More and more mainstream retailers are getting into the cannabidiol (CBD) business. First came CVS, with the March announcement that it would be selling topical CBD products in eight states. Walgreens, Rite Aid and The Vitamin Shoppe made similar announcements in April. In June, the country’s largest grocery chain, The Kroger Co., became perhaps the largest mainstream retailer to enter the CBD category, and it further expanded its offering of topical products to 22 states in July.
“Like many retailers, we are starting to offer our customers a highly curated selection of topical products like lotions, balms, oils and creams that are infused with hemp-derived CBD,” a Kroger spokeswoman told CNBC.
CBD manufacturers who have partnered with mainstream retailers such as Kroger see a huge upside to entering the brick-and-mortar market. During its second-quarter earnings call, Boulder, Colo.-based Charlotte’s Web reported a 45% year-over-year revenue growth, with 53% of that revenue coming from brick-and-mortar retail outlets.
“Top-tier mass retailers are entering the market as several national grocery and drugstore brands have announced their CBD plans,” the company’s CEO, Deanie Elsner, said on the call. “This is a significant development for the hemp CBD category.”
The July Kroger expansion marked the CBD maker’s largest distribution deal through a single retailer. The increased exposure has led to increased sales in brick-and-0mortar stores as well as through the company’s e-commerce platforms.
While the CBD market initially developed through online and dispensary sales, Eisner predicts that as much as two-thirds of global sales will eventually come through mainstream retailers such as Kroger and CVS.
“The size and influence of the food, drug and mass merchandising retail channel will shape how the CBD category develops,” she said. “The decisions being made by these massive companies will determine how we need to scale to meet their needs.”