The beauty and personal care market is lucrative for cannabis-derived products. Global retail sales are expected to reach $513 billion in 2020 with nearly 20% of sales generated from North America, according to Euromonitor International. Not surprisingly, Canada and the U.S. are also the top two markets for cannabis opportunities.
Canada is considered a pioneer in the international legal cannabis industry. However, topical recreational CBD has not been legalized in the country. Consumers need a medical prescription to obtain a CBD-derived topical product. Licenses are required to manufacture and sell CBD products, creating additional barriers to entry.
The U.S. is a driving force for the innovation of cannabis-derived beauty and personal care products. The country’s less stringent regulatory environment, combined with the rising tide of state-level legalization, enables many brands to compete and has resulted in increased consumer interest. However, cannabis usage as a supplement is not currently legal in the U.S., leaving room for growth to be concentrated in topical applications.
Enormous Market Growth Coming
The market for cannabis-derived products is expected to grow 1,200% from 2018 to 2023, according to Euromonitor International estimates, with particularly high interest in beauty and personal care. According to brokerage firm Jefferies, online searches for CBD beauty products rose 370% in 2019. Several drivers contribute to this growing market.
The wellness movement pushed cannabis beauty into the mainstream. There is a clear shift to a new definition of beauty that is aligned with health. Consumers desire a holistic lifestyle centered on eating, exercise, prevention and mental wellbeing, which translates to the popularity of superfood ingredients in beauty and personal care.
Mindful consumption is also driving demand for products that regulate mood. Almost 23% of global respondents participated in stress-reduction activities at least weekly in 2019, up from 16% in 2013, according to Euromonitor International’s Lifestyles Survey.
Further, cannabis is seen by consumers as a less harmful substitute for alcohol and tobacco in some markets. Desire to experience a product that incorporates a stigmatized ingredient and capitalizes on indulgent behavior is driving demand among some consumers for cannabis-infused products.
Sustainability remains top of mind with consumers continuing to look for natural ingredients. Approximately 17% of global respondents stated that plant/botanically derived ingredients were important in purchasing skin care in 2019, according to Euromonitor International’s Beauty Survey.
In CBD beauty, the next wave of renovation is the addition of adaptogens, which help the body adapt to specific needs, such as calming during periods of stress or boosting during periods of low energy. Neurocosmetics is also an emerging area. Mood-enhancing, functional fragrances that contain CBD are at the intersection of consumer desire for products that claim to treat sleep, stress or anxiety.
Skin Care, Healthy Living
Cannabis-derived beauty has the potential to be a long-lasting trend, particularly in skin care, if the segment embeds itself in a healthy living mindset. Consumer interest in natural has helped propel this much-hyped segment, since cannabis is perceived as natural compared to prescription drugs for pain management and anti-anxiety.
Cannabis’ positioning as a plant-derived ingredient and local medicinal herb further strengthen its association with wellness. Its promotion by health sources that global consumers deem trustworthy has also fueled interest, stemming from alternative healthcare practitioners (58% moderately or extremely trustworthy), online communities (37%) and social media influencers (34%), according to Euromonitor International’s Lifestyles Survey.
Cannabis is the ultimate natural health and wellness super-ingredient, fulfilling a range of functional uses across products. The more than 100 cannabinoids, in addition to CBD, represent the potential to further explore cannabis beauty, which may lead to an entirely new category or market of functional wellness beauty products.
Currently, however, the beauty and personal care market is in the beginning stages of disruption due to regulations that limit the study of or communicating the benefits of cannabis-derived products. Nevertheless, the market is at a turning point as public acceptance of cannabis-derived beauty and personal care products grows amid an overarching trend that places cannabis within the realm of beauty, health and wellness.
Villena is a senior analyst at Euromonitor International, based in Chicago, examining the beauty industry. She is a frequent speaker at national industry events and is a regular contributor to Natural Products INSIDER and Beauty Packaging. She has also been featured in Bloomberg, The Wall Street Journal and CNBC, among others.