Small businesses must now find their niche and continue educating consumers as chain retailers begin selling CBD-infused topicals.
Last month, Walgreens and CVS Pharmacy announced plans to store CBD-infused products in a number of selected stores. The latest development brings a prediction made by Brightfield Group in the last fall, which said that chain retailers would support the rapid growth of the hemp-derived CBD market as soon as 2019.
What is next for the rapidly growing market, as big businesses continue to cash in on CBD passionate?
According to the NBC News report, CVS Pharmacy will carry topical hemp-derived CBD products including sprays, creams, and roll-ons in more than 100 stores across eight states. The Pharmacy will market them as an alternative source of relief and over-the-counter medicinal products. CVS is in contract with a third-party laboratory, Eurofins to test and ensure the products sold are of quality. The Pharmacy will sell the products in California, Illinois Kentucky, Tennessee, Alabama, Maryland, Indiana, and Colorado.
Walgreens has also not been left behind in the latest development as it also announced its raid into the CBD market niche. According to CNBC, Walgreens will sell CBD sprays, creams, and patches in almost 1,500 stores in Colorado, Kentucky, Vermont, Indiana, Illinois, Oregon, Tennessee, South Carolina, and New Mexico.
“The entry of the giants into CBD space is interesting since I feel that they are kind of testing the waters,” said Brian Baum (CEO of CBD product manufacturer Cannovia) while speaking to Cannabis Dispensary. “For some time, CBD is among the biggest innovations in wellness and health industry. Thus, if your brand is pushing wellness and health like all the pharmacies, then it is advisable to consider engaging in this space. However, these are either national or global companies, which mean that you have to contend with the regulations at both the state and federal level.”
Baum also noted that the companies are not stocking CBD dietary supplements or CBD-infused foods, but the FDA is expected to meet next month to deliberate on developing regulations for CBD use in beverages and food.
“I believe that the companies want to assess the consumer’s reaction first,” said Baum. “Are their consumers engaging with CBD products? What are the consumers buying patterns? So I believe that they are now venturing into the market to assess that for long-term plans.”
Usually, big box retailers like Walgreens and CVS will most likely be interested in CBD products that fall in a particular niche, says Celeste Miranda, the CEO, and founder of the CBD Expo Tour. “I believe that the retailers are considering a lot of other additional things that the CBD products can do,” she adds. “For instance, if they want to put the products in their sleep section with the sleeping aids, I feel that they would be interested in a product that contains CBD and melatonin. Besides, they might also put the products in their immunity section, which includes products with CBD plus elderberry and so on.
With the big box stores entering the CBD market, it may be a challenge to smaller businesses expecting to compete in the space, says Baum. But, CBD remains a niche product and thus, learning about the new trend is important.
“Much education is required to help those joining in the market reap great benefits,” Baum says. “For instance, the companies that are just joining the market space can help educate their consumers on making educated and intelligent choices in the products to buy. This will be an excellent way to stand out in the new market.”
“Investing in a specific niche will be the most effective way for smaller companies to compete, adds Miranda. “I think that it will always be a daunting task for smaller companies to get into bigger box store or any retailer. Thus, I believe that they will have to narrow down into a particular niche. Then, they can add a niche after a niche once they are well-established in the market. This is the only way that such businesses will stand out from the stiff competition in the CBD industry.”
Besides, confusion still bounds in CBD use although it is still getting a tremendous amount of attention since 2018 Farm Bill passage, Baum adds. For instance, Amazon does not allow the sale of CBD products in its marketplace but does not prohibit hemp seed oil products from being sold. This might be very confusing to consumers who may not be able to tell the differences between the two.
“If a consumer goes to Amazon to search on CBD oil, they will find a long list of products, but these products do not contain CBD in them as they are hemp seed oil products,” adds Baum. “I think that Amazon is doing a big disservice to their customers by making such products the only available ones since when they try them, they end up claiming that they do not work for them.’ Hemp seed oil offers some health value, but it does not have the therapeutic value associated with CBD. So I feel that Amazon can help the industry get to its best level single-handedly by assisting their customers in accessing CBD products because they are just confusing them at the moment.”
E-commerce platforms should consider developing some regulations for listing CBD products in their market place instead of failing to stock them. Moreover, the platforms should hold the manufacturers responsible for describing and labeling their products to educate their consumers, Baum adds.
In the next few days, the FDA will step in and hopefully help clear the guidelines for the market, says Baum. “It is encouraging to hear that they are taking the open hearings approach to get input from the market to be able to come up with a seasoned regulatory policy, which will offer protection to consumers without stifling the industry.”
It is highly likely that the FDA will be very strict on health claims and the market will probably divide into two segments, which include the CBD-infused wellness products that Walgreens and CVS Pharmacy are launching in their stores and a pharmaceutical grade of CBD items that will be controlled by Big Pharma, adds Miranda.
Moreover, the industry is likely to experience some growing challenges, especially when it comes to creating and marketing items that customers do not relate to, says Baum.
“I think the claim that CBD will solve every health issue that you have is among the challenges that the products faces, he says. “You believe that if you use tincture and you sublingually take some few drops, it will take care of the pains, aches, and depression. The same product might offer various benefits across different categories, but looking at this from a consumer point of view, that is not the way people buy. Consequently, I feel that the industry should focus on packaging products with messaging that targets specific applications. This will make it easier for the consumer to pick a product that appeals to them and one that solves a particular issue.”
Besides, the product’s formulation should also be adjusted to meet the expectations of the consumer, Baum adds. “Every person is used to popping antibiotics, which temporarily takes care of the problem. That is a foreign interaction compared to squirting drops of a CBD tincture under your tongue. Being mindful of what people are used to is one of the areas where I believe that we should be more sensitive. Then, we should create products that do not make using them seem like a huge leap from what they are used to.”
In conclusion, though the industry is moving in the right direction, Miranda concludes. “I believe that most of the actions that have been taken so far have brought positive results in the industry. It might not be growing at the expected pace, but it is slowly getting there.”