State of the CBD Industry After Coronavirus
With some referring to it as “The Next Gold Rush” as recently as 2018, the CBD industry has grown exponentially since its inception. But has its momentum stalled in light of the devastation that coronavirus has caused throughout countless markets across the world? Has this once thriving industry seen its day, or is at as resilient as the hemp plant from which it is derived?
In this article, we’ll cover the current state of the CBD industry, and whether this young market is still a gold mine for new investors and seasoned business owners alike.
The Rise of CBD
Short for cannabidiol, CBD may be just one of the many compounds found in the hemp plant, but it is certainly one of the most popular. Typically extracted from hemp that has been cultivated specifically to have a high CBD concentration and only trace amounts of THC, this non-psychoactive cannabinoid has become increasingly popular.
So much so, that as of May of 2019, some estimated the prognosis for US collective sales of CBD to reach $20 billion by 2024.
During its rise, CBD products went from being niche and novelty items (typically sold in oil and tincture formulations) that were hard to acquire, to spanning into every-day and trending markets such as bath and body, beauty, wellness, sports, and even pets.
In fact, according to Direct Selling News, the availability of CBD has increased by 80% in the USA.
The CBD pet market alone became so popular that between 2018 and 2019, it saw an increase of 946%. And while this market is primarily focused on cat and dog goods, it continues to expand, including even CBD products for horses.
See our full catalog of CBD products here.
With the spread of coronavirus, most brick-and-mortar retail shops were forced to shutter their doors, causing U.S. sales to drop by 16% according to the U.S. Commerce Department. The CBD industry faced a similar challenge. No longer being able to sell exclusively in local specialty shops, CBD business owners embraced an e-commerce approach to their brand marketing.
But it wasn’t all downhill for this budding industry. While the nation went on lockdown, just this March, one online CBD retailer watched sales transactions grow 240% over previous monthly averages. Then again in April, by an additional 88%.
With consumers facing a global pandemic, Bethany Gomez, managing director of the Brightfield Group, a consumer research firm, reported that thirty-seven percent of CBD customer planned on increasing their CBD use, and forty-seven percent planned to stock up their supply.
“As the response around COVID-29 has ramped up and stores are shutting down, we are seeing e-commerce sales spike amongst some of the largest CBD companies,” said Gomez.
This means that while many industries saw a steady decline, the CBD market felt more of a shift in the form in which it’s customers sought out their favorite CBD products, forgoing brick-and-mortar shops for the safety and convenience of e-commerce sites.
Current State of CBD
While this underdog industry continues to transcend expectations, it also breaks the norm in other aspects. Currently, 75% of CBD brands have women founders or general managers, making it one of the few industries, or perhaps even the only one, dominated by female entrepreneurs.
With the country - and the world - facing a global pandemic, many are turning to self-care indulgences to cope or manage the effects of the day-to-day. And while CBD products have been associated with wellness and self-care markets, consumers are seeking it out now more than ever.
As with most other industries in the post-coronavirus landscape, e-commerce seems to be the saving grace for CBD retailers, with Brightfield’s research showing that one-third of existing CBD consumers plan to switch to purchasing their CBD products online.
While we await a return to “normal,” it is imperative that CBD brands, such as brands across almost all industries, make the switch to e-commerce transactions in order to quell the effects of the shuttering of brick-and-mortar shops.
A Look Ahead
Though that return to normal may seem far away, one FMI report has projected the global CBD oil market to expand exponentially at 30% CAGR through the end of 2030, showing a positive long-term success.
As of February 2020, The Global CBD Industry was expected to grow with a CAGR of over 32% during 2020-2024. Of course, with the events of the coronavirus, these numbers may need to be revisited soon, two things remain constant in regard to the CBD market. And these are consumers' need and/or interest in wellness and self-care solutions, and the loyalty and ambassadorship of current CBD users.