Innovation in the CBD market segment
Growth in any industry often depends on continued innovation, and even the most exciting consumer-packaged-goods brand in today’s market could be a basic dollar-store commodity in just a few year’s time. One of the newest product categories today is CBD, which has already seen tremendous growth. That growth, not unexpectedly, is based on brand innovations which position the product as more than just an over-the-counter hemp-derived facsimile for aspirin.
For this product segment to succeed, we will need to see innovation in product format as well as the sales model, with an expanded universe of potential uses, which will depend in part on FDA guidelines and approvals which have not yet been formulated.
Innovation will hinge on quality, driven by clearer regulations. “There are still many avenues to success,” said Patrick Smullen, Vice President of Sales at MÜV CBD. “The industry could be limitless if the rules and regulations become clear. Having comprehensive rules and regulations will allow the ‘cream of the crop’ to rise, and much like cannabis, those who are not fully invested in innovation and safe practices will begin to fade away. The time frame of this depends on how fast we can get out of the ‘gray’ area.
Innovation in the industry will take the form of a dramatic expansion of uses for CBD, which will find its way into multiple CPG brands. “As a whole, I believe this industry will succeed. It may not have as many companies, but those who are left standing will have several roads to success, be it food and beverage infusion, cosmetics, or general health and wellness,” said Smullen.
Serve Chistov, Chief Financial Partner at the eco-conscious cannabis groweryHonest Marijuana Company, sees a rapidly expanding consumer market in CBD, built on a foundation of innovation, brand expansion and consumer demand. “Quality of packaging, quality on the materials, quality of the manufacturers – all of that is improving. So that’s a win-win for the consumer. I also see cannabinoids being more widely incorporated in the day to day consumer products, especially food. We might be able to see hemp derivatives to be a part of the diet. I believe that smoking in the general sense will become less of an item. Consumers will treat vaping similar to that of smoking tobacco – they are looking for different alternatives to smoking with the same benefits but limited downsides.”
The hemp industry does more than produce CBD though, and innovation will drive use of this versatile crop to other uses. Cree Crawford, CEO of Cann-ID, a QA/QC cannabinoid testing lab, says “The US Hemp industry’s reemergence from prohibition has seen a plethora of verticals spring up to process this versatile plant. From CBD and other cannabinoids for human ingestion as a therapy to many other applications for industrial use ranging from fiber used for clothing, formed materials and for building and construction e.g. Hempcrete. The uses and value of this specialty crop seem to be limited to only technology and human ingenuity.”
Innovation in the CBD industry will be driven not just from the growers and manufacturers, but also from the retailers. Virtual sales models will dominate, allowing online retailers like Nug Republic, one of the largest online resellers, to satisfy market demand with curated collections of CBD products while adhering to a strict quality control process.
Innovators in the CBD industry will expand on its uses, and according to Tim McCarthy, VP Sales of United Natural Hemp Extracts, “It will no longer be called the ‘CBD industry.’ Hemp Extracts, Cannabis Extracts, or possibly a more ethereal name like Cannabis Phytoceuticals… as the current industry and the public finally learn that the hemp/cannabis plant is so much more than CBD and THC alone, and promote the plant as a broad mix of Cannabinoids for better results at lower doses.”
This market segment is poised for tremendous growth, and the innovation potential is already opening the doors to new product lines ranging from newer and more precise delivery of the oils for therapeutic purposes, to products as esoteric as CBD-infused beer. Opportunities will continue to exist for both startups and established CPG companies to move into this segment, but the key to survival will depend on finding a way to stand above the already crowded field with newer and more innovative products, improved sales methods both online and on the retail shelf, and a continued push towards quality control and adherence to the still-forming regulatory environment.