CBD Market Trends You Should Know About
The UK CBD market is undergoing profound change. Thanks to the EU Novel Food Regulations, any foods or food ingredients that people did not consume to a significant extent before 1997 are now classed as novel and subject to regulation. And that's leading to a wholesale change in how the industry operates. We are witnessing the rise of some segments and the decline of others as companies pivot away from edibles before the rules come into force in March 2021.
In this article, we take a look at some of the CBD market trends shaping the industry right now and ask what they mean for the future.
Trend #1: The Pivot To Topicals
Between 2019 and 2020, the retail price per item of topicals soared. Data suggest that prices went from £28 last year to more than £43 now.
Commentators believe this switch is primarily a function of the new EU regulations. As the Novel Food Regulations come in, companies are increasingly looking to differentiate themselves in other areas of the market, including CBD-containing lotions and creams for external application.
Trend #2: The Commoditisation Of CBD
Before 2020, CBD was very much a niche product. Now, though, competition and global demand are leading to commoditisation, driving wholesale costs down to farm-gate prices. The aggregate price per pound of hemp CBD biomass fell more than 79 per cent from April 2019 to April 2020.
CBD market participants, therefore, have a choice. They can either continue in their race to the bottom, getting wholesale prices as low as possible. Or they can start focusing on branding and differentiation as a means to generate a profitable premium.
Trend #3: Better Consumer Knowledge
Consumers are learning more and more about how CBD works and why it is beneficial. There is now a vast array of cannabis-related digital news sites and publications, including Marijuana Business Daily, Cannabis Business Times, Green Entrepreneur, High Times, and Dope Magazine. Information is percolating into public consciousness and changing how consumers approach the product purchasing process, giving them information on the best suppliers, brands, and forms of CBD.
Trend #4: The Rise Of CBD Drinks
The cannabis-containing drinks segment is still going strong, despite the upcoming regulations, because brands in the space are successfully carving niches for themselves. AVER, for instance, wants its customers to 'have it all' – providing energy drinks that help to push back against the culture of constant work. It's part of a growing movement that recognises the need for balancing work with play. Humans, it says, aren't designed to be in constant motion. We need to spend as much time recovering as we do working to lead happy and connected lives.
Trend #5: CBD Oils Go Mainstream
The industry will likely look back at 2020 as the year when CBD oils and tinctures went mainstream. Brands like WXLLNXSS are trying to diversify their offering away from the traditional plain tinctures towards flavours that consumers will likely enjoy more. Expect to see more of this diversification in the industry as we advance, with each brand attempting to create compelling tastes that keep consumers interested and avoid negative experiences.
Trend #6: Quality Becoming Increasingly Important
With the price of CBD topical rising despite the wholesale fall in CBD prices, the focus is shifting towards non-cannabis ingredients brands include in their products. The absolute price for externally-applied products is high, and the CBD component is less important, leading to a search for quality elsewhere.
In this environment, production transparency is likely to evolve naturally. CBD users want to know that the products they buy reflect best practices they read about in cannabis publications. Brands will need to tell 'the full story of production,' making information available on provenance, sourcing and extraction techniques. The CalCannabis Appellation Project in the Californian CBD industry is already making this a reality in the US market. It is only a matter of time before something similar comes to the UK.
What Marketing Lessons Can We Learn From These Trends?
If there is one lesson from these CBD market trends, it is that modern cannabis companies need to find a niche. The more that they can carve a persona for themselves different from mainstream supplies, the more likely they are to thrive.
The optimal approach may not be to become as large as possible but engage in cost-effective marketing by appealing a smaller, less competitive audience instead. There will always be customers with diverse needs – and today's CBD brands can meet them.
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