Activities initiated by the Food and Drug Administration (FDA) will continue to affect the evolving hemp-based CBD marketplace in the United States over the next decade. That’s why Nielsen, Chicago, predicts brands, marketers and consumers to have a big appetite for data and information about cannabis in 2020.
In fact, Nielsen projects that the U.S. hemp-based CBD market could be a $2.25-2.75 billion industry in 2020.
Here’s a handful of developments to be on the lookout for in 2020 that may tip the scales for manufacturers and retailers.
Targeted educational efforts will rise
While education will remain a necessity for hemp-based CBD manufacturers and retailers, expect a rise in manufacturer-driven, educational efforts to hit healthcare providers. Nielsen’s Q4 Health Care Practitioner Tracking Study found that although 70% of the practitioners surveyed said they discuss CBD with their patients, only about one in three practitioners were knowledgeable about the laws surrounding hemp-CBD.
CBD prices will fall
CBD manufacturers that narrow the price gap between hemp-based CBD products and their CPG equivalents will maximize the opportunities to compete within the CPG space. Currently, the price gap is large. Depending on potency, CBD products frequently range between 4-10 times the retail price of CPG products used for comparable needs. Production efficiencies linked to cultivation and extraction practices will affect product pricing. The number of U.S. hemp farmers will also rise over the next decade, as well as price efficiencies from the growing of hemp in Latin American countries. A study by Hemp Benchmarks, Stamford, Conn., reveals that nearly 50% of current hemp cultivators in the United States expect to increase the acreage they devote to hemp cultivation. All of these will set the stage to make hemp-derived CBD more affordable for producers and manufacturers.
Consumers will grow an appetite for ingestibles
Capsules, gummies and beverages will significantly grow their user bases, pending the FDA’s permission for manufacturers to legally infuse hemp-CBD extracts into ingestible products. In fact, Nielsen projections show that with FDA approval, ingestible formats could grow their existing user base as much as 250-375% in a year’s time. In addition, these formats will benefit from recent technological advances in this space. For example, new water-soluble and nano-technologies both allow for more efficient absorption. Over the next decade, categories that consumers use habitually or as part of their daily routine will contribute significantly to CBD growth and ultimately garner high sales due to replenishment frequency.
Consumers will pass CBD curiosity onto their pets
Hemp-CBD is exploding in the pet space, and a sizable portion of pet owners are already hopping on board. Data shows that 37% of dog owners who give their dogs vitamins and supplements say they’re likely to give their dog a hemp-CBD infused vitamin in the next 12 months. That said, those who claim to have given their dog a hemp-CBD product, more than 20% used a product not specifically formulated for a dog. As more U.S. adults adopt products from the hemp-CBD category, it’s imperative for pet CBD product manufacturers to provide a recognizable and valued level of differentiation between their products and those intended for human consumption.
A battle at retail will emerge
Over the next decade, traditional brick-and-mortar CPG retail channels, inclusive of food, drug, mass, club, convenience and dollar store channels, will begin to steal share from online CBD retailers, local specialty CBD retailers and vape and tobacco shops. An influx of new consumers will tip the scales for traditional retailers. Compared with current hemp-CBD users, survey data shows that new CBD consumers who say they’re likely to consume CBD products in the next 12 months but have yet to consume are more than twice as likely to state that they’ll shop for CBD products at a grocery chain or mass merchandiser. These same consumers are more than 3.5 times more likely to state that they’ll purchase hemp-CBD products from a chain drug store.
With the rising appeal of hemp-CBD and ubiquity of CPG, the two industries have much to offer each other. As the regulatory outlook becomes clear, manufacturers and retailers can’t afford to ignore the CBD space.