Consumers continue to demand cannabidiol (CBD) products in c-stores for their numerous benefits even though regulations are underway.
The CBD industry has gained attention from consumers and retailers over the past few years. CBD is touted for its perceived health benefits, including relief for pain and anxiety, weight loss and heart health, among others, and can be consumed in a variety of ways or topically applied through skin care products.
Nonetheless, the Food and Drug Administration (FDA) in January announced that CBD can’t be considered as a dietary supplement or food additive until the FDA finds a new pathway for regulating CBD products, noting it was prepared to work with Congress on the matter. This makes CBD’s future uncertain as retailers await further direction from the FDA.
CBD Sales Shifts
Revenue in the cannabis market is projected to reach $47.20 billion in 2023. It is expected to show an annual growth rate of 12.69%, resulting in a market of $76.12 billion by 2027, according to a recent report from Statista.
“For the last few years, we have seen a marked increase in CBD in everything from shampoo, conditioner, lotions, foods, beverages and supplements,” said Leah Heise, constellation advisor for Kearney, a global strategy and management firm. “The demand for CBD products has risen markedly over the last few years, and economic projections continue to put the industry at a greater than 25% growth rate year over year.”
IRI data saw big dollar sales declines for CBD category leader vitamins, which fell 38.1% in 2022, while beverages fared better. CBD sports drinks were up 269.6%. Bottled juices (up 16.4%) also saw dollar sales increases. Smokeless tobacco (up 37.2%) and electronic smoking devices (up 41.9%) enjoyed sales lifts.
CBD-infused beverages are becoming a hot commodity for c-stores.
“It appears CBD beverage options will continue to spark interest and grow as a category, with the bulk of buying being convenience-oriented for near-term consumption,” said Jonah Ellin, chief product officer at 1010data, a retail analytics firm.
These CBD customers are often seeking items that have a health halo.
“As consumers become more focused on their health and wellness, they are searching for products that are not filled with sugars, artificial sweeteners and preservatives,” said Heise.
Even though CBD products in c-stores are doing well overall, pending regulation from the FDA is causing challenges for retailers.
“Retail outlets will be challenged to keep pace with changing rules, as well as changing consumption patterns as new trends span all channels,” said Ellin.
While the FDA works to determine new rules for CBD, retailers should help educate consumers on CBD and its benefits to drive sales.
“There is a high degree of confusion surrounding the legality of CBD and what it is,” said Heise. “It is time for the government to clear up the confusion.”