Big Brands Get Set To Enter The CBD Market

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No, the above image is not a figment of our imagination, it came from Ben & Jerry’s in May this year when they released it as part of a press statement to confirm their intention to get into the CBD market once the inclusion of CBD in food and drinks was legal in all US states.

Ben & Jerry’s announcement follows last year’s mini frenzy when it was reported that the Coca-Cola Company was considering developing non-alcoholic beverages infused with cannabidiol (CBD).

Whilst Coca-Cola were more coy about their intentions than Ben & Jerry’s, they did admit to closely watching the growth of CBD in wellness beverages but that no decisions had been made ‘at this time’. The use of the term ‘at this time’ shows that they’ve not slammed the door shut and our guess is that at some point in the future we will see the launch of a Coca-Cola CBD infused wellness drink.

The excitement generated at the possibility of brands like Coca-Cola, Ben and Jerry’s launching CBD infused products is an indication not only of growing consumer demand but how quickly this sector is moving.

It’s not difficult to see why brands are weighing up their options when you consider that according to analysts at Canaccord Genuit, in the US, the CBD drinks market alone could become a $600 million market within the next three years. The CBD wellness category has the potential to turn into a 21st Century gold - or green - rush for brands especially those who get in first.

Last September, New Age Beverages, the makers of Bob Marley-branded organic coffees and teas, Coco Libre coconut water and Kombucha drinks announced plans to launch of a line of CBD-infused waters, teas and other drinks in the US. The day of the announcement they added $14.5 million to their market capitalisation.

The passing of the 2018 US Farm Bill in December 2018 legalised the commercial production of hemp in the United States and if you’re wondering why this is important it’s because farmers are now free to legally produce industrial hemp for use in CBD products.

That gives brands that may been reluctant to enter the market when it was a bit of a grey area, the green light to ramp up new product development which is already beginning to happen with Mondelez, the makers of Oreos being the latest brand to express an interest in taking a bite out of the growing market.

Mondelez CEO, Dirk Van De Put, told CNBC that they hope to introduce a range of CBD products soon, although as US FDA regulations prohibit the use of CBD in food and drinks, for now, any plans won’t be extending to family favourite, Oreos. Van De Put said “We’re getting ready, but we obviously want to stay within what is legal and play it the right way.”

The UK is now one of the largest markets in Europe

Such is the interest in the CBD market that it has the potential to turn into a 21st Century gold, or maybe green, rush for brands who get in early - and with a good product to sell.

Here in the UK, the CBD category is now one of the fastest growing industries with a recent report by the Brightfield Research Group estimating that the UK, which along with Austria is currently one of the largest European markets, was worth £80 million in 2018.

This growth along with a growing appetite from consumers was demonstrated last year when Holland & Barrett became the first UK high street chain to launch a dedicated area in-store and online for its range of CBD oil products from Dutch brand Jacob Hooy and promptly saw a 37% increase in sales within four weeks.

The success and popularity of the product took Holland & Barrett by surprise with a spokesman for the health chain stating '“We knew that there were numerous trends surfacing around this liquid but we didn’t expect to see sales increase this dramatically.” 

The range proved to be so popular that Holland & Barrett have now introduced more products including oils, beauty products and capsules as well as their own-label range. Boots has followed suit with the launch of a range of CBD oil products by Dragonfly and Healthspan and iconic store Harrods has launched a bespoke range of CBD oils in collaboration with Dragonfly.

It’s not just the big brands that are offering CBD, smaller boutique brands such as LDN CBD and MR NICE have opened dedicated CBD stores, and Planet Organic has a wide range of CBD infused products online and in stores.

For now, the market is being driven by smaller independent brands but the bigger brands will be closely watching the FDA’s (Food and Drugs Administration) review, which started off with a public hearing in May, into whether companies can add CBD to food, beverages and dietary supplements. If the decision is yes, we can expect a rush of CBD oil enhanced products being brought to market. If not, we’ll have to wait a little longer to see CBD versions of some of our favourite foods.

To read more on the FDA’s review into CBD click here