Convenience Channel Has Room for Growth in the CBD Market
NATIONAL REPORT — While CBD is still not standardized nationwide, consumer products derived from hemp became legal as part of the 2018 version of the U.S. Farm Bill, and 2019 saw explosive growth in the category. At the end of 2019, however, the category suffered slightly when the Food and Drug Administration warned consumers to stop using products with THC and CBD following an outbreak of lung injuries associated with the products.
Many consumers instead turned to topicals and other CBD products as replacements, according to Don Burke, senior vice president of Management Science Associates Inc. (MSA), a Pittsburgh-based company focused on analytics and informatics. In fact, sales of topicals soared to No. 1 in the CBD category for a time; they recently dropped to No. 2 with gummies taking the top spot.
“In 2021, gummies have returned to the best-selling product form in c-stores, followed by topicals and tinctures, and vape is starting to come back fairly strong as well,” Burke told Convenience Store News.
Overall, CBD sales in the convenience channel have declined from where they were in 2019, and the COVID-19 pandemic drove people online to shop for these products, which hurt c-stores, noted Mike Luce, president of Chicago-based High Yield Insights, a provider of data-driven insights about the cannabis market. The good news, though, is that awareness of CBD and hemp products is higher than ever, and sales projections are still on an upward curve, he said.
“None of the spaces are saturated the way mainstream beer is,” said Luce. “There is a lot of competition within individual categories, such as gummies, but there is still room for growth, and CBD drinks are ideal for the c-store industry. Right now, CBD drinks are ranked among the highest categories that CBD consumers are not using but interested in using in the future.”
Looking at the total adult population in the United States, only 16 percent are current CBD users, meaning they used a product within the past three months. The potential for growth in the category is revealed in the 84 percent who are not current users, Luce pointed out.
“If you drill down, of that 84 percent, 46 percent expressed interest in trying CBD, and 13 percent are former CBD users that may come back,” he explained.
Additionally, once the pandemic has passed and shopping patterns return to normal — with consumers commuting to and from work again — CBD sales are expected to grow once more in the retail space, along with the introduction of new cannabinoids such as CBG and CBN, said Burke.
C-stores that may have tried CBD products in the past but didn’t find success should consider changing their approach and how they are marketing the products in their stores, according to Tony Sparks, senior vice president of marketing for Betterment Retail Solutions, a West Des Moines, Iowa-based health and wellness company that connects up-and-coming brands with retailers.
Many may have tried a turnkey program from distributors, but Sparks recommends retailers instead take a multi-vendor approach to CBD.
“We take a multi-vendor approach with floor and counter displays that are not just CBD, but may also have other functional products and brands in it as well,” he explained. “It doesn’t have to be all CBD or nothing.”
He also suggests convenience retailers “call out CBD” in their marketing so that customers know it’s available there — and do so in a big way. In fact, Betterment Retail Solutions tested neon signs that say CBD, aiming for customers to notice them when they walk up to the cold vault door. Every store with the sign saw an increase in sales, Sparks shared.