Sales of CBD food and beverage products, in the United States, are down 75% so far this year when compared with the same time of 2019, as the impact of COVID-19 continues to have implications on the retail sector.
According to figures from the Nutrition Business Journal impulse purchases at retail outlets have fallen alongside sales at coffee shops and cafes, said Claire Morton Reynolds, senior industry analyst for Boulder-based New Hope Network.
Most CBD products tend to be available at convenience stores in the U.S. as bigger grocery chains continue to adopt a cautious approach to the selling of where the regulatory landscape is still ambiguous. With footfall down in those locations alongside many consumers adopting online shopping habits during COVID, the figures follow reductions across the wider segment.
The food and beverage category makes up only 0.5% of the US hemp/CBD market. Supplements account for 69% while topicals are at 24% and the pet category makes up 7%.
2020 has seen a diverse range of new CBD-infused beverages launched in the US, as well as elsewhere, and the sector shows positive signs of development. The CBD beverage market is seen as been one of significant opportunity. With a wide range of different market segments available for commercialisation, from stress relief through to alcohol replacements the opportunity to include CBD in beverages as diverse as coffee and tea to sports drinks is seen by many as one a significant area for growth.
A recent report by Grand View Research estimated that the global cannabis beverages market size is expected to reach USD 2.8 Billion by 2025 at a CAGR of 17.8%. The report looked at alcoholic and non-alcoholic beverages using either TCH or CBD. It said: “The demand of THC infused cannabis beverages is majorly driven by rising product demand from adult consumers for recreational purposes. Rising demand for the therapeutic effects of the component along with the euphoria it provides is expected to bode well for the growth of the segment in the forthcoming years.”
CBD based food on the other hand is a more difficult proposition. Regulatory restrictions, in the United States, and elsewhere, are hindering the segment as retailers are hesitant to carry food and beverage products with CBD following rulings by the US Food and Drug Administration (FDA) that state CBD cannot be used legally in foods, beverages and dietary supplements.
With the CBD food and beverage market still in its relevant infancy there are many lessons to learn around using the ingredient effectively. Ensuring that CBD has the necessary requisites in terms of taste and shelf-life is a big consideration.
“CBD is indeed the most bitter substance that any food scientist has ever encountered — more bitter than caffeine,” comments Justin Singer, chief executive officer and co-founder of Caliper Foods, in a Food Business article.
The food and beverage industry also has little experience in working with hemp/CBD.
“This is all new science — how CBD works in formulations. There are no shortcuts in formulations when working with a novel ingredient. You have to test it. You cannot make assumptions.” continues Singer.
The total US hemp-based CBD market stood at $912 million in 2020, up 0.4% from 2019, a year in which growth was 115%. New Hope Network/Nutrition Business Journal expects sales growth to pick up in the middle of 2022 and the market to reach nearly $1.4 billion in 2023. The projections for 2020 differ from those in 2019 when New Hope Network/Nutrition Business Journal expected the US market to go over $4 billion by 2023.