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Data Dive: CBD Rising

by Eric Peterson on September 4, 2019, 11:26 am MDT

As the cannabis market gains speed, CBD is projected to increase from about a quarter to nearly half of all sales in five years.

"CBD isn't something new -- it's new to the general market," says Jessica Lukens, senior vice president of sales and consumer insights at BDS Analytics in Boulder, Colorado. "We predicted, not surprisingly, in January was going to be the talk of the town. That has happened."

That's the thrust of BDS' new report, CBD: Cannabinoids Escape the Dispensary, produced in partnership with Arcview Market Research.

The report's estimate for "the total cannabinoid marketplace" of both THC and CBD products was about $11 billion in the U.S., she adds. The 2024 forecast is $45 billion. 

The entire market's on fire, but CBD is even hotter. From 2018 to 2024, BDS forecasts CBD sales to jump from $1.9 billion to $20 billion.

"Not something new, but new to the masses"

The big news is Walgreens, Kroger, CVS, and other big retail chains starting to sell CBD products in 2019.

"Not only have we seen growth in the channels where these were already available, and that includes the dispensary channel and some of the specialty natural supplement shops, but with the major retailers coming online, that's a big shift in the mainstreaming of this industry," says Lukens. "Walgreens was the first one to put out the press release that they're doing it, then CVS followed, and then Kroger."

The market share for general retailers is "still very small," says Lukens. "We predict obviously for that to change drastically."

She says thinks year-end numbers will show dispensaries driving about 50 percent of sales for CBD products nationwide, with general retail accounting for about 35 percent and pharmacies at 15 percent.

The 2024 projection has general retail commanding a 60-plus percent market share. "As we look outward five years, the dispensary channel grows substantially, as does every channel, but sales will shift to the mainstream," Lukens notes.

"As of right now, all of the major retailers are carrying predominantly topical products, so creams, balms, salves, lotions," sher says. "If you think of the anti-inflammatory pain management benefits of CBD, it's not surprising to see those products first. Until the FDA comes out and rules and says how it's going to regulate anything you consume, these mainstream retailers aren't going to be carrying CBD gummies or beverages or supplements, you name it. The mainstream retailers, the big guys, are all holding off until the FDA tells them what is and what is not legal."

In the broader marketplace, however, ingestibles ranging from tinctures to cookies still reign. "Despite being gray-area legal, ingestible products are at the top in terms of consumption," says Lukens.

FDA guidance should further catalyze ingestibles, she adds. The 2024 projection for ingestibles is a sector-leading $6.9 billion, with topicals close behind at $5.5 billion. "We really see big growth in topicals. We're starting to see more and more skincare, which is interesting."

A new partnership with Chicago-based IRI will give BDS the ability to drill down into the sales data at general retail as the market matures. "One of the team members at IRI said, 'A really good way to put that $45 billion in perspective is that the U.S. snacking industry snacking industry is about $40 billion year after year,'" says Lukens.

Courtesy BDS Analytics

Millennials to grandmothers and everyone in between

Lukens says she's been surprised "how quickly the general population of the U.S. has become fascinated with CBD. It really has exploded."

That makes for a broad market that defies expectations, she adds. "It's interesting. The consumer of hemp-derived CBD products looks like a fairly representative cross-section of the U.S. demographic population." 

The average age is 43, the market skews slightly male and is largely college-educated and employed full-time. "I think we'll see a continual shift in who's buying CBD products to look even more like the mainstream population. The more available these products are at mainstream retailers, the more people are going to be buying them."

With the boom comes a learning curve that's impacted by issues ranging from inconsistent labeling to bad online information. "People are seeing CBD as a cure-all," says Lukens. "When you start trying to uncover what people know, there is still so much confusion."

She offers an example: a consumer who starts their day with a CBD coffee, moves to gummies in the afternoon, and takes a supplement before bedtime. "All of a sudden, they've had 60 or 80 milligrams of CBD in a day."

That could be a problem, but there's a big information gap. "Right now there is not a lot of education about what are the proper dosages for different people and how should people start out."

It looks like it's going to take some time for the science to catch up with the market. "More research is definitely needed. That comes with relaxing some of the restrictions," says Lukens. "We're going to need to see manufacturers, brands, retailers really stepping up to support this."

This is the first in a series of data-driven features for CompanyWeek's Cannabis Manufacturing Report produced with the help of BDS Analytics. Headquartered in Boulder, Colorado, BDS Analytics provides businesses with comprehensive, actionable, and accurate cannabinoid market intelligence and consumer research. To learn more about how you can utilize the company's industry-leading market research, visit www.bdsanalytics.com.

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