FDA aside, Nielsen sees tremendous potential in CBD products
Despite the fact the Food and Drug Administration (FDA) has hit the pause button on CBD use inside food and beverages, market research firm Nielsen believes that the hemp-based CBD market could reach $2.75 billion in 2020.
In New York-based Nielsen’s “2020 forecast for the U.S. Hemp-CBD and CPG Industries” report, Rich Maturo, vice president, cannabis practice, said the estimate is conservative, as the industry waits on an official ruling from the FDA (see this recent Store Brands article).
According to the FDA, potential health risks that could come from CBD include liver damage or the substance making users feel drowsy. That aside, Nielsen found consumers are still very interested in learning more about hemp-based CBD consumer goods and private brand options, and this curiosity shows signs of huge potential growth to the consumer goods industry as a whole over the next decade.
In the Nielsen forecast, Maturo compiled five watchouts or trends that could influence the rise of CBD-rich products in the years ahead:
CBD prices will fall. The price gap between CBD products from CPG versions and their private brand equivalents will get narrow. Currently, Maturo says the price gap between the two versions is very large, a difference of four to 10 times the difference in price, depending on the potency levels in the products. However, as more hemp farmers get into the game and multi-million dollar investments from Canadian Licensed Producers increase, that gap could squeeze.
A retail fight will emerge. Over the next 10 years, traditional stores will steal share from direct, online CBD suppliers and that will bring in new consumers and drive up sales. As Maturo has stated, compared with current hemp-CBD users, CBD consumers who say they’re likely to consume CBD products in the next year are more than twice as likely to shop for CBD and try it when purchased from a grocery store or mass merchant. At the same time, the same consumers are more than 3.5 times more likely to buy a hemp-CBD product from a chain drug store.
More targeted educational efforts will occur. Nielsen surveyed health care practitioners and how well they’ve been informing patients about CBD and found that 70% of the practitioners surveyed said they do in fact discuss CBD with patients but only about one in three practitioners were knowledgeable about the laws facing CBD products. In turn, expect companies to do more work educating the medical community.
Ingestibles will rise. The gummies, capsules and beverage versions of CBD-products will have the largest impact on the market — if FDA approved. Nielsen found that ingestible formats could grow a manufacturer’s user base by as much as 250% to 375% in a year’s time. They’re the types of products consumers seem most familiar and comfortable with, per Maturo. CBD-infused beverages such as coffees or functional waters, especially stand out to Nielsen.
CBD pet products should be strong. Pet owners are interested in Hemp-CBD for their pets, Nieslen reported, with 37% of dog owners who give their dogs vitamins and supplements, saying they’d likely give their dog a CBD product. Some owners have already tried it, too, but the difference is as the market grows, more products directly created for pets will emerge and grow the category.
As consumer goods companies, private manufacturers and retailers mull the FDA’s further findings on CBD, Nielsen says there’s too much growth at stake to simply stop and ignore CBD.