As homebound consumers shifted to online purchasing in 2020, many also gravitated toward cannabidiol (CBD) products to alleviate anxiety and promote general wellness. While that hurt in-store retail, it could bode well for c-stores to claim those consumers post-pandemic.
“CBD did not perform well in the convenience channel in 2020,” said Don Burke, senior vice president with Management Science Associates (MSA). “As the pandemic wore on, in fact, sales declined further as consumers moved their purchases to online vendors.”
Data from MSA illustrates a roaring CBD market in brick-and- mortar retail during Q1 of 2019 with double- and triple-digit dollar sales increases in products with the greatest comfort factor for the c-store customer — gummies (66%), tinctures (144%), topicals (185%) and beverages (92%).
Products containing CBD have begun to take off in U.S. general retail, but Food and Drug Administration (FDA) restrictions on CBD as a food additive have kept legitimate manufacturers away from the general retail channel. In December, cannabis market analyst BDSA said it expects the FDA to lift those restrictions in 2021. Congress is pushing, too, taking another swing with HR 841, a bipartisan bill to designate cannabinoids as legal dietary supplements.
C-store chains like Circle K, Rutter’s, Yesway and others have committed to carrying CBD products. Some smaller chains are following suit, like Massachusetts-based VERC Enterprises, which is experimenting with store-within-a store concepts that offer CBD.
With vaccines rolling out, the table is set for CBD sales to recover. Stronger competition is yielding higher-quality products while pandemic anxiety is driving first-time consumers, prime prospects for convenience retail.
BDSA forecasts CBD beverages in general retail to account for 6% of spending in 2021, growing to 10% in 2025. And MSA data show topicals’ robust rebound with a 59% dollar sales increase for the final quarter of 2020. As a whole, the category bounced back 7% for that same period after a dramatic 37% drop in Q3.
“It’s expected that, in 2021, there’s the possibility of a slight increase in sales near the end of the year as some consumers may return to more normal commuting and shopping patterns,” Burke said. “The real recovery will not likely occur until 2022, when there’s a better chance that the CBD consumer will re-adjust their shopping patterns to brick-and-mortar stores.”
Retailers would be wise to prepare now to meet the anticipated demand.