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The CBD-edibles category is still in its infancy in the mainstream market today, but sales growth is already outpacing that of the general CBD product market.
CBD edibles such as food, drinks, gummies, and candy are set to be a huge driver of CBD market growth moving forward. CBD-edibles sales are already trending upward even as the COVID-19 pandemic persists. Market researcher IRI (Chicago) shared this and other CBD market insights during an August 13 Nutritional Outlook webcast titled “CBD in Food: A Challenging Road Ahead.”
Although the CBD-edibles category is still in its infancy in the mainstream market today (meaning outside of dispensaries), the potential for growth is promising, noted webcast speaker Larry Levin, executive vice president, Market and Shopper Intelligence, IRI. Although “the bases are small” today, Levin said, sales growth of CBD edibles and beverages is already outpacing the sales growth of the general CBD product market, at 130% vs. 89%, respectively, based on data from the 52 weeks ending June 14, 2020. (The data IRI shared stems from its partnership with BDS Analytics (BDSA; Boulder, CO), a market intelligence provider specializing in the global cannabinoid retail market. Last year, IRI and BDS announced a partnership to provide market research data on the legal cannabinoid marketplace.)
Looking forward, edibles such as food, candy, and beverages will be essential to CBD’s mainstream market growth, Levin said. The mainstream CBD products market is expected to reach $18 billion by 2024, growing from just $3 billion in 2019. CBD edibles will grow the most during that time, gaining approximately $5.7 billion. Compare this to the mainstream growth predicted for other CBD categories during that time period: topicals ($4.2 billion), pharmaceuticals ($2.1 billion), sublingual ($1.8 billion), inhalables ($1.0 billion), and pet care ($0.6 billion).
“There’s definitely a preference for edibles,” Levin noted. Reporting on Q1 2020 consumer research BDSA conducted among adult cannabis consumers living in states where cannabis is legal, Levin pointed out that 71% of respondents said they consume edibles while 33% said they prefer edibles.
Drilling down further into BDSA retail sales tracked in January 2020-April 2020, Levin reported that CBD candy (including gummies) accounted for the largest share of edible products sold in dispensaries. “More than half of the edibles market is being driven by candy,” Levin said. The next biggest CBD-edibles categories in dispensaries—from highest to lowest sales—were chocolate, infused food, pills, and beverages. Altogether, sales of all of these edible products, including candy, amounted to $420 million during that time period.
Beverages are still a small part of the CBD-edibles market, accounting for just 6% of the edibles sold in dispensaries, for instance. However, rapid growth is happening. In the 52 weeks ending December 29, 2019, for instance, hemp and CBD beverage sales grew 168% in the general market.
For companies hoping to participate in the CBD market, “having an edibles strategy is certainly a critical component,” Levin advised. Keys to success include taste/flavor, price, and brand familiarity/trust.
For growth to happen, consumers need to be educated about these products. “There’s a lot of confusion in the market, because just a little more than one out of five consumers can actually articulate the difference between cannabinoids and understand the difference between CBD [cannabidiol, the non-psychoactive cannabinoid] and THC [tetrahydrocannabinol, the psychoactive cannabinoid],” Levin said.
He added: “There’s still so much education that’s necessary, and that’s one of the reasons that the budtenders become so important at the dispensaries, because they really understand the market. They can help consumers figure out what’s the right product for them.”
Brands looking for pockets of opportunity should understand that CBD users span a wide range, crossing generational and socioeconomic lines. “The user is really everybody, from the soccer mom who inhales to baby boomers who take edibles at night,” said Levin. Many also use both THC and CBD products, meaning many brands will find opportunities by “playing in both channels.” Some have already found good results extending their reach beyond dispensaries and into the mainstream channel.
Levin also shed light on why consumers seek CBD products. The number-one sought-after benefits include relieving pain, sleeping better, and relaxing. Moreover, nearly 50% of consumers who prefer CBD-edible products report consuming these products daily, with nearly half taking them later in the evening.
Finally, as CBD products becomes more mainstream, companies will find retail channels shifting. While dispensary sales accounted for 51% of the market in 2019 (followed by e-commerce at 14%, pharma at 14%, grocery at 4%, mass-market at 1%, natural/vitamin stores at 5%, other channels at 3%, convenience stores at 4%, and drugstores at 3%), that pie will change. By 2024, dispensaries’ share will shrink to 26% and pharma will decline to 11% as other retail channels grow (e-commerce to 18%, grocery to 9%, mass-market to 9%, natural/vitamin stores to 8%, other channels to 7%, convenience stores to 5%, and drugstores to 5%).
“This truly is becoming a mainstream market, and we’ve got to be ready for that,” Levin said.
Finally, Levin shared numbers indicating that CBD sales have not suffered during the COVID-19 pandemic. For instance, from April 14, 2020, to June 14, 2020, sales of all CBD products were 37% higher compared to the same period a year ago. Drilling down, CBD health and beauty product sales were 37% higher compared to a year ago while CBD-infused food and beverages were 39% higher.
Levin shared many more CBD market details, including total market size and projections, during this free webcast. To watch this free webcast on demand, click here.