Part of cannabis and investing
Retail data giant Nielsen Holdings Inc. is entering the Canadian cannabis market through a “strategic alliance” with Deloitte LLP and a U.S. dispensary-focused software company called Headset, the companies announced Tuesday.
As Nielsen does for other sectors, it will collect information on product trends, pricing, consumer habits and demographics from cannabis retailers and wholesalers across Canada, as well as directly from consumers.
"For Nielsen, which largely operates in the FMCG [Fast-Moving Consumer Goods] space, cannabis is a whole new category that’s going to impact our industry,” said Mike Ljubicic, managing director of Nielsen Canada. “There’s interest on both sides: Those who will be in the space and those who will be impacted by this space.”
For all the money that has poured into the Canadian cannabis industry over the past four years, remarkably little data is being produced and analyzed in a reliable manner. Anecdotal information, on everything from market size to consumer preference, abounds. But few firms are able to capture and analyze large enough data sets to make truly informed decisions about things such as branding, product development and even basic logistics.
“The lack of data in the market is really challenging for everyone from LPs [licensed producers] to retailers to CPG [consumer packaged goods] companies. No one can make heads or tails of what’s really going on,” said Jennifer Lee, a partner at Deloitte Canada, who leads the firm’s cannabis group.
"Each of the provincial liquor boards are producing data sets, and the LPs have their data sets, but nobody has a full view of the market, and that’s what makes it so challenging, you’re making decisions in isolation,” she said.
Nielsen and Headset, which provides dispensary software and real-time sales analysis, will collect point-of-sale data from retailers, along with wholesale data from LPs and provincial wholesalers. Deloitte will help analyze and segment the data, overlaying it with information sourced from elsewhere.
Nielsen has already begun collecting cannabis consumer data using its Homescan Panel system, which is installed in 12,500 households across the country, said Mr. Ljubicic. People who have Homescan Panels scan their retail purchases at home, providing data to Nielsen in return for various rewards from the company.
“Point-of-sale information is going to give us transactional data, what are people buying. It’s going to be our Homescan Panel that’s going to give us the demographics of who’s buying,” he said.
The partners expect to launch a data product sometime in the second quarter of 2019, Mr. Ljubicic said.
"This thing will start to grow as more stores are rolled out across the provinces, as we start picking up more transactions, as we start picking up more consumer information. Right now it's flower-based products, and we know that down the road it will eventually go into edibles and stuff as well, and that's where we'll just continue to see growth," he said.
The companies did not disclose the financial arrangements involved in the alliance.
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