by John McCurry/contributing writer
A recent webinar conducted by Jessica Lukas, VP of consumer insights at BDS Analytics, and Larry Levin, EVP of market and shopper intelligence at IRI, provided a look at how the burgeoning CBD market has developed. In this second installment of a three-part series from the webinar, Lukas painted a picture of the current cannabis landscape, covering points on who is using CBD products and why they choose to use them.
“Excitement has to be brewing here about what’s available to us in the marketplace,” Levin said. “So, it’s really important, as Jessica was saying, to really look at the consumer and fascinating data that BDS has been tracking on a regular basis. In its latest research earlier this year, two-thirds of the American population is either a consumer or an acceptor of cannabis, and this is among respondence in the legal states. So, when we think about this, it helps us to seize the opportunities that are available to us. Of the 67 percent, 38 percent or more than half are already consuming and, more importantly, I think it’s about the momentum that we are seeing in the industry.”
Levin points out that recent BDS research shows that two-thirds of the U.S. are either consumers or acceptors of cannabis. Of that number, 38 percent are already consuming. So, the momentum is building, he says. Also, usage spread across all segments of the population, and requires an “umbrella-like” strategy for both manufacturers and retailers to be able to connect with the population interested in the benefits.
Levin says about half of consumers using cannabis are using it for health benefits.
“When you start to look at that, there are implications across many categories in CPG that IRI has been tracking…with consumers saying they are going to use prescriptions less often and are going to use over-the-counter [medicine] less often, or they are going to substitute cannabis for beer, wine and spirits,” Levin says. “There is a new competitive set that we need to be thinking about from a manufacturing point of view.”
Levin says studies show that in the legal states, 15 percent of adults in households have consumed a hemp-derived product within the last six months. He notes that that’s a smaller percentage than the 38 percent figure, but highlights the potential market opportunity. However, he says it mirrors the U.S. population with an average age of 43. There is a heavy suburban penetration and the reasons people are using it are to combat issues like anxiety, depression and back pain.
“I roll on a CBD product, and it’s a fantastic remedy,” Levin says. “Thinking about that, a lot of people will use it because they feel like it’s giving them an opportunity to improve their quality of life, relieve pain and sleep better.”
Levin notes that past survey data shows consumers are looking at CBD more than legal marijuana as a way to treat symptoms for medical conditions.
“So, if you think about the opportunity here and as you think about a consumer experience, they are seeking functional benefits from these products,” Lukas says. “They are not necessarily going to think in silos of channels or legalization. They are seeking the benefits of CBD and as they seek out the benefits of CBD, they can buy those products again in a dispensary where legal. They can buy them at a Kroger. They can buy them at a Walgreens, at a CVS. You name it. Your salon, your spas, specialty retailer. Now all of a sudden you have to think about this really differently. And it’s interesting for those of us who have been in this industry for some time. Where now the dispensary channel has become the leading indicator of what will and will not be successful in the general market.”
Lukas advises companies considering launching a CBD product to critically examine where it will be sold at retail and how the categories, brands, products and consumers might evolve. She suggests looking at the current legal marketplace, where it has been open to consumers for several years, for guidance.
“Nowhere else can you get that level of understanding of this marketplace,” she says. “And so, for an example of that, the dispensary channel as another reminder, it’s not just about high THC products. CBD products have been available in the dispensary for years and are growing. And so, as you think about what products and product formats and flavors and offerings work, the dispensary channel is a great place to look.”
Lukas says it’s not surprising that topical CBD products such as creams, balms, salves and tinctures have been the most prevalent categories in the dispensary channel for years, and are the first to transition to the general market.
“So think of this as a leading indicator because five years’ worth of trends and information is very predictive of what’s going to happen with the passing of the Farm Bill and as these markets emerge and explode,” Lukas says. “Consumers are looking for portion control and dosing. Even in the dispensary this isn’t about getting as high as possible as quickly as possible. Almost 50 percent of edible consumers prefer low-dose THC products. So, think about that as low THC, less than 10mg per serving. Consumers are looking to have a controlled experience. It’s not just about getting stoned.”
Part three of this three-part series will appear in next month’s e-newsletter.