​Nielsen: Several Developments Will Drive the U.S. CBD Market in 2020

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​Nielsen: Several Developments Will Drive the U.S. CBD Market in 2020

12/19/2019

NEW YORK — Activities initiated by the Food and Drug Administration (FDA) will continue to affect the evolving hemp-based cannabidiol (CBD) marketplace in the United States over the next decade.

According to new research from Nielsen, as cannabis-curious consumers and companies wait for additional guidelines from federal regulators, brands, marketers and consumers will seek data and information about cannabis in 2020.

This information provides insight to what a cannabis-rich consumer packaged goods (CPG) landscape could look like. Nielsen projects that the U.S. hemp-based CBD market could jump from a $2.25 billion to $2.75 billion industry in 2020. These conservative projections already account for hampered FDA rulings and other possible speed bumps for the hemp-CBD marketplace. 

Despite an ambiguous regulatory roadmap, the next decade the next decade for the hemp-based CBD market has the potential to be a game changer for the traditional CPG and retail industry. Nielsen identified key developments to be on the lookout for:

Targeted Educational Efforts Will Rise

While education will remain a necessity for hemp-based CBD manufacturers and retailers, there will be a rise in manufacturer-driven, educational efforts for healthcare providers. Nielsen's Q4 Health Care Practitioner Tracking Study found that although 70 percent of the practitioners surveyed said they discuss CBD with their patients, only about one-in-three practitioners were knowledgeable about the laws surrounding hemp-CBD.

If the medical community is properly educated, its influence will be profound for the hemp-based CBD industry. Over the next decade, Nielsen believes that primary health care practitioners may do more to drive trial and brand/format loyalty than traditional branding and marketing efforts. Nielsen's Thinking Beyond the Buzz study found that medical advice is a major motivator to hemp-based CBD trial. 

The study also found that free product trials is more convincing than a healthcare practitioner’s guidance. According to 50 percent of hemp-CBD interested adults, free product trials would motivate them to try a hemp-CBD product vs. 16 percent for a family member's recommendation, 17 percent for a friend's recommendation, or 15 percent having the product manufactured from a familiar brand.

Additionally, in the coming years, hemp-CBD products positioned as substitutes for over-the-counter (OTC) solutions targeting arthritis, sleep and general pain will attract the largest percentage of non-CBD users. 

CBD Prices Will Fall

Depending on potency, CBD products frequently range between four and 10 times the retail price of CPG products used for comparable needs. Production efficiencies linked to cultivation and extraction practices will affect product pricing. The number of U.S. hemp farmers will rise over the next decade, as will the multi-million dollar investments that Canadian Licensed Producers are making in cultivating hemp in the U.S. market.

Price efficiencies will also be found from the growing of hemp in Latin American countries. A recent study by Hemp Benchmarks reveals that nearly 50 percent of current hemp cultivators in the U.S. expect to increase the acreage they devote to hemp cultivation. All of these will set the stage to make hemp-derived CBD more affordable for producers/manufacturers, fostering lower prices at shelf. 

Consumers Will Grow an Appetite for Ingestibles

Capsules, gummies and beverages will significantly grow their user bases, pending the FDA's permission for manufacturers to legally infuse hemp-CBD extracts into ingestible products.

In fact, Nielsen projections show that with FDA approval, ingestible formats could grow their existing user base as much as 250 percent to 375 percent in a year's time, as these are the formats that consumers are most familiar with.

In addition, these formats will benefit from recent technological advances in this space. For example, new water-soluble and nano-technologies both allow for more efficient absorption. The next 10 years, categories that consumers use habitually or as part of their daily routine will contribute significantly to CBD growth and ultimately garner high sales due to replenishment frequency. CBD-infused beverages are especially a good fit for this, including coffee, functional waters, energy drinks, teas and sport drinks.

Consumers Will Pass Their CBD Curiosity Onto Their Pets

Data from Nielsen shows that 37 percent of dog owners who give their dogs vitamins and supplements say that they’re likely to give their dog a hemp-CBD infused vitamin in the next 12 months. According to the market research firm’s Thinking Beyond the Buzz study, of those who claim to have given their dog a hemp-CBD product, more than 20 percent used a product not specifically formulated for a dog. As more U.S. adults adopt products from the hemp-CBD category, it will be imperative for pet CBD product manufacturers to provide a recognizable and valued level of differentiation between products intended for human consumption and pet consumption. 

A Battle at Retail Will Emerge 

Over the next decade, traditional brick-and-mortar CPG retail channels will begin to steal share from online CBD retailers, local specialty CBD retailers and vape and tobacco shops. An influx of new consumers will tip the scales for traditional retailers.

Compared with current hemp-CBD users, Nielsen survey data shows that new CBD consumers who say they’re likely to consume CBD products in the next 12 months but have yet to consume are more than twice as likely to state that they’ll shop for CBD products at a grocery chain or mass merchandiser. These same consumers are more than 3.5 times more likely to state that they’ll purchase hemp-CBD products from a chain drug store.