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4 Trends to Watch in the CBD Market

Experts offer their take on prominent themes in the category
Photograph: Shutterstock

While much of how the CBD market develops and grows in 2020 will be dependent on what happens on the regulatory front, there are still some trends CBD experts are watching for this year. Four prominent themes are:

1. Consumers Home In on Accuracy: As consumers have learned more about these products, they’ve come to identify a measure of value. “Once they validate the quality, the customer defines value as dollar per milligram,” says Miguel Martin, president and CEO of Natick, Mass.-based Reliva, a top-selling CBD brand. “They really do that math.”

Unfortunately, due in part to the lack of regulatory oversight, not every product on the market actually contains the amount of CBD advertised—something consumers and retailers alike are picking up on. Christian Patino, EVP of CBD maker Day One, Los Angeles, estimates 10% to 20% of the products on the market contain less than half the CBD claimed on the packaging. Official research shows as much: CBS News and Mile High Labs tested a number of CBD products across the country and found 25% of what they tested had less CBD than what was advertised and 25% contained more CBD (one product as much as 210% more than labeled). Cannabis site Leafly has also done extensive testing and found 1 in 10 products tested contained no CBD at all, and none of the four CBD waters it tested contained CBD.

Short of conducting independent testing, Patino encourages retailers to require a certificate of analysis on any CBD products they’re considering. “Make sure if a beverage is claiming 10 milligrams of CBD that they’re truly delivering,” he says.

2. Grocery Jumps In: While mainstream retail made up a relatively small piece of the CBD business in 2019, experts expect that to change in 2020. Martin points to the fact that all four national wholesalers now carry multiple CBD brands. “That will change things dramatically in terms of the trade having access to vetted brands,” he says.

Grocery is a channel Martin sees as particularly ripe for CBD success, thanks in part to the 40% to 50% margins the category boasts. “For grocery, it’s exceptional margins, a small footprint, 100% incremental and the basket size is great,” he says. “I think you’re going to see a lot more grocery operators bring on CBD this year, particularly topicals. They clearly have the consumer already in their stores.”

3. Beverage Booms: Will beverages be the new gummies of the CBD category? Many manufacturers think so, with Day One expanding its line of CBD sparkling waters and Reliva launching ready-to-mix CBD beverage powders.

“I believe that the leading ingestible is going to be beverage,” Patino says. “Beverage is very convenient and, in terms of efficiency, it’s one of the fastest ways to get CBD working in your body.”

Advances in technology have allowed CBD to be more accurately distributed in water and other beverages via emulsions, which should help the segment—though lingering regulatory concerns may keep CBD beverages from hitting its full potential this year. “Based on conversations I’ve had with major retailers, all of the buyers are very excited and want to have these products on their shelves as soon as possible,” Patino says.

4. Brands Emerge: When it comes to what CBD manufacturers are focused on in 2020, a common theme is developing a brand presence among a nascent and crowded category. “CBD is the brand right now,” Martin says. “There’s probably only a few brands that have brand equity.”

This year, retailers can expect many CBD brands to set themselves apart, building brand recognition and loyalty through packaging, advertising and other marketing materials. “Brands will evolve from being a just a product with a benefit to more of a lifestyle type of product,” Patino predicts. That’s what Red Bull did to set itself apart from the competition.

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