Major chains like CVS and Walgreens are expected to dominate the rapidly-growing CBD market this year, according to a new report by The Brightfield Group.
In 2019, mass chains are expected to eclipse all other channels which the leading market and consumer intelligence group predicts will hold 57% of sales for this year. By years’ end, the CBD industry is expected to be a $5 billion industry, a 706% increase from 2018. The Brightfield Group also predicts that the total U.S. CBD industry could reach around $23.7 billion by 2023.
“The CBD market has been growing rapidly, but we will see unprecedented growth in 2019,” Brightfield Managing Director, Bethany Gomez, says in a statement. “The bulk of this growth is coming from large retailers like CVS, Walgreens, and Kroger entering the market and providing that availability to consumers.”
2019 was not always going to be this way. The first quarter of the year was looking to be dominated by companies already set to take advantage of the market (ie, vaping companies), the group says in its report. After the passage of the Farm Bill, which legalized hemp, CBD products could now be sold in stores—as opposed to strictly online—and could reach larger markets. However, the FDA has not allowed CBD supplements nor food additives to be permitted for retail sale, leading to a massive increase in topical product sales.
Currently, The Brightfield Group reports tinctures of CBD still dominate the market, holding 25% of sales; however, these products are losing their lead to mainstream, consumer-friendly products.
Topicals currently comprise 17% of the market, and skincare and beauty products comprise 8%. Both have gained tremendous traction in the second quarter of 2019, according to the report. The Brightfield Group likens the success to the ability of mass retailers that have signed on to carry CBD-containing products under the current regulatory limitations. The group says that topicals and Skincare & Beauty products are separate entities in their report given the ways in which the products are uniquely marketed and positioned, which will likely affect their growth in distinct ways.
In total, The Brightfield Group reports that only 1.0% of all CBD companies were in the top tier, (ie, earning more than $40 million in sales or selling products in more than 1,000 stores).
Major chains have the greatest advantage when it comes to gaining an immediate foothold on the new, legal CBD market as they introduce products to a vast consumer base. The Brightfield Group suggests that supercenters, gyms, pet stores, natural food chains’ and other big box retailers will expand into the CBD market as well.
“CBD’s persistent popularity is in line with longer-term anti-pharma, health, and wellness trends that continue to drive consumer demand, which major manufacturers and retailers are extremely eager–and have already begun–to capitalize on.”
Brands are identifying with consumers whose core values align with “mindfulness,” and whom often patronize companies that exhibit environmentally friendly missions, are helpful, and value honestly and a healthy lifestyle.
The Brightfield Group also suggests that natural food and smoke shop CBD revenues will continue to grow and thrive.