Zenith Global Report 2020
North American CBD Drinks Market Report
Copyright All copyright in this document is reserved. Liability This document contains information and may contain conclusions and recommendations. Every effort has been made to ensure that the information is accurate and that the opinions expressed are sound. However, Zenith Global Ltd cannot be made liable for any errors or omissions or for any losses or consequential losses resulting from decisions based on the information. Important notice on distribution This report should not be quoted, referred to or transmitted to another party, in whole or in part, without the prior written consent of Zenith Global Ltd. Should you desire to release a copy of this report to another party for information purposes, we request you and the requesting party to indemnify Zenith Global Ltd from any liability related to the report distribution. Such readers however will not be considered “users� of this report.
2
Š Zenith Global Ltd 2020
Contents Section 1. Introduction and scope 2. Executive summary 3. CBD oil 4. CBD industry developments 5. Regulatory environment - US - Canada 6. Market trends in CBD drinks 7. Market trends in other CBD oil-infused products 8. CBD drinks brand profiles
3
Š Zenith Global Ltd 2020
Page
1
4
Introduction and scope
© Zenith Global Ltd 2020
1. Introduction and scope Introduction
Scope
The development of CBD (cannabidiol) infused beverages has been the latest wellness trend to hit the North American market primarily in the US despite the consumer watchdog, the Food and Drug Administration (FDA), maintaining regulatory authority over CBD additions in food and drink items.
North American coverage of the CBD market, including the current and future outlook of the market such as market size and growth, as well as key developments, new product launches and brand profiles.
Consumers’ demand for better-for-you products has been instrumental in raising awareness of cannabidiol as an ingredient for wellness beverages. Functionality has become a key selling point globally and is travelling along a healthy growth track as customers are becoming more ingredientsavvy while seeking healthier alternatives to sugary drinks.
Regions covered in this report •
North America
•
USA
•
Canada
Instability in the regulatory environment is dampening overall market growth of CBD-infused beverages. At this time, cannabis-derived CBD (cCBD) is regulated as a cannabis product, while hemp-derived CBD (hCBD) is more widely available, as allowed by state law. The FDA, state and local agencies lack a clear set of regulations and, at the time of writing, hCBD-infused beverages remain illegal to sell. Beyond the US, the nascent category has been receiving traction in Canada after challenges with packaging were resolved. CBD drinks are regulated as a legal marijuana product, but growth prospects remain positive.
5
© Zenith Global Ltd 2020
Amy Lathrop Category Research Director
1. Introduction and scope Definitions Cannabis •
Cannabis is a plant which belongs to the family Cannabaceae and includes three species: Cannabis sativa, Cannabis indica and Cannabis ruderalis. Hemp and marijuana are the most popular plants coming from the cannabis family.
Hemp •
Hemp is a variety of the Cannabis sativa plant species that is grown specifically for the industrial uses of its derived products. The plant only contains a maximum tetrahydrocannabinol (THC) level of 0.3% compared to marijuana but, depending on which parts of the plant are used to create oil, the product can feature zero to higher percentages of hCBD.
•
The applications of industrial hemp are varied and it is used in a wide range of industries: A. Textiles: Hemp can be transformed into fibers which are more resistant to weather and ultraviolet rays than cotton and silk. B. Food: Hemp leaves include high amounts of fiber, iron, potassium and zinc and a great quantity of protein. The seeds - where most of the nutrients are - can be pressed to retrieve oil or consumed raw, cooked or roasted. C. Cosmetics: Cosmetic manufacturers add hCBD oil for its high concentration of fatty acids.
Marijuana •
6
Different strains of the cannabis plants are grown and processed to maximize the THC over the Cannabidiol (CBD) levels for use in pharmaceutical applications, as well as medicinal and recreational enjoyment of the psychoactive properties of THC.
© Zenith Global Ltd 2020
1. Introduction and scope Definitions CBD vs THC •
Claims Produces a ‘high’ Claim 1 Claim 2 Claim 3
7
CBD
THC
✘
✔
Commentary
© Zenith Global Ltd 2020
1. Introduction and scope Definitions cCBD and hCBD •
Cannabidiol (CBD) derived from the species of cannabis grown and processed to harvest potent THC levels is referred to in this report as cCBD.
•
CBD derived from the hemp plant is described as hCBD.
CBD drinks •
For the purpose of this report, Zenith has limited its research scope using the following definition: o CBD drinks should be considered any non-alcoholic beverage infused with CBD in ready-to-drink (RTD) format. This could include still or sparkling functional waters and still or carbonated soft drinks including sodas, energy drinks, juice drinks and iced coffees and teas.
8
© Zenith Global Ltd 2020
2
9
Executive summary
© Zenith Global Ltd 2020
2. Executive summary Key findings •
10
Commentary
© Zenith Global Ltd 2020
3
11
CBD oil
© Zenith Global Ltd 2020
3. CBD oil Overview •
12
Commentary
© Zenith Global Ltd 2020
3. CBD oil Extraction processes •
Commentary
Extraction process CO2 supercritical
Solvents
13
© Zenith Global Ltd 2020
Description
Pros
Cons
3. CBD oil US production overview •
Commentary
Domestic hCBD oil capacity •
Commentary
Buying and selling hCBD oil •
14
Commentary
© Zenith Global Ltd 2020
3. CBD oil North American producers •
Commentary
Name
15
Website
© Zenith Global Ltd 2020
Overview
Stock
Notes
3. CBD oil Global producers Name, Country, Website
16
Overview
© Zenith Global Ltd 2020
Stock
Notes
4
17
CBD industry developments
Š Zenith Global Ltd 2020
4. CBD industry developments Trading platforms •
18
Commentary
© Zenith Global Ltd 2020
4. CBD industry developments Specialized hemp and cannabis-focused supportive industries •
Commentary
Manufacturing
19
Law firms/regulatory consulting
Š Zenith Global Ltd 2020
Specialized cannabis manufacturing solutions
Marketing
CBD-specific ingredients
Start-up financing
4. CBD industry developments M&A activity - Key acquisitions Buyer
20
Target
Š Zenith Global Ltd 2020
Type
Date
4. CBD industry developments Joint venture activity Partners
21
Š Zenith Global Ltd 2020
Deal details
Date
5
22
Regulatory environment
Š Zenith Global Ltd 2020
5
23
Regulatory environment - US
© Zenith Global Ltd 2020
5. Regulatory environment US: Hemp-derived CBD (hCBD) - mostly legal •
Commentary
Shaded states are where hemp-derived CBD is legal according to the federal guidelines, though individual state-level regulations for sales and consumption vary widely.
24
Š Zenith Global Ltd 2020
5. Regulatory environment US: Cannabis-derived CBD (cCBD) - legislated as a marijuana •
25
Commentary
© Zenith Global Ltd 2020
5. Regulatory environment US: State-level marijuana
Medical & recreational use is LEGAL Medical use is LEGAL & recreational use is DECRIMINALIZED Medical use is LEGAL, recreational use is ILLEGAL Medical & recreational use is ILLEGAL but DECRIMINALIZED Medical & recreational use is ILLEGAL Medical use is limited to CBD
26
© Zenith Global Ltd 2020
5. Regulatory environment US: Future cannabis market changes •
27
Commentary
Š Zenith Global Ltd 2020
5. Regulatory environment US: Summary of tax rates: 10 states with the highest cannabis revenue States
28
Tax rates
Š Zenith Global Ltd 2020
2019 cannabis revenue
5. Regulatory environment US: Sales channels - hCBD and cCBD hCBD •
Medical = LEGAL Recreation = LEGAL
Commentary
Medical = LEGAL Recreation = ILLEGAL
* hCBD product sales allowed through dispensaries †
29
© Zenith Global Ltd 2020
Not allowed through dispensaries
5. Regulatory environment US: Mainstream retail adoption of hCBD products •
Commentary
CBD Consumer Products
State law expressly gives permission for CBD-infused products (including foods) to be sold State law allows CBD-infused products under certain conditions or regulations
30
Š Zenith Global Ltd 2020
5
31
Regulatory environment - Canada
Š Zenith Global Ltd 2020
5. Regulatory environment Canada: An overview •
32
Commentary
© Zenith Global Ltd 2020
5. Regulatory environment Canada: Canadian products •
33
Commentary
© Zenith Global Ltd 2020
6
34
Market trends in CBD drinks
Š Zenith Global Ltd 2020
6. Market trends in CBD drinks 2020 changed everything •
Commentary
Where are they now? Market leaders from 2018 •
35
Commentary
© Zenith Global Ltd 2020
6. Market trends in CBD drinks Market players: local distribution and start-ups •
36
Commentary
Š Zenith Global Ltd 2020
National distribution Regional distribution Online only Local distribution and start-ups
6. Market trends in CBD drinks Market players: online only •
37
Commentary
Š Zenith Global Ltd 2020
National distribution Regional distribution Online only Local distribution and start-ups
6. Market trends in CBD drinks Market players: regional distribution •
38
Commentary
Š Zenith Global Ltd 2020
National distribution Regional distribution Online only Local distribution and start-ups
6. Market trends in CBD drinks Market players: national distribution •
39
Commentary
Š Zenith Global Ltd 2020
National distribution Regional distribution Online only Local distribution and start-ups
6. Market trends in CBD drinks Brands and total volume sold by retail network size •
40
Commentary
Number of brands by retail network, 2020e
Volume (million liters) by retail network, 2020e
Local
Local
Online only
Š Zenith Global Ltd 2020
Regional
National
Online only
Regional
National
6. Market trends in CBD drinks Price per liter by retail network •
Commentary
Price per liter by retail network (US$), 2020
National
Regional
Online only
Local
$0.00
41
Š Zenith Global Ltd 2020
$5.00
$10.00
$15.00
$20.00
6. Market trends in CBD drinks Product sizing and price per liter •
Commentary
Product size available in market, 2020
Price per liter by product size (US$), 2020 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 500ml
500ml
42
473ml (16 fl. oz.)
Š Zenith Global Ltd 2020
355ml (12 fl. oz.)
250ml or smaller
473ml
355ml
250ml or smaller
6. Market trends in CBD drinks Legal games: Amazon and Walmart - “hemp extract” vs “CBD-infused” •
43
Commentary
© Zenith Global Ltd 2020
6. Market trends in CBD drinks Consumer sentiment •
Commentary
Awareness of non-psychoactive properties of cannabis in Canada and US, 2020
Yes, aware
Š Zenith Global Ltd 2020
No, not aware
6. Market trends in CBD drinks Consumer personas • Abstainer • “Quote”
Wellness enthusiast • “Quote”
Aging athlete • “Quote”
True believer • “Quote”
Sugar avoider • “Quote”
45
© Zenith Global Ltd 2020
Commentary
6. Market trends in CBD drinks Future expansion trends •
46
Commentary
Š Zenith Global Ltd 2020
6. Market trends in CBD drinks North American CBD drinks market evolution •
Commentary
North American CBD drinks market evolution, 2018-2023f 7
120
6
100
5
4 60 3 40 2 20
1
0
0 2018
2019
2020e Volume
47
Š Zenith Global Ltd 2020
2021f
2022f Value
2023f
US$ million
Million liters
80
6. Market trends in CBD drinks North American CBD drinks market forecast: The future of CBD drinks •
Commentary
North American CBD drinks market forecast, 2023-26f 140 10 120
100
80
6
60 4
40 2 20
0
0 2023f
2024f Volume
48
Š Zenith Global Ltd 2020
2025f Value
2026f
US$ million
Million liters
8
7
49
Market trends in other CBD oil-infused products
Š Zenith Global Ltd 2020
7. Market trends in other CBD oil-infused products CBD and THC infused into ready-to-drink beverages •
50
Commentary
Š Zenith Global Ltd 2020
7. Market trends in other CBD oil-infused products CBD in edibles •
Commentary
cCBD •
Commentary
hCBD •
51
Commentary
© Zenith Global Ltd 2020
8
52
CBD drinks brand profiles
Š Zenith Global Ltd 2020
8. CBD drinks brand profiles US/Canada + national/regional/local/online brand
Brand Name
Company Name, Company Location www.companywebsite.com
Product information: Product information CBD content: Xmg CBD per can Positioning: Positioning Launch date: Launch date Variants: Flavor variants Distribution channels: Distribution channel(s)
Pack size & type: 12oz. (355ml) aluminium can Price: US$ Price
53
Š Zenith Global Ltd 2020
Contact us We hope you have found this report insightful. Please help us improve our reports further by providing your feedback here To subscribe to FREE daily industry news from Zenith, please click here For further information regarding this report, or for a tailor made study specific to your requirements, please contact:
Zenith Global Ltd, UK Tel: +44 (0)1225 327900 insight@zenithglobal.com www.zenithglobal.com
54
Š Zenith Global Ltd 2020
Explore our services
Global food and drink experts
Accurate, up to date global food and drinks market research and forecasting to support market strategy. Expert analysis of industry, competitors, consumers, trends, forecasts and latest product innovations. Off the shelf reports, bespoke reports, online databases.
Advice on overall strategy, business planning, entering new markets, finding contract manufacturers and distributors and having your product listed with retailers. Also, transaction services including sale mandates, target searches, valuation and due diligence.
Turnkey design and build of production facilities, site searches, manufacturing efficiency improvements, cost reduction, quality and food safety. Expertise in finding a water source, assessing water quality and volume, drilling and testing boreholes, obtaining a licence and reducing water use. Beverage formulation design and development, ingredient innovation, packaging design and advice on labels.
Global and regional industry conferences, providing detailed market insights and exclusive networking opportunities with key executives from the global food and drink sectors. Daily, weekly, bespoke news services to stay abreast of fast moving changes.
55
Š Zenith Global Ltd 2020