How CBD Has Performed During COVID
Market falling short of projections, finds new report. While a new report finds that 39% of consumers are using CBD more frequently as a result of COVID, the hemp-derived CBD market is not expected to meet 2020 sales projections.
![CBD oil vials CBD oil vials](https://eu-images.contentstack.com/v3/assets/blt58a1f8f560a1ab0e/blt9538f9b8e2e4e35b/669ef56c2955d8665fca8ca0/cbd-oil-vials-shutterstock_1602270212.jpg?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
In its mid-year 2020 CBD Market Report, Brightfield Group outlined how the cannabidiol (CBD) industry has been impacted by the COVID-19 pandemic. Perhaps most notable, the Chicago-based cannabis market and consumer intelligence firm reported that the growing hemp-derived CBD market is not expected to meet retail sales projections for 2020.
“In addition to the economic pressures faced by consumers and temporary store closures, inaction by the U.S. FDA (Food and Drug Administration) is constraining growth of the U.S. CBD market,” the report reads, projecting a 14% growth in CBD sales this year vs. 2019.
There was promising data, however, regarding CBD usage in the wake of COVID-19. In a June Brightfield Group survey of 5,000 CBD consumers, 39% reported using more CBD as a result of the COVID-19 crisis. Younger consumers were most likely to consume more, with 51% of millennials and 48% of Gen Z respondents saying they’ve increased their CBD usage (compared to 40% of Gen X and 17% of baby boomer respondents).
Brightfield Group identified a number of ways CBD manufactures have responded to the COVID-19 pandemic, both to help recover some of the lost sales and leverage the increased consumer interest in CBD. The two main responses Brightfield found were:
1. Lower Prices
According to the data, middle-class households (making $40,000 to $75,000) now account for nearly one-third of CBD consumers—a distinct increase from 2019. That, combined with high unemployment rates from the pandemic, has elevated price sensitivity in the category.
“When deciding on a CBD product to purchase, price is the second ranking product attribute that consumers consider,” the Brightfield Group report reads. “More specifically, consumers are looking for products that fit within their budget, but still deliver effective relief. CBD sales volume will continue to rise as new consumers enter the market across a broad range of product formats, partly thanks to more friendly pricing.”
The raw cost of hemp-derived has dropped 79% this year due to an increase in supply, per data from Hemp Benchmarks. Efficiencies in extraction equipment and manufacturing facilities have allowed CBD manufacturers to pass on those savings to consumers. Brightfield Group pointed to several major manufacturers—such as Charlotte’s Web and Global Widget—who have reduced prices and offered consistent discounts on their websites.
“Lower prices will help draw new consumers into the CBD market and help convert them into loyal shoppers,” Brightfield Group said.
2. Product Innovations
The other major COVID-19 response identified was product innovation, with Brightfield Group noting that “companies are going beyond adding new flavors and are investing in research and development to introduce new products that contain botanical ingredients and minor cannabinoids CBG and CBN alongside CBD to offer additional benefits.”
Products that combine CBD with ingredients to boost the immune system—such as elderberry, echinacea, and Vitamin C—have been of particular focus. Innovation in full spectrum and minor cannabinoids, specifically CBG and CBN, was also cited.
“Combining cannabinoids and terpenes (found naturally in hemp) are believed to produce the ‘entourage effect,’ where the compounds work synergistically to enhance the effects of each component,” the report reads.
Brightfield Group predicts this focus on innovation may give the CBD industry an edge as many other CPG companies look to focus on core brands to streamline supply chains and simplify due to economic and pandemic-related uncertainties.
“CBD companies and brands are doing the opposite and rolling out innovation at a high pace,” Brightfield Group writes. “New functional ingredients can be a helper in bringing new consumers to CBD, especially as natural ingredients complement the many uses of CBD. Featuring these products that also offer accessible price points can help drive incremental CBD sales for convenience operators and encourage routine purchases.”