Sales of products containing CBD have grown four times faster this year than CPG products overall, according to cannabinoid market researcher BDSA in a webinar that the Boulder, Colo.-based company held recently in conjunction with market analyst IRI.
Further, sales of CBD products are expected only to continue to climb. In the U.S., sales of CBD products grew by 48% from 2019 to 2020, especially in states where cannabinoid was newly approved for adult use (versus medical use) such as Massachusetts, where sales have grown 127% this year, and Illinois (up 101%).
BDSA anticipates a $40 billion market for legal cannabis by 2026, both for recreational use and medical use, although recreational use drives the market. The top market for 2021 is California; it's followed by Colorado, Florida, New York and New Jersey. "We anticipate them being top drivers of sales as we look out to 2026," says Jessica Lukas, SVP of commercial development with BDSA.
However, in the absence of federal regulatory approval, every state is still a world unto itself in terms of what products it allows for sale and for what reasons. According to BDSA, about 75% of adults in fully legal states are open to, or already consuming, cannabis (up from 63% in 2018), and about 45% are currently consuming CBD.
“It’s not the Wild, Wild West anymore,” says Lukas, although California “drives a lot of what’s happening in the U.S.,” she points out.
In grocery stores, the most popular CBD items are edibles and topical products, both of which are expected to see sales grow. In fact, Lukas says, “we anticipate that edibles will drive sales in mainstream retail if the FDA approves it.”
Edible CBD products make up just 14% of the market so far and are dominated by candy, and candy is dominated by gummies. Of the edible market, candy constitutes 68% of the category; chocolates account for 13%; pills make up 7%, infused foods are 6%; and beverages 5%, “however inhalables are still king,” says Lukas. Within candy, “there’s a lot of interesting things happening beyond gummies in the marketplace.”
The beverage category, while small now, is likely to expand significantly. “Beverages are the hot topic,” Lukas says. They constitute about 5% of the edibles market, or about 1% of the total CBD market, so their sales are small, but they’re growing.
“Beverages grew 60% this year over 2020, so it’s huge, but off a very small base,” Lukas says. However, the category represents a meaningful competitor to other functional beverages as well as to alcohol, as more consumers abstain from alcohol-containing beverages. BDSA anticipates a $2.5 billion cannabinoid beverage market by 2026.
Who is the CBD Consumer?
Overall, around 54% of CBD consumers are male; 62% have a college degree or higher; and 35% are younger than 35.
Of cannabis consumers, around 70% consume edibles and 34% say they prefer edibles. Most consumers of inhalable products (68%) also consume edibles.
What are they looking for from CBD? Pain relief is the top reason consumers cite for choosing edible CBD products; they also seek better sleep, anxiety management and stress management.
What This Means for Grocery Retailers?
For retailers, CBD offers a significant opportunity to grow sales that likely will continue to expand as more states approve CBD products.
Do the rules of CPG apply to cannabis? Yes and no. Price matters and is a top driver of product choice. There are no national brands, due to no federal regulations, and brands matter less, though a good experience, trusted recommendation and brand familiarity are important, consumers have told BDSA.
Lukas expects to see this industry move quickly. “There’s a lot of capital being invested in this space," she says. "We anticipate this to continue to grow, legalization to continue to spread. The big companies are going to continue to get bigger."