Cannabidiol (CBD) is one of the two main active cannabinoids in cannabis and its medicinal properties range from anti-anxiety to anti-inflammatory effects. It is not psychoactive, meaning users do not feel ‘high’ after ingestion, unlike tetrahydrocannabinol (THC), which is the main psychoactive cannabinoid of cannabis.
Attitudes to medical and recreational cannabis are softening around the world. Uruguay legalised the drug for recreational use while Canada was the first large country to formally legalise the sale of cannabis-based beverages.
Today, the CBD and hemp-infused edibles market has the potential to become a multi-billion-dollar market and despite ongoing regulatory uncertainty, there has been a flurry of new product development from both start-ups and multinationals.
Growth predictions for the sector are bullish. In the US alone, retail sales could potentially reach US$4 billion by 2024 if the Food and Drug Administration (FDA) approves hemp-based CBD for general consumption, while the global market could reach a value of US$5.8 billion by 2024, according to market research firm specialised in the cannabis sector Prohibition Partners.
Nearly every segment of the traditional beverage market now counts a cannabis-based alternative, from wine to beer, tea to coffee, soda to seltzer.
“As a plant-based nootropic and health supplement, the CBD drinks category is rapidly gaining traction in the health and wellness markets across the globe, which already have a strong foundation in drinks products,” said Claire Birks, senior analyst at Prohibition Partners and the author of its latest report published in June this year, Disrupting Drinks.
“CBD is being touted as a remedy for sleeping issues, anxiety, pain management, sports performance and even weight-loss, making CBD drinks a natural extension to the drinks ranges that already exist for these markets - think chamomile tea, isotonic or energy drinks and meal replacement milkshakes,” she said.
R&D advances make CBD beverage-friendly
The beverage category has also been given a boost by R&D scientists, who have made advances that mean beverages are now a good ‘carrier’ for CBD, offering product consistency, stability, bioavailability, and taste.
Liposomes, for instance, are considered to be one of the best carrier systems for pharmaceutical products and cannabis drink manufacturers are beginning to use them.
Liposomes are microscopic vesicles that disrupt phospholipids so they form minuscule protective bubbles. When used in CBD beverages, the liposomes protect the CBD molecules throughout the digestive system and as they enter the bloodstream, ensuring the molecules remain active.
Health & wellness key to attracting women consumers
Another reason why the infused soft drinks market has greater potential than alcoholic drinks is the fact that many would-be consumers are looking for a replacement for intoxicating substances.
Prohibition Partners surveyed over 15,000 adults in the ‘mature markets’ of US and Canada and the UK, France, Germany, Spain and Italy in the ‘emerging’ European market. It found that sleep, health and wellness, and mood are the main drivers for using CBD or hemp-infused drinks among existing buyers, with 45%, 38% and 31% of consumers citing these as purchase drivers, respectively.
Even in markets where CBD drinks can legally contain THC, intoxication is a much lower priority at 21%.
CBD’s health and wellness associations are fuelling particular interest among women aged 22 to 44. In general, women tend to be more interested than men in plant-based products and medicines (57% versus 43%, according to Prohibition Partners’ 15,000-strong survey) and they are also more likely than men to describe their lives as hectic or stressful (53% of women versus 44% of men), possibly due to the dual weight of career and family responsibilities.
When marketed as natural-based health products, CBD and hemp-infused drinks could therefore represent a major draw for women looking for new ways to unwind or de-stress.
Going forward, diet, low-sugar and sugar-free options that do not compromise CBD’s health halo with a high sugar content could offer promising product development opportunities, particularly as women tend to be biggest buyers of diet drinks, noted the report.
Going beyond the novelty factor
The London-based research firm found that 36% of cannabis-based drinks buyers liked trying new products and experiences compared with just 10% of non-buyers – but will these consumers still be interested in cannabis products when they have been around for several years?
“CBD drinks are currently riding the wave of novelty; they offer something that is currently edgy and daring - but that won’t always be the case. Going forward, this may present difficulties for retaining users in the category and for fostering brand loyalty,” Birks told Fi Global Insights.
“Finding a brand positioning that resonates with consumers is key to driving repeat purchases. Cannabis and CBD users are, however, proving to be a difficult audience to pinpoint as seen in Canada, where the restrictions on branding and product content are making it hard for products to compete with the black market. A full understanding of the dynamics of the user and potential user base is therefore critical,” she added.
Price is also an issue for consumers buying CBD drinks with more than one in five saying that CBD and hemp products are expensive. This is relevant for CBD manufacturers, according to Birks because “where brand and brand messaging is stripped out, products will be left to compete on price”.
Asked whether slow-moving regulatory barriers and consumer uncertainty of legality are holding back this nascent industry, Birks said “absolutely”.
“One in ten CBD drinks buyers thinks that CBD products are unproven and potentially dangerous, and the figure among non-users is significantly higher. With the FDA unable to endorse that the product is safe for long-term use and so much inconsistency between countries about whether the product can be legally ingested or not – despite the recommendations from the World Health Organization – consumers are understandably confused.”
More than one in five (21%) potential CBD drinks consumers don’t know enough about the legalities of using CBD consumer goods while one in six potential buyers (17%) does not know what their impact might be on day-to-day life, such as driving or performance at work, or what the basic differences between CBD, hemp and cannabis are.
“With widespread reporting on poor regulation and varying standards in the market, consumers are crying out for recognised standards and strong brands that can deliver on trust and quality,” said Birks.
Birks predicted that regulatory harmonisation and strong national branding would shape the market in the coming years. In the meantime, however, education and clarity were critical in creating a product that consumers can feel confident about buying.