In the US, non-consumable, hemp-based cannabidiol (CBD) products have been popping up on shelves within major retail outlets and generating a big buzz. Nielsen Insights research predicts that by 2025, the US hemp-derived CBD market could be a USD6 billion industry, while other researchers believe recreational cannabis de-regulation may speed up the legislation of hemp-derived CBD.
Euromonitor International expects global sales of CBD packaged foods to double over the next two years and the legal cannabis market to be worth US$166 billion in 2025. According to Nielsen, some consumers are finding CBD from hemp appealing for the natural benefits of the cannabinoid compound without tetrahydrocannabinol (THC), the psychoactive compound found in Cannabis. Unlike areas in the US where marijuana is legal, edible products containing CBD from hemp remain regulated by the US Food and Drug Administration (FDA).
While the legal environment for selling edible products including CBD from hemp is currently murky and complicated, many consumers and companies are taking a close look at the potential for this market, Nielsen says.
According to a Rabobank report published in May 2019, The Future of CBD in Food & Beverage, consumer interest in cannabidiol (CBD) has exploded over the past two years. Despite warnings from regulators, CBD-infused products – anything from lotions and tinctures to gummies and seltzer water – are penetrating new markets at an astounding pace. “Will CBD become a consumer staple, or will it become another has-been cure-all in the supplement aisle?”
Bourcard Nesin, the beverages analyst with Rabobank, fears that the hemp market is heading towards a biomass price crash, with farmers producing far too much CBD raw material than can be processed.
“In this report, we lay down a framework for what is driving demand for CBD and present alternative theories for how the market could develop over the next five to ten years,” says Mr Nesin. “Finally, we break down what all this could mean for food and beverage companies and brand building in the CBD space.
Rabobank believes we are likely approaching peak hype around CBD. Once farmers, investors, brand owners, and consumers start to readjust expectations from their current stratospheric status, it will be much easier to size-up the long-term opportunity that CBD-infused products represent.
Cannabis legislation will disrupt global industries
Euromonitor International, in its June 2019 report, Here Comes Cannabis, How Legislation Will Disrupt Global Industries, says Cannabis is poised to disrupt virtually every consumer industry. While the total global market for Cannabis, both legal and illegal, stands at USD150 billion today, Euromonitor expects the legal market to grow to 77 percent of total sales, at USD166 billion in 2025.
“Within the next decade, some form of Cannabis will be a part of consumers’ daily routines, either as a functional ingredient in foods, beverages and beauty or as a wellness mood enhancer in health. However, what is it? Where is it? What industries will be most impacted? Also, how will it transform the future of consumer markets?” Euromonitor says.
It’s all about CBD for now
“CBD is currently the functional ingredient of choice, being non-psychoactive and thus legal. It is kick-starting conversations around Cannabis as consumers are educated about the potential applications of CBD, such as anti-anxiety relief, pain relief, anti-nausea, anti-inflammatory and anti-spasmodic, “Euromonitor says.
“CBD is not the only cannabinoid. As scientific studies develop, a range of cannabinoids in specific combinations with each other and with THC will be created for specific ailments. For example, THC converts to cannabinol (CBN) as the plant naturally ages or is exposed to heat/oxygen. CBN is reputed to have sedative, pain relief, antibiotic and anti-inflammatory properties as well as being an appetite stimulant and stimulating bone healing, amongst other therapeutic properties.”
CBD de-regulation a boost for snacks in the US
Nielsen says that in the last week of May 2019, the FDA began hearings examining the potential de-regulation of CBD from hemp within food products. This possible legalization of edible CBD from hemp could have a significant impact on the US consumer packaged goods (CPG) industry—particularly for the snack and confectionery category.
Nielsen predicts that, by 2025, the US hemp-derived CBD market could be a $6 billion industry when considering legalized sales of food and beverage products containing CBD from hemp.
This suggests a sizeable opportunity for CPG snack and confectionery manufacturers within the CBD space. Today’s shoppers are increasingly seeking out snacks with added health and wellness benefits. Lockstep with this smart snacking trend, some believe that adaptogens and botanical hemp extracts that naturally contain CBD could be the next frontier in snacking. While these types of ingredients are still very niche in nature, they are certainly gaining the attention of many due to their purported abilities to impact wellness naturally.
Euromonitor International Experts View
Howard Telford, Industry Manager, Soft Drinks: In the short-term, the foremost opportunity for cannabis within the soft drinks industry will be CBD-infused drinks. These products can be positioned as naturally sourced relaxation beverages and provide a new functional angle. We can expect the major beverage companies to acquire and create new CBD beverage brands over the next few years.
Irina Barbalova, Global Lead, Beauty & Personal Care: Exploring the cannabis space in terms of product formulation and overall proposition will be an opportunity hard to resist. As health becomes intrinsic in every brand’s strategy, cannabis’ remedial and therapeutic credentials present an immediate investment prospect. Cannabis may well become as ubiquitous as any other mainstream beauty ingredient in the not so distant future.
Matt Oster, Industry Manager Consumer Health: The mainstreaming of cannabis will open the consumer health space up to innovation and experimentation. Though CBD is already in demand, we haven’t scratched the surface of potential applications for the ingredient. I expect engagement only to deepen once norms and regulations finally catch up
Pinar Hosfaci, Industry Manager, Packaged Food: while current penetration of cannabis and related ingredients remain niche in foods, there are substantial growth opportunities. Similar to the way plant-based disrupted the entire packaged food industry, cannabis is expected to bring a new edge to mindful consumption. Today’s functional food-seeking consumer will convert into tomorrow’s mindful / mood-boosting consumer.
Euromonitor International says that today’s CBD-infused market will drastically change over the next decade. By 2030, the cannabis market will be transformed by outcome-based brands made by household brand names. The growth of THC-infused products will become more routine in consumers daily lives, adding a new dimension of social lubrication beyond medical applications. Brands across all industries will focus on the sensorial, mood-enhancing attributes.
The pace of legalization means that consumers will be able to use cannabis products in 2030 for their daily needs. They will be able to wake up and have a pick-me-up cannabis beverage, jump in the shower and use cannabis toiletries, take a cannabis supplement with lunch, consume cannabis sports nutrition after the gym, pop out in the evening for a non-alcoholic THC drink with a buzz and go to bed at the end of the day with a THC sleeping aid.
By 2030, those companies which reacted early will have their everyday cannabis brands, as cannabinoids are turned into a variety of outcome-based products across all industries, Euromonitor concluded.