CBD, pain management insights to guide CBD strategies

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CBD, pain management insights to guide CBD strategies

By Kate Senzamici, BDS Analytics - 11/25/2019

As more consumers adopt a proactive self-care approach to health and wellness, products with hemp-derived CBD and other cannibinoids are a welcome supplement, or alternative, to traditional solutions. CBD and other cannabinoid products that span categories, forms, retail channels and regulatory landscapes create a unique situation for CPG retailers and suppliers aiming to make the most of this new growth opportunity. Across OTC, pharmacy and adjacent categories, there are some key points for CPG players to consider when formulating a CBD strategy:

1. Legal cannabis is growing. BDS Analytics projects a $45 billion U.S. cannabinoid market by 2024, with CBD positioned as a key growth driver. The new market opportunity within CPG virtually is unprecedented: BDS Analytics partner IRI compares the projected $45 billion industry to the entire U.S. snacking market from a dollar sales perspective. Additionally, mainstream acceptance is becoming more widespread: 80% of U.S. adults agree that marijuana should be legal in some form, and more than 60% agree that the plant has medical benefits. 

2. Pain management is a top reason for CBD product use, but it’s not the only reason. BDSA Consumer Insights data shows that close to one-third of hemp-derived CBD consumers turn to CBD to treat pain — a far greater percentage than the No. 2 use case, sleep (10%). However, since CBD fits nicely into a holistic approach to health, consumers do report using hemp-derived CBD for a variety of physical and mental wellness purposes. 

As such products spread across food, drug and mass channels, there are considerable opportunities for cross merchandising within pain management. For example, BDSA data shows that hemp-derived CBD consumers over-index on consumption of organic foods and prefer local and natural brands. When considering placement, it would make sense to plan for adjacencies with natural, better-for-you and local products.

3. The rise of CBD in pain management impacts OTC/Rx shopping behavior and trip frequency. Roughly half of all consumers who use cannabinoid products for pain management report decreased use of OTC and prescription medications (54% and 46%, respectively), and substantial proportions of this consumer segment report using cannabinoid products specifically to avoid OTC and prescription drug use. This shift in behavior can impact traditional OTC and pharmacy trips in several ways, potentially eliminating an entire aisle or threatening the retail pharmacy trip as a source of front store traffic. As demand for CBD products grows and state cannabis markets mature, food, drug and mass channels will face competition for key OTC or pharmacy trips from dispensaries and other channels.  

4. The importance of the dispensary channel should not be overlooked. It’s essential for retailers and suppliers in the general market to understand that the dispensary channel is not only about high-THC products. The legal dispensary channel dominates CBD product sales today, and BDSA projects that products containing CBD will make up nearly 20% of channel sales in 2019. 

In fact, CBD sales within dispensaries are growing at a faster rate than dispensary sales overall. The dispensary channel will continue to be the leading indicator of cannabinoid product trends. Therefore, formulating a winning cannabinoid strategy at general retail requires monitoring product innovation at the dispensary level across delivery systems, dosing, packaging, branding and messaging.  

5. There is a lot of room for education. It is necessary for retailers and manufacturers to educate themselves, as well as consumers, about the cannabis plant. Despite CBD’s mega-trend status, more than half of U.S. adults age 21 years old and older don’t know the difference between CBD and THC, nor accurately understand the effects of CBD. Here, there exists opportunity to establish a trusted advisor relationship with customers who are new to, or curious about, CBD products.  

Kate Senzamici is an account manager with BDS Analytics.

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