the data, make sure the data is good, and uh, and if you need a business case, you can always talk to me.

Ben Larson 55:36

Amazing. Jason Zelinsky, Nielsen IQ. Thank thank you so much for spending the last hour with us. It truly is a a dream come true to hear just this discussion. Um, you know, if we were to rewind, you know, five years ago, I don't I don't think any of us predicted that we would have been having these conversations, saying the names of the retailers that we're talking about, talking about the growth rates and and the access to to consumers. So um it truly is just wonderful having your brain in perspective and and talking about all of this. Thank you. Oh, thank you, Ben. Thank you, Anna Ray. I really appreciate this opportunity. All right. Well, safe travels and and we'll talk to you again soon. You're right, everyone.

SPEAKER_00 56:21

Really cool. I when I finished uh grad school and I was interviewing for internships at CPG companies, I remember one of the first questions was always Do you have experience with Nielsen data? Yeah, exactly. I remember getting so nervous, like I'm just out of school. How do I how do I have used something that I don't never who's Nielsen? Yeah, what's this? Um now that they're covering THC, it's pretty pretty neato.

Ben Larson 56:46

Pretty neato, yeah. Uh what do you folks think? Neto? Yeah. Uh thank you for watching as always. Thank you to our teams at Virtosa and Wolfmeyer, and of course, our producer Eric Rossetti. If you've enjoyed this episode, please share, like, review, do all the things on Apple Podcasts, Spotify, YouTube, wherever you watch us. Thank you for listening. As always, folks, stay curious, stay informed, and most importantly, keep your spirits high. Until next time, that's the show.