Sizing up the CBD marketplace
This year is shaping up to be a massive one for CBD, with sales reaching nearly $5 billion in the industry by end of year — an increase of more than 700% compared with 2018. By 2023, Brightfield Group estimates that the total U.S. CBD market could hit $24 billion.
Historically, online sales have been the primary distribution channel for the CBD market. In fact, nearly two-thirds of sales were online in 2017. Today, however, the primary cause of market growth is the entrance of chain retailers. Large pharmacy, retail and grocery chains are entering the market with a wide variety of large-scale pilot programs. Given their reach, scalability and mainstream familiarity, these distribution channels are expected to garner 57% market share in 2019.
Over the short-to-medium terms, we expect expansion across both the pharma and grocery channels, as well as the emergence of supercenters, gyms, pet stores, natural food chains and other big box retailers.
Tinctures remain the largest part of the market, followed by topicals, vape oil/cartridges and capsules. However, that lead is narrowing as the hemp CBD industry evolves and expands. Increased consumer access has spurred huge growth as the market is no longer entirely dominated by people who suffer from extreme pain or epilepsy and must go to great lengths to attain product, nor primarily by cannabis consumers.
As CBD is extremely versatile, companies have begun infusing it into everything from facial scrubs and sunscreens to CBD sparkling water, beer and coffee, appealing to a greater variety of mainstream users.
The U.S. CBD market has become even more saturated in 2019, with a continuous flood of new entrants or established line extensions creating CBD products to join the thousands already present in the market.
Since the market has seen both sizable expansion and consolidation this year, the top 20 brands technically have lost share, but still maintain a majority of the now much larger pie. Expansive growth in the industry should continue apace as brands gain name recognition and consumer loyalty following product trials and higher consumer education.
By deeply understanding what they are as a brand and identifying the consumers who resonate with their messaging, they have built the foundation for potentially lifelong customers and advocates.
Success primarily has come from classic product formats, e.g., capsules, softgels, and adherence to quality, low-dose products, making PlusCBD Oil a safe bet for more conservative users.
One product category that has gained a great deal of traction this year is skin care and beauty. Separate from the topicals category, such skin care and beauty products are items as face masks, eye serums, bath bombs, body lotion and scrubs — some of which are applied topically, but few of which generally are used to treat chronic physical medical conditions.
In fact, many products appeal to those consumers suffering from emotional health issues, as nearly two-thirds of CBD skin care product users suffer from anxiety. Skin care and beauty products are highly similar to topicals in terms of the implications of the Farm Bill and subsequent FDA announcement. As such, they generally are considered less risky by manufacturers and retailers, and are witnessing rapid adoption across the country. In addition, skin care and beauty products are extremely versatile, giving producers a great deal of room for innovation in this space.
They reach a very different audience than general topicals, thus skin care and beauty products are projected to follow their own distinct trajectory both in terms of distribution channels and overall growth.
CBD brands have been capitalizing on this growing product segment by creating targeted, purposeful products aimed at specific consumers. The general skin care and beauty industry markets product successfully by highlighting specific customer goals that could be attained using their products. CBD is no different. Brands like Bluebird Botanicals and Mary’s Nutritionals maintain transparency in product ingredients, while emphasizing their benefits and how they will help consumers reach their skin care goals.
By leveraging not only CBD, but functional, supplemental ingredients in their product and descriptions, these CBD brands better tailor their products to the skin care and beauty consumer, as opposed to the average CBD user, appealing to them by utilizing the same tools as traditional brands, further blending the industry with traditional CPG.
Historically, online sales have been the primary distribution channel for the CBD market. In fact, nearly two-thirds of sales were online in 2017. Today, however, the primary cause of market growth is the entrance of chain retailers. Large pharmacy, retail and grocery chains are entering the market with a wide variety of large-scale pilot programs. Given their reach, scalability and mainstream familiarity, these distribution channels are expected to garner 57% market share in 2019.
Over the short-to-medium terms, we expect expansion across both the pharma and grocery channels, as well as the emergence of supercenters, gyms, pet stores, natural food chains and other big box retailers.
Tinctures remain the largest part of the market, followed by topicals, vape oil/cartridges and capsules. However, that lead is narrowing as the hemp CBD industry evolves and expands. Increased consumer access has spurred huge growth as the market is no longer entirely dominated by people who suffer from extreme pain or epilepsy and must go to great lengths to attain product, nor primarily by cannabis consumers.
As CBD is extremely versatile, companies have begun infusing it into everything from facial scrubs and sunscreens to CBD sparkling water, beer and coffee, appealing to a greater variety of mainstream users.
The U.S. CBD market has become even more saturated in 2019, with a continuous flood of new entrants or established line extensions creating CBD products to join the thousands already present in the market.
Since the market has seen both sizable expansion and consolidation this year, the top 20 brands technically have lost share, but still maintain a majority of the now much larger pie. Expansive growth in the industry should continue apace as brands gain name recognition and consumer loyalty following product trials and higher consumer education.
By deeply understanding what they are as a brand and identifying the consumers who resonate with their messaging, they have built the foundation for potentially lifelong customers and advocates.
Success primarily has come from classic product formats, e.g., capsules, softgels, and adherence to quality, low-dose products, making PlusCBD Oil a safe bet for more conservative users.
One product category that has gained a great deal of traction this year is skin care and beauty. Separate from the topicals category, such skin care and beauty products are items as face masks, eye serums, bath bombs, body lotion and scrubs — some of which are applied topically, but few of which generally are used to treat chronic physical medical conditions.
In fact, many products appeal to those consumers suffering from emotional health issues, as nearly two-thirds of CBD skin care product users suffer from anxiety. Skin care and beauty products are highly similar to topicals in terms of the implications of the Farm Bill and subsequent FDA announcement. As such, they generally are considered less risky by manufacturers and retailers, and are witnessing rapid adoption across the country. In addition, skin care and beauty products are extremely versatile, giving producers a great deal of room for innovation in this space.
They reach a very different audience than general topicals, thus skin care and beauty products are projected to follow their own distinct trajectory both in terms of distribution channels and overall growth.
CBD brands have been capitalizing on this growing product segment by creating targeted, purposeful products aimed at specific consumers. The general skin care and beauty industry markets product successfully by highlighting specific customer goals that could be attained using their products. CBD is no different. Brands like Bluebird Botanicals and Mary’s Nutritionals maintain transparency in product ingredients, while emphasizing their benefits and how they will help consumers reach their skin care goals.
By leveraging not only CBD, but functional, supplemental ingredients in their product and descriptions, these CBD brands better tailor their products to the skin care and beauty consumer, as opposed to the average CBD user, appealing to them by utilizing the same tools as traditional brands, further blending the industry with traditional CPG.