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The Growth Of CBD And How Supermarkets Can Get In On It

Naomi Sleeper, CBD trends

by Naomi Sleeper, VP of continuous improvement and strategic initiatives, Imperial Distributors

 

CBD column, Naomi Sleeper
Naomi Sleeper

Last year’s Natural Products Expo West in Anaheim featured cannabidiol (CBD)—the non-psychoactive ingredient in hemp and marijuana—as a top trend in health and wellness.

This year’s trade shows already are revealing that CBD has since exploded in popularity.

As one of the biggest trends at this year’s Expo West, CBD was presented in a broad range of forms: ingestible supplements in the form of tincture, soft gels, gummies, shots and protein bites, and topical products like moisturizers, serums, sprays, cleansers, shampoos and deodorants, as well as new varieties of beverages and edibles, like seltzer, coconut water, ice cream and even pet treats. Even the International Home + Housewares Show in Chicago in early March featured CBD as a trend, with exhibitors offering CBD oil sprays and infusers in air diffusers, purification and filtration systems.

The CBD market is booming. At $641 million U.S. sales in 2018, CBD sales are expected to grow significantly over the next three years. In its 2019 report, the Hemp Business Journal projects that total CBD sales in the U.S. could hit $1.5 billion by 2020 and $2.26 billion by 2022 ($1.3 billion in hemp-derived CBD, $647 million from marijuana-derived CBD and $310 million from pharmaceuticals). Predicting much steeper growth, Chicago-based market research firm Brightfield Group estimates CBD sales to hit $22 billion by 2022.

The popularity of CBD—marketed as a “natural relief” in a plethora of products—is due to its claimed benefits in addressing a variety of health concerns, including chronic pain, anxiety and depression, nausea, high blood pressure, seizures, insomnia and acne. While some claims have more supporting evidence than others, the Food and Drug Administration (FDA) has approved a CBD prescription drug for some forms of epilepsy.

The 2018 Farm Bill’s legalization of industrial production of hemp opened the door for broader marketing of hemp-derived CBD products. Although CBD remains in a legal gray area, potentially subject to FDA regulations (particularly in food and beverage), hemp-derived CBD is legal in most states and going mainstream in non-food categories.

With large chains like Sephora, Neiman Marcus and now CVS selling CBD topical balms, lotions, soaps, serums, masks and sprays, retail is embracing CBD beauty and personal care products. This presents a huge opportunity in supermarket non-food categories. In states like Massachusetts, where cannabis is more broadly accepted, opportunities extend beyond beauty and personal care products to oils and capsule supplements.

Imperial category expert Kevin Cooley provides tips on how supermarkets can best capitalize on this new sub-category of non-food product:

Understand different classification of CBD products. CBD products range from “isolates,” containing 100 percent CBD without any additional hemp or marijuana ingredients, to “full-spectrum,” including legal amounts (0.3 percent) of THC. CBD also can be derived from both hemp and marijuana. The market for different types of CBD products varies, in part based on state and local regulations.

• Ensure third-party product verification. Buyers should look for third-party lab results from CBD product suppliers to verify product ingredients and percentages.

• Review state and local ordinances. Some geographies have regulations restricting sale of certain CBD products.

• Look for a vertically integrated supply chain. Manufacturers that own the production of CBD products from the farm to the package are likely to allow for more competitive costs.

• Market strategically. Like most products, price points of CBD products vary from value to premium, with the latter typically including higher CBD content. Ensure that the price point is right for stores’ demographics. Brands that provide promotional opportunities are also more conducive to sales in the supermarket channel.

• Pay attention to packaging and merchandising. As a new feature in supermarkets, CBD products should be merchandised in a way that draws attention, educates the consumer and discourages theft. Off-shelf displays with signage can help to inform and enthuse shoppers. With visible signage, keeping product near (or even behind) the counter or in-store pharmacy can also help to pique interest and encourage questions about the product.

 

CBD offers a rare opportunity to introduce a new non-foods sub-category into supermarkets. With the right strategy, supermarkets can capitalize on this thriving trend and its promising growth potential.

About the author

Lorrie Griffith

An observer of the grocery industry since 1988. Away from her editor job, she's a wife and mother of two grown sons and thinks cooking is (usually) relaxing.

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