CBD TRENDS
CBD Outlook Is Cautiously Optimistic Trends include industry expansion, consolidation and evolving consumer preferences By Nora Caley
E
ven the CBD category needed some stress relief during the pandemic. While the industry attracted new consumers seeking innovative wellness products, cannabidiol sales growth was hampered by industry consolidation, lack of regulatory clarity and limited consumer education about product benefits. As manufacturers adapt to meet these challenges, retailers must keep up with the latest trends, formats and ingredients to remain competitive. The Food and Drug Administration still has not yet released regulatory guidance related to CBD, but that has not stopped companies from entering the space. According to Brightfield Group’s “2021 U.S. Mid-Year CBD Report,” in 2019 thousands of brands flooded the CBD market. The research firm noted that the category is so fragmented that the top five brands’ combined share totaled just under 10%. The number of brands became unsustainable during the pandemic, and many dropped out of the market. Companies said the shakeout was inevitable but also beneficial. As lower-quality brands disappear, the brands that remain will be the ones that demonstrate quality, expertise, strong testing and marketing support. “This really is good for the industry,” said Eric Martin, senior vice president of sales and marketing at Contract Pharmacal. “It gives consumers confidence that the brands that remain are safe and efficacious.” The Hauppauge, N.Y.-based company makes the Uleva line of hemp-based supplements. The shakeout could help the industry gain favor among consumers and retailers. “We are currently in a massive CBD extinction and consolidation phase,” said Jay Hartenbach, CEO of Irvine, Calif.-based Medterra. “With 1,400-plus CBD brands currently in the space, the industry is extremely competitive, and brands that are looking for quick, short-term gains will not be successful.” While several brands liquidated, others
28 July 2021
were acquired. The past year saw Newport Beach, Calif.-based Kadenwood acquiring CBD materials and formulations company EcoGen Labs, hemp processing and extraction company General Processing, and wellness brand Social CBD. The deals helped Kadenwood expand distribution and gave it a cost-of-goods advantage because it controls its supply chain “That allows us to drop retail price points and bring more consumers to the category,” said Doug Weekes, Kadenwood co-founder and COO. Recent purchases point to another trend, Hartenbach said, which is that the CBD and cannabis industries will become more intertwined. Medterra partnered with Acreage Holdings, a multistate operator of cannabis cultivation and retailing facilities.
Ingredients Are Key
Another way manufacturers are bringing more consumers into the CBD category is by highlighting other ingredients. One of the biggest trends right now, Weekes said, is plant-based solutions. As an extension of consumers’ desire for nonmeat proteins in
their diets, they are also looking for plantbased products for pain, sleep and anxiety, which Weekes noted are the three top segments for CBD products. In response, brands are combining CBD with plant-based ingredients to maximize the wellness benefits. “The market for plant-based wellness products is booming, and we are finding that more consumers are open to adding CBD to their wellness routines,” said Joseph Dowling, CEO of CV Sciences. “CBD continues to be an exciting ingredient that is opening up new possibilities for optimizing wellness.” The San Diego-based company recently launched PlusCBD Calm and Sleep Gummies, which combine CBD with such plant compounds as magnolia and lemon bark, which the company said work synergistically to support the endocannabinoid system and overall health. Synergistic ingredients are another trend as manufacturers find benefits in combining CBD with established supplement ingredients. For example, Michael Law, chief commercial officer at Eagle Labs, said brands are
DRUGSTORENEWS.COM
028-032_DSN_CBDTrends_0721_v4.indd 28
7/9/21 11:41 PM
