CBD product development takes market consideration

Early indicators showed signs that cannabidiol (CBD) is much more than a fad. As consumers actively shift toward more natural remedies and legislation evolves in favor of cannabis, CBD and hemp, expansion potential is tremendous. Across the breadth of grocery retailers, about 95 percent of CBD’s US$48 million in sales are occurring in the natural channel, according to SPINSscan natural and specialty gourmet channels, conventional multi-outlet and convenience channels (powered by IRI), for the 52 weeks ending Nov. 4, 2018.

SPINS often refers to the natural and specialty gourmet channels as incubator or innovation channels, but this high concentration of early-adopter natural retailers may be an indicator of CBD’s potential to scale in mainstream channels over time. As consumer awareness, retail availability and the assortment of products expand, the landscape for CBD will look quite different over the next few years.

CBD’s already coming to market across several categories and formats, from body care to supplements to functional foods and beverages. It’s no surprise so many brands are attracted to the prospect of bringing CBD on board; the market opportunity so far has been impressive. SPINS tracked nearly 160 new introductions in the last year. While nearly 98 percent of sales volume currently comes from supplements, expansion beyond extracted oils is creating new opportunities for brands to enter the market. As an ingredient added to other formats, these extracted oils are versatile in any number of segments and formulations, offering many possibilities for expanded market presence. In fact, this year food and beverage offerings were the fastest-growing segment of CBD products—an early predictor of what’s to come.

Despite all the strong growth, brands entering the CBD market should consider if the ingredient aligns with its proposition and consumer base.

Get more information on CBD product development in INSIDER’s CBD Digital Magazine.

As principal of SPINS’ brand growth solutions, Perteet Spencer helps clients transform data into insights that fuel innovation.