Before we even delve into the role of Cannabis in the consumer goods sector, let’s take a moment to understand the constituent that has led to this disruption. Cannabidiol (CBD) is one of the 200+ compounds naturally found in the cannabis plant. CBD is claimed to have salubrious properties, some of which are the subject of considerable debate. For commercial purposes, CBD is normally harvested from the hemp plant, a type of cannabis with little or no tetrahydrocannabinol (THC), which is the psychoactive chemical in marijuana. Advocates of CBD believe it may benefit cognitive function, alleviate stress and anxiety, fight inflammation, reduce pain, and even treat depression – benefits with business potential for FMCG. Hence, marketing managers in the consumer goods industry would capitalize on the use of CBD to innovate across a broad range of products and have the luxury of becoming the first movers in the segment.
The WHO Expert Committee on Drug Dependence (ECDD) concluded that CBD (in its pure state) “does not appear to have abuse potential or cause harm” This clearly aligns with the global trend toward easing regulations around CBD, especially products containing CBD that are intended for medical applications. The US, Canada, Australia, Switzerland, and the UK are among the countries that have eased regulations around CBD in recent months.
According to GlobalData’s Q1 2017 global consumer survey, 75% of consumers globally say they are concerned about chronic health issues like tiredness, fatigue, and stress. The majority of consumers globally say they are either buying or would consider buying products that address these conditions. For example, Economic losses from insufficient sleep are estimated to be as high as 2.92% of gross domestic product (GDP) for Japan, the country with the greatest estimated loss by this metric. according to a 2016 study by Rand Corporation. Given this wide range of issues faced by consumers, companies across sectors ranging from food & beverages, skincare to cosmetics can enter and disrupt the market. Some companies have already entered the markets with innovative product offering. Let’s take a look at few examples to understand the trends and what to expect in future as more and more countries continue to legalize the use of recreational and medicinal cannabis.
Functional water segment has been the first point of entry for companies as it’s relatively easy to fabricate the product using additional ingredients. In the UK, #HempRevolution is how ‘Love Hemp Water’ began marketing its product which it claims to be the first spring water in Europe that is infused with cannabidiol oil. As expected, they bank on the functional and health benefits of the product conveying the fact that they are made from “Clinically proven medical hemp”. “HighDrate” in the USA boasts of tropical coconut and CBD infused energy water with natural antioxidants. Similarly in Canada, Eversan launched its hemp-infused RO powered water that uses 3 mg of nano-encapsulated CBD which according to them is way more efficient than the normal dose of CBD oil. As the consumption of enhanced water is rising y-o-y, one should expect a massive fragmentation of this segment in near future as industries continue to enter this market with diverse yet unique value proposition. In addition, the Beer industry has started disrupting this segment with Corona beer owner Constellation Brands pouring in $4bn (£3.15bn) into Canada’s top cannabis producer, Canopy Growth, in a deal marking the largest investment in the industry to date.
In the Skincare industry, early research has shown a positive impact on skin-conditions such as acne, dermatitis etc. Following this, the make-up industry is no exception. FMCG companies are not waiting to extend CBD usage into new offerings, like mascara. Cult beauty company Milk Makeup, earlier this year, launched Kush mascara, with product imagery and verbiage designed to connect with marijuana users or prospective users – medical and recreational. Estee Lauder’s Origins is the latest mainstream company to capitalize on the burgeoning cannabis beauty market by launching a new celadon green face mask that contains cannabis sativa seed oil from hemp.
Lot other industries will soon be disrupted as cannabis continues to gain momentum and attains legal status in one country after another. Global attitudes and behaviors towards cannabis will be the driving factor that will dictate where CBD establishes itself. According the global consumer survey of GlobalData, North America and the Middle East and Africa regions are the most positive toward cannabis and marijuana; Asia-Pacific being the least positive. The legalized markets are ripe, and innovation and marketing managers have a lot to do to distinguish themselves in this already-fragmented market and prepare themselves for the future as more markets open up to this phenomenon called Cannabidiol.
1) GlobalData Foresights CBD
2) World Health Organization, 2017
3) Rand Corporation, 2016