Defined as individuals born between 1965 - 1979, Generation X grew up during the height of the War on Drugs and traditionally had some of the most conservative attitudes toward cannabis use.
Luckily, opinions are slowly shifting as the legalization movement gains traction and they are watching many of their own children embrace recreational cannabis use. With over 82 million Gen Xers in the U.S., this aging demographic is increasingly seeing both the medical and recreational benefits of cannabis, and retailers should take greater efforts to reach this lucrative consumer market.
By analyzing Headset data on basket composition and trends in market share and average item price (AIP), individual dispensaries can be better equipped to drive ROI and serve this particular group of potential customers.
What’s in Generation X’s basket?
Generation X is one of the fastest growing consumer demographics in the legal cannabis space, making up more than a third of total cannabis sales in recent years. In 2019, the baskets of consumers in this demographic include about 2 items per purchase. Flower and pre-rolls are the most commonly purchased items with an average of 66 flower products and 52 pre-roll products per 100 purchases. Vapor pens, concentrates, and edibles are the next most commonly purchased products with 18-24 of each per 100 purchases.
Capsules, topicals, tinctures & sublingual, and beverages are the least commonly purchased among Generation X customers, with 4 or fewer products of each category per 100 purchases. This underperforming subcategory may be perceived as too medical, leaving a potential opportunity for savvy retailers to educate Generation X customers about the health benefits of using capsules, topicals, tinctures, and beverages in an engaging way.
AIP for Generation X Purchases
Flower products are the most frequently purchased items among Generation Xs, and the average item price (AIP) is increasing. Generation X spent an average of $18.12 per flower product at the beginning of 2018 and $19.17 at the end of 2018. Their spending is projected to increase to an average of over $20 per unit of flower product by the beginning of next year.
Vapor pens have seen a slight decrease in AIP since 2017 but have experienced a steady increase in Q4 2018 from $22.64 to $23.59.
Edibles AIP have jumped among Generation X from Q4 2017 at $12.95 per item to $14.66 in the last quarter.
Concentrates have experienced the largest decrease in AIP among Generation X consumers, dipping 37.5% from $21.34 in Q1'17 to $13.33 in Q3'19.
Generation X typically spends 10 cents to a dollar more per item compared to the rest of the market on flower, vape and edibles. However, for concentrates, they typically spend 20 cents less on average in the most recent quarter.
Where is Generation X’s Market Share Growing?
The market share of concentrates among Generation X customers has declined from over 55% in Q1'17 to just over 45% in Q3'19. This trend has an inverse relationship with the increase in AIP for flower among this generation. Vapor pens saw the greatest growth in Generation X's market share from Q4'17 to Q3'18, increasing from 13.6% to 18.5%, respectively.
Edibles have seen a steady growth across Generation X's market share possibly due to the steady growth of AIP. Even with the significant decline in AIP in the concentrates category for Generation X, their share of the market hovered around 10%, with a slight decline the past two quarters and landing at 8.4% market share in the most recent quarter.
It’s evident that Generation X is more likely to spend their disposable income on higher-priced flower and edible products. Edibles and vapor pens also have the most potential for market share growth among the consumer demographic, judging by their each AIP’s upward trajectory.
Retailers located in communities with a robust Generation X population should keep these figures in mind when determining their inventories and take the appropriate measures to encourage and educate Generation X customers about the benefits of purchasing flower, edible and vape products.