Joe: On this episode of the "CBD University Podcast," Trust The Data. We'll look into some telling data when it comes to CBD sales, which brand is selling the most and where, and how the national products market continues to grow. Learn the science behind the data and how we are staying ahead of the CBD industry trends. This is the "CBD University podcast" and it starts right now.

I'm Joe Agostinelli, host of the "CBD University Podcast." If you're a returning listener we welcome you back to our podcast. If you are a new listener we are glad you found us on your podcast platform of choice. Don't forget, full video episodes of our "CBD University Podcast" can be found on the Global Widget YouTube channel and the YouTube channels of our brands, and for those of you watching the full video episodes you've become familiar with our Zoom episodes, our remote episodes in which we feature insiders in the industry. This one looks a little different. First time we ever had three windows in an episode, so I welcome my guests, the Vice President of Sales Operations for Global Widget Scot Wooster, and then joining us from SPINS is Mike Friedman...excuse me. In this episode we are talking data and just how we use third party sales data to better help retailers offer their customers the premium CBD products that they demand and want, and I welcome both of you guys to the podcast. Scot, welcome back, and Mike, thanks for joining us for the first time.

Mike: Thank you. A pleasure to be here.

Scot: Thanks, Joe. Always a pleasure.

Joe: And Mike, first off let's start with you. Let's talk a little bit about SPINS, a wellness-focused data technology company. While most retailers are used to the organization some of our listeners and viewers may not be, so why don't you give them a little background on what SPINS does and what it's all about?

Mike: Sure. So in the food data world there are some major players, SPINS being one of them. And what we do we work very closely with the retailers as well as food brands and we partnered retailers by buying what we call raw data which is just a item description, the unit, and the dollar based off of the little barcode that's on the back of a lot of packages. And what happens is that anything that scans across a register, across a retailer that we have a partnership with we get that data, and that allows us to really understand what's going on in the marketplace, but what we do when we partner their brands we don't just hand that raw data over. We actually code it and apply insights against it, so allowing us to understand exactly what's going on the CBD industry along with copious amounts of other products and categories.

Joe: Yeah, and let's talk about that real quick and I'll get into the questions that we have discussed. So obviously you guys go beyond the CBD industry when it comes to retail?

Mike: Yeah, that's exactly right. So anything that has a barcode in the food and beverage industry, we track it. That's gonna be from barbecue sauce to CBD items to hot cereal, cold cereal, tea, you name it. And the partners that we talk to we cover the entire retail landscape. So that's gonna be conventional grocery stores like the Krogers and the Publixs of the world as well as mass retailers like Walmart and Target, but also we started in the natural specialty channel as well, so the Sprouts or the Fresh Thyme Markets and let's not forget about the convenience channel as well which is a massive channel that we cover as well.

Joe: And this question for the both of you. Mike, we'll start with you, and on that note when it comes to data such as the point-of-sale data that SPINS uses, how does SPINS gather such data and how many retail locations...I know you hit some of them there...but how many retail locations are covered? How many are we talking about?

Mike: Yeah, we have over a 183 retail accounts that we are partnered with, but that encompasses over 75,000 stores. That includes the subdivisions within a Kroger for example, so Harris Teeter if you're on the East Coast or Ralphs over in California as well as Vitamin Shoppe in the vitamin world, and Circle K and Wawa in the convenience world.

Joe: And Scot, what does data allow you to review and analyze to better position retailers for success?

Scot: Well, it's so important because it tells us as a manufacturer, you know...it validates who we're selling to, what the sell-through rate is, but it really...the important thing for us is it changes the conversations that we have with our distributors and our retail partners, so we can take more of a category captain approach, have more of a strategic conversation with our retailers which has really helped us immensely since we partnered with SPINS.

Joe: And Mike, we'll get to maybe how 2020 affected some of this data in just a minute, but first, when it comes to the CBD industry we're talking thousands of companies competing for shelf space. How can SPINS narrow it down for retailers? And is the CBD industry, you know, harder maybe than other industries in which retailers take away from data like this?

Mike: Yeah, it's a great question. You know, I think we're in a world where there's data a lot of places, and you need to be able to tell the right story and leverage the right data. So trust the data is a fantastic motto to follow because you need to use the data correctly and you have to stand by that number. And so what we do when we work with our brands is that we need to learn about what the brand is doing, their mission statement, their focus, and then we look to see what the data insights are telling. Specifically, we look at velocity. We look to see is this item selling quickly? Is this item at a unit per store per week, dollar per store per week? These are key metrics that we look at to see how quickly is this item selling. And then the other key metric that we look at is are you selling quicker than the competition or the category.

In conventional categories like barbecue sauce or condiments it's pretty straight for what that category is. The challenge and the fun puzzle that is CBD is that CBD can go across a lot of different categories, a lot of different universes, and so one of the main things we focus on at SPINS is how do we make sure we capture those items and categorize them correctly, and we really focus in on what is this item doing? What's the functional ingredient of this item? Is it a immunity item? Is this a mental health item? Is this...and so forth and you go down that focus area. And we really work with the brands to help identify what is the consumer looking for and how is this item solving that need.

Joe: And Scot, you know, what can retailers take away from some of the data that SPINS has shared from us in regards to that?

Scot: Well, all the metrics that Mike just mentioned, you know, units per store per week, those kind of things, dollars per store per week, those are all the metrics that category managers and buyers really care about, and, as I mentioned before, because we have the data now...I mean, stores know what's selling and not...you know, chains know what's selling and not selling in their stores, but the fact that we have the data and we come armed with a conversation about our product specifically or one of the other things that, you know, SPINS allows us to do is to look at the competitive and the geography competitive to where the chain's maybe located, what's selling around them. So, you know, being able to talk the same language as the category manager or buyer I think they appreciate that from a manufacturer, you know, just coming with not just a product conversation but something from a category captain perspective where we're trying to help them grow the category to what matters to them which are the retail metrics.

Joe: And Mike, obviously, you know, we'll go into some of the research and data insights in a little bit when it comes to the CBD industry, but how did 2020, you know, affect market research with everything that went on and what's in the retail channels outlook for, you know, the rest of this year ahead?

Mike: Yeah, I wish I had that crystal ball because we're getting that question left and right, but, you know, well it was very interesting from a consumption standpoint and from the food and CBD world is the change in buyer habits. So we had a dramatic shift in how consumers are buying their products, their food and their immunity products, and the shift that we're seeing is where channels that were usually traditional in CBD for example like convenience, their consumption habits shifted away as people were forced to change their daily habits. So travel went down and therefore convenience in general just felt the impact of that. However, the need is still there, and so we're seeing that people are now looking to boost their immunity and use food as medicine and that's kind of where we're seeing the next phase of this is that people really leaned in on vitamin D last year as part of the immunity, and now we're seeing people take that and personalizing that to their daily regimen.

So 2021 is gonna be about food for medicine and how am I gonna take what I did in 2020, vitamin D, vitamin C and so forth, and inject that into my daily routine. Coming out of that you're seeing a lot more developments around sleep aid, melatonin, how do we calm down, how do we help with our mental health and things like that. So there's gonna be some phasing out in terms of the trends you saw from vitamin D and C potentially. They're still very important or we're seeing a rise in other areas to help balance that out.

Joe: And with that answer I just wanna thank Mike real quick and then I'll get to Scot. I don't even have to preview our upcoming podcast episodes and some of the new products because you just said it for me. So there's a little hint on what's coming up on "CBD University Podcast" in future episodes. Scot, you wanna follow up on that?

Scot: Before you gave me a question I was just gonna, you know, comment on what Mike just said. What he's talking about is why partnered with SPINS. So it's important that we know the metrics of where our products are selling and how CBD is performing in the channels that we service. That's important, but if you're listening to what Mike is saying because he's talking about the trends. So it's not for us...the reason we partnered with SPINS is yeah we wanna know the data but we wanna know what's coming. So in having conversation with Mike and Greg and some other people on his team they're giving us ideas for future products. And I don't know if you can see in my background but, Mike, I cheated. I staged my office with some of the...

Joe: He's got products back there we haven't even showed on the podcast, but that's good because some of those products are gonna make their debut on our next podcast episode so we're just giving you a sneak peak.

Scot: Well, that's my point. Because some of the conversation we've had with, you know, Mike and his team at SPINS we are starting to develop in some of these, you know, our prototypes. We are starting to develop products that are product trends based on our relationship with SPINS and our understanding of what's going on in the marketplace. So again, it's a strategic partnership, both for today's, you know, sell-through rates and today's what's moving in the market and what SKUs are working, but really preparing for that next phase of products that are important to people.

Joe: I also didn't mention the trust the data part that Mike mentioned. And Scot, when we talk about trust the data, and you just, you know, kind of answered that, not only are we trusting that data of the statistics that says, you know, what some of the top brands are in the channels in the industry but also helping retailers prepare for upcoming trends to make sure they are prepared for maximizing their sell-through.

Scot: Yep, yep, and a lot of times they'll just mention to us, you know, things that customers are asking for, whether that be a distributor we're working with or, you know, a retail chain, and again, it's pretty much always in the line of what we're hearing from the SPINS team, so it's really nice. Yeah, it's a nice relationship.

Joe: And in that revolving retail landscape, how important is it for brands, you know, to stay on top of the latest research data so in turn that they stay on top of mind for retailers and consumers? Mike, I'll let you answer that first.

Mike: Yeah, sure. It's incredibly important. I mean, it's a...a retailer they look, depending on what they're focused on in terms of their job and what area of the store they're looking at, they look at it like dollars per inch. How much space is that product costing me to have it up there? And therefore, if you're talking about a gummy packet or a shot or something like that where your brand is standing there and your brand is taking rent on his or her store, therefore it's incredibly important that brand pays an ROI to the store. And while CBD and hemp balms being the number one CBD brand there is has really proven itself and you trust that data.

Now, as the trends are shifting and evolving and the consumers move into other areas and looking to boost the rest and destress and immunity boosting, your brand and your relationship with that retailer is gonna be the backbone because you're gonna be pivoting to new areas based off of the consumers needs, and we really help facilitate that conversation so that you can establish that trust from that initial data and then you can use that data and the partnership we have with you to go and launch the next item with confidence knowing that rent you're paying is gonna keep doing a positive ROI.

Joe: And Scot, we talk about staying on top of the latest trends, and Mike alluded to it, but, you know, what we have seen why don't you discuss what we've seen about the hemp balms brands in that channel?

Scot: Well, I mean, hemp balms and the channels that hemp balms serve which is primarily convenience, to Mike's point, were very much at the leadership position, but we don't wanna get overconfident in that. You know, one of the things that we talk to our distributors and retail chain partners is we know which SKUs sell well in their stores, right? Because we have the data from them. They know which SKUs sell well. What we do is also look at, you know, competitive information and see if there's any other SKUs that, you know, maybe are selling well that we don't have which hasn't been the case, but if it was we would try to get out in front of that and understand, you know, what we should be developing to make sure that they're successful.

I mean, as a manufacturer our job is pretty straightforward. We sell to distributors and distributors sell to stores, and, you know, to Mike's point earlier, they look at shelf space and say, "You know, what is each square inch worth?" So it's our job to develop products that get our distributors excited because they wanna, you know, they got lots of tools in their bag, lots of SKUs to sell. What's gonna make them excited about, you know, selling our products into their retail partners? And then once it hits the shelves what really turns? So that's why this...the innovation card and seeing what the trends are, you know, with the SPINS partnership helps, talking to distributors helps, talking to the chains helps.

Also, we have an Amazon arm of our business as a manufacturing organization and we use the E-comm data. You know, there's analytics tools within Amazon called, you know, Jungle Scout, so we're able to triangulate what we know from the people we deal with everyday, the information we get from SPINS, the information we're getting from the E-comm side of the business to help us, you know, create, you know, new offerings that we think are gonna move at the cash register.

Joe: Mike, what would you say the biggest challenge facing retailers is when it comes to CBD and what you guy's research has shown?

Mike: I think CBD...the greatest challenge is just where is it going. I mean, that challenge affects everybody but it's really prominent in CBD. CBD clearly has a purpose around rest and destress, but where does it play in terms of what type of product? We're seeing CBD come up in dog treats. We're seeing it come up in water, and so as the theme of food as medicine is it now at a point where CBD is an expected added ingredient or functional ingredient to an existing product. So should we expect CBD to show up in other areas that are not traditionally like gummies and tinctures and so forth. So what role does CBD play in the near term as people are starting to make their own personalized immunity regiment.

That's the biggest question we have, and it's...the added complexity is just a distribution of CBD and willingness of retailers to accept it as a valid ingredient and a functional ingredient, so that just adds a wrinkle to it, but the real question is where is CBD going in itself and should it be playing in water? Should it be playing in other areas? That's kind of the biggest question that we wrangle with constantly.

Joe: And Scot, with that question, where is CBD going?

Scot: Yeah, if I only knew. So I like the way Mike positioned that. That's a good, forward-thinking though process, but what to me the biggest challenge today in the short term, the near term, the right now what we're seeing is that inventory. So there the fact that there's so many brands in the marketplace. There's too many brands. That means brands cannot...that's not sustainable. And so if we're focusing on convenience and some of the, you know, the chains. You know, we're talking to different chains the data wasn't available as to what sells, right? So in today's world in convenience two brands make up 85% of all sales. That's a crazy statistic. People didn't know that two years ago when they were making their decision.

So the challenge we have right now is to get the inventory that's not moving out of the chains so that they can bring the players in to create an anchor brand, and that really what has to happen in different markets. You know, we talk a lot about convenience because hemp balms are so prevalent and convenient but we have lots of other products that are, you know, non-convenience and we have products obviously when I talked about Amazon channel and sell CBD on Amazon. So those would be non-CBD products, but it's just a matter of in convenience having the retailer who already knows the pain if they have a brand that doesn't move, working with them through the process to unload it so that they can create an anchor brand strategy hopefully with hemp balms. If they trust the data it will be hemp balms, and just working through that this year is probably gonna be our biggest challenge, but then the forward-thinking stuff that Mike's...you know, what is the form factors, formats, water, pet treats. What's it gonna look like? Other active ingredients. You know, that's a discussion for next podcast episode.

Joe: There you go. We've already got our next topic. I love it. I mean, I didn't even have to come up with it. I'm gonna have Scot write the script and we'll be all set.

Mike: One very good thing Scot pointed out is the anchor brand, and you become an anchor brand or a category captain by leveraging the data correctly, and because data is really what the two people [inaudible 00:20:12] could talk to. These are the dollars, these are the units, here's how quickly something's moving, and then you can problem solve together rather than being that...you know, we were in the previous step of, "Take my product, please. It's got a good story and a good label." So having that, you can now be that advisor to say, "We're seeing the changes in CBD. We have to move some of these brands away and so forth. Because you trust us with the relationship we developed let's go and do this." And so that's really where the conversation evolves and becomes a more mature, strategic conversation with your retailers.

Joe: And Mike, before we wrap up just a last question. When we talk about...is this real-time data? How often are you guys pulling?

Mike: Yeah, that's a good question. So it's every four weeks is when it's updated with ability to break it out by weekly. And I've lived in the data world one way or another in my entire career, and anything under four weeks it's pretty volatile, and, like, dollar promotion...you're running a certain promotion that really can skew the data of course. So it's good to look at weekly four weeks, but you also, again, wanna think about the longer trends. So 12 weeks, 24 weeks, 52 weeks, those are ways as to see how you're doing on the long term as it compares to the more recent trends.

Joe: Well Mike, I wanna thank you for joining us today. Scot, as always, thank you for joining me on this episode. We're gonna have to do this again. Great conversation, a lot of good topics, and I look forward to getting together again to talk about the latest trends and some more data.

Mike: All right. Thank you so much, a pleasure.

Scot: Thanks, Mike. Thanks, Joe.

Joe: Yeah, and thank you guys and thank you for listening to this episode of the "CBD University Podcast." A reminder that if you have not yet done so subscribe to our podcast on your favorite podcast platform of choice. You'll get notifications each week when new episodes are published. You can also subscribe on our YouTube channel to see the full video episodes there. I'm Joe Agostinelli, host of the "CBD University Podcast." Thanks for tuning in.

These statements have not been evaluated by the Food and Drug Administration. The CBD products are not intended to treat, cure, or prevent any disease or condition. Always consult your personal physician about CBD and using CBD products. CBD should never be used by anyone under the age of 18. This content is not intended to provide legal advice regarding the legal status of CBD and CBD products.