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25. September 2020
Food & Beverage News Production Trends & Insight

Market Insight: Booming CBD Beverage Sector Requires Rigorous Product Testing to Prevent Mislabelling

According to a recent report the global CBD-infused beverages market is expected to reach a value of $1,018.3 million by 2025. This boom in growth is being driven by a healthy consumer appetite for CBD-inspired beverages which has seen the segment grow rapidly over the last 18 months. CBD-infused food and drinks are setting a new trend in the food and healthcare industries, and as a result, many major brands are investing a significant amount in the growing trend for cannabinoid-infused drinks.

Like any nascent industry, however, this growth is not coming without problems. A recent independent study conducted by CBD watchdog Leafreport found that 54% of beverage products tested contained less CBD than advertised.

This is a worrying trend that will ultimately have ramifications for the whole sector. Despite many manufacturers undertaking independent third-party testing of their products it would seem that this is not translating into accurate labelling.

In an industry that is still in its infancy the need to demonstrate product safety and accuracy is paramount, particularly with the growing regulatory scrutiny that is beginning to impact the wider cannabinoid industry.

Independent study of CBD beverages finds 54% of products contained less CBD than advertised

CBD watchdog Leafreport recently conducted independent laboratory testing on 22 CBD-infused beverages in an effort to educate consumers on the discrepancies in product quality and labelling. The results of the testing, conducted by Canalysis Laboratories, found significant inaccuracies in the amount of CBD in each product.

Overall, the study suggested that most CBD drinks contain much less, or much more CBD, than they should.

The report authors highlighted that this was in line with expectations owing to the difficulties associated with accurately formulating CBD beverages that generally contain relatively small amounts of CBD. This means that variations of even a few milligrams (mg) can have a big effect.

The researchers rated the accuracy of each CBD drink by comparing the amount of CBD it was advertised to have to the actual level measured by Canalysis lab technicians.

According to cannabis industry experts, +/- 10% is a reasonable amount of variance for cannabis products, which means that a high-quality CBD product is expected to have CBD levels that are within 90–110% of what’s stated on the label.

Using this benchmark, products were then given one of four ratings, depending on how accurate their CBD content was. Here’s a complete breakdown of each rating:

A (Excellent): independent lab tests showed CBD levels that were within 10% of what was stated on the label.

B (Decent): independent lab tests showed CBD levels that were within 20% of what was stated on the label.

C (Poor): independent lab tests showed CBD levels that were within 30% of what was stated on the label.

F (fail): independent lab tests showed CBD levels that differed from the label by more than 30%.

Booming CBD Beverage Sector Requires Rigorous Product Testing to Prevent Mislabelling

Leafreport CBD beverage report summary

Among the key findings:

  • 54% of the products (12 products) contained less CBD than advertised
  • Two products contained no CBD at all
  • 81% of beverages (18 products) had CBD levels that were more than 10% higher or lower than what the label claimed
  • 64% of beverages (14 products) had CBD levels that were more than 40% higher or lower than what the label claimed
  • Only 18% of tested drinks (4 products) had CBD levels within 10% of the claimed amount, which is equivalent to an excellent (A) rating
  • Unlike our first report, we didn’t see a positive association between a company’s overall reputation and their test results. That means that leading CBD brands were not more likely to score well on our tests than lesser-known companies.

Leafreport is a science-based, peer-reviewed website designed to help consumers navigate the confusing landscape of CBD products. The company’s mission is to introduce transparency into the CBD industry through its patient-focused, educational content and medical reviews. The company medical review team consists of physicians, chemists, nutritionists, pharmacists, chemists and naturopaths.

CBD beverages are difficult to formulate and contain relatively small amounts of CBD, which means that variations of even a few milligrams can have a big effect,” said Lital Shafir, head of product at Leafreport. “The CBD industry is completely unregulated and there have been many cases of companies selling products that contain little to no CBD. That’s why third-party testing is important for brands in this industry.”

The need for third-party testing

Given the lack of regulation in the CBD industry, particularly when it comes to labelling and formulations many manufacturers use third-party independent labs to test product samples and provide insight into the safety and effectiveness of the product.

The most common type of a third-party test for CBD is called a cannabinoid profile or potency test. It shows the levels of CBD and other cannabinoids in the product to confirm that it contains as much CBD as advertised. Testing labs will then issue a Certificate of Analysis (CoA) to document those profiles.

Despite all of the products tested in the Leafreport study having valid CoAs and using those within the product labelling, many had a significant variation from the study’s independent third-party testing, with some containing no measureable CBD at all.

This demonstrates a significant problem for the industry.

CBD beverage formulation

The report highlights how difficult it can be to formulate high-quality CBD beverages compared to other CBD categories like oils. CBD beverages are more difficult to formulate because CBD is a fat-soluble molecule that doesn’t dissolve in water. On top of that, the amounts of CBD used in tinctures are much higher than those added to beverages, which means that variations of a few mg will have a much bigger impact on the accuracy of a beverage.

Leafreport illustrates this problem by suggesting that for a CBD oil that should contain 500mg of CBD, a 5mg variation would only translate to a potential discrepancy of 1 percent, meaning that the labels accuracy would be upheld. However, in a CBD-infused beverage the amount of CBD is only likely to be around 25mg, meaning that a similar 5mg discrepancy would translate into a 20 percent variation in accuracy.

This means that it is significantly more complex to develop and manufacture CBD beverages than other CBD product classes. The work involved in formulating a new product therefore requires greater investment and rigorous testing protocols in order to maintain an accurate composition of ingredients.

Building consumer trust

As CBD beverages grow in popularity consumers are becoming increasingly aware of ingredients and accurate labelling. Already consumers are switching to products that can demonstrate third-party testing regimens and this trend will only increase as the market grows.

The responsibility lies with manufacturers to ensure that they are suitably investing in processes that can help ensure the reliability of their product.

CBD beverage market growth

There is no doubt that the consumer CBD beverage market is set to see exponential growth over the coming years.

North America is expected to see the major share, with the CBD drinks market in the U.S. expected to be worth USD 260 million by 2022, while the combined value of CBD and THC-infused beverages will reach USD 1.4 billion by 2024. Europe is anticipated to hold the second position in the global cannabinoid beverages market, owing to the rising investment for cannabinoid beverages and growing consumer awareness.

US CBD Beverage Market Size 2018-2025

Source Cannyx Markets

According to reports, growth in the CBD beverage market is primarily being driven by an increasing demand for functional beverages made with healthy, natural ingredients and increasing public awareness of the health and wellness benefits of CBD. Combined with the advances in CBD manufacturing technology, there are already many different companies offering CBD-infused drinks in the United States and other countries.

As more established brands start to take notice of this sector, then this will only serve to accelerate the growth cycle.

Well-known beverage companies, like Coca-cola, AB InBev, and Nestlé, are already experimenting with niche brands across all aspects of the beverage market, from coffee through to alcoholic mixers, and as these gain greater main-stream acceptance then we will see huge upside in the market segment.

Maintaining product quality and developing reliable formulations is going to be a paramount consideration for any market player, looking to capitalise on this opportunity.  

Author: Matthew Driver, Senior Consultant

Market Analysis | Insight & Trends