Questions/Answers: CBD expert discusses future of the category

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Questions/Answers: CBD expert discusses future of the category

By Dan Ochwat - 02/20/2020
Virginia Lee

The Food and Drug Administration took surprising action in November against one of the biggest categories right now — CBD. The regulatory agency sent warning letters to 15 companies for illegally selling CBD, and it revised its Consumer Update listing to highlight safety concerns about potential liver damage, harmful side effects and increased drowsiness when CBD is used with alcohol.

Among the experts who were surprised by the FDA’s actions was Virginia Lee, a CBD research manager with Chicago-based Brightfield Group, helping CBD and packaged goods companies with strategic planning by developing and executing syndicated research on the U.S. CBD market. She recently presented an in-depth morning session at the PLMA Private Label Trade Show in November 2019.

Store Brands spoke to Lee about what the future holds for the category. 

STORE BRANDS: How do you think the FDA’s actions will impact the overall CBD market?
Virginia Lee: I think many CBD companies will tighten their production processes and reduce their use of health claims on their packaging, website, social media accounts, and marketing communications. More CBD companies will become Current Good Manufacturing Practice-certified and highlight this certification on their websites and marketing communications.

Longtime CBD users are unlikely to reduce CBD consumption just because the FDA highlighted safety concerns. However, consumers who have not yet tried CBD may need additional information about production standards and third-party testing methods, and reassurance about the safety profile from family, friends and store employees.

SB: In what categories do you see the most opportunity CBD?
VL: Beauty and skin care products, capsules and drinks are fast-growing CBD categories to watch.

The entrance of large mainstream chain retailers including CVS Pharmacy, Walgreens, Kroger and Albertsons, and beauty specialists Ulta and Sephora into the CBD space in 2019 boosted sales of CBD beauty and skin care products from $17 million in 2018 to $311 million in 2019.

Sales of CBD capsules grew by 526% to reach $477 million in 2019 despite the FDA not allowing the sale of CBD as dietary supplements. CBD capsules provide an easy to use, dosage-controlled, discreet option for consumers looking for natural alternatives to pharmaceuticals.

CBD drinks are expected to continue seeing high rates of revenue growth and innovation, with sales of CBD drinks reaching $143 million in 2019, up 1276% from 2018. New innovations in CBD drinks — ranging from sparkling waters to coffees, teas and single-serve shots — provide relaxation, energy-enhancement, sleep-enhancing and workout-recovery benefits in a familiar and convenient format.

SB: Who is the consumer of CBD products, do you have an idea of what demographics or types of shoppers lead this category? 
VL: Brightfield Group’s consumer insights research shows that overall, CBD users are more likely to be women, parents and millennials. Women comprise 52% of CBD users. A majority (62%) of CBD users are parents, with 48% having children at home.

Women comprise 52% of CBD users. A majority (62%) of CBD users are parents, with 48% having children at home.
Virginia Lee

Millennials are avid users of CBD, with 50% of CBD users between the ages of 21 and 40. Many CBD users are regular users, with 50% saying that they use CBD two or more times a week.

CBD users are using CBD as a natural alternative to treat a variety of ailments including anxiety, chronic pain, depression and insomnia. Nineteen percent of CBD users are “daily symptom attackers” who are using CBD to manage chronic conditions such as multiple sclerosis, endometriosis and chronic pain.

SB: Where do you see hemp- CBD products in the next five to 10 years?
VL: In the likely case that the FDA creates a regulatory framework for CBD usage in supplements, food and drinks, and the mainstream market continues to embrace hemp-derived CBD, the U.S. CBD market is expect-ed to grow exponentially, reaching $24.3 billion by 2025.

Over the next five years, we expect expansion of CBD products — beyond topicals and skincare products to include supplements (tinctures, capsules), food and beverages, pet products — across both pharmacy and grocery as well as into mass merchandisers, gyms, chain pet stores and other big-box retailers.