Joe: On this episode of the "CBD University Podcast," trendy topicals and other hot products from the recent report, "How to Navigate the Complicated World in CBD Retail." We'll talk with the publication who presented the report and help you understand many aspects and considerations of our evolving industry. This is the "CBD University Podcast," and it starts right now.
I'm Joe Agostinelli, host of the "CBD University Podcast." If you are a returning listener, we welcome you back to our podcast. If you are a new listener, we are glad you found us on your podcast platform of choice. Don't forget, you can also watch full video episodes of the "CBD University Podcast" on the Global Widget YouTube channel and the YouTube channel of our brands. Navigating the CBD industry, tricky for just about anyone. In a currently unregulated industry, navigating the industry in retail could be a huge challenge for retailers, distributors, and even consumers. I'm joined on this episode by Laura Drotleff, a reporter from Hemp Industry Daily, who recently published a report in collaboration with Nielsen Global Connect, "How to Navigate the Complicated World of CBD in Retail." And this is another one of our...you're watching the video episode, another one of our Zoom episode. Given the current pandemic going on, we're not able to have outside guests in the studio, but hopefully, maybe Sunday I'll have you guys down to our facilities here in Tampa, but for now, Laura, thanks for joining me.
Laura: Thanks for having me on the show, Joe. I appreciate it.
Joe: And for our listeners and viewers who have watched or listened to past episodes, you're probably very familiar now with the name Hemp Industry Daily. We've had quite a few of their team on, we always enjoy talking with them on different aspects of the industry. And, first of all, from the report, we'll talk about the report and if you want more information on the report, you can visit www.hempindustrydaily.com. But Laura, from the report, consumers turning to CBD more and more it appears, and why is this?
Laura: Yeah. So, Joe, over the last couple of years, since the Farm Bill was passed, the 2018 Farm Bill which made hemp a legal commodity, the industry's really seen a marked interest in CBD. But then especially over the past several months since the coronavirus pandemic, you know, hit the U.S., CBD manufacturers have noticed really increased purchases over the last few months. And well, a lot of CBD stores, the independent stores were closed and deemed non-essential. Manufacturers said consumers were buying larger quantities when they're in the stores. And there was also a large pivot over to e-commerce sales. Based on a study by Aclara Research out of Chicago, one in five consumers indicated that they were buying more CBD during the pandemic, and the top reasons that they said that they were purchasing more CBD were for pain relief and anxiety. Those are the top two reasons. But then also relaxation, sleep, and general wellness.
And, although, I mean, they said that those were the reasons that they're using them, although CBD manufacturers are currently banned from making any medical claims for their products. What was really interesting in that research as well, and talking to Carmen Brace from Aclara Research is that according to the Kaiser Family Foundation, 53% of adults said that their mental health and well-being has been negatively affected and impacted by the coronavirus pandemic. And more than a third of U.S. adults have reported anxiety symptoms. And pharmacy benefit service called Express Scripts has even reported that prescriptions for anxiety medications have increased by 34% since the pandemic. So, the higher CBD sales go along with that, but then they also go along with increased interest in general wellness and improving immunity, which has really shown an uptick in recent months with consumers focusing also on their diets and taking more supplements.
Joe: So, when it comes to the retail scene, the report mentions that many retailers have entered the CBD category by picking up topicals. Why topicals?
Laura: Yeah. That's a good question, Joe. So, topicals on the retail side have been sort of like the easiest application for retailers to enter the category because the products aren't ingestible. And while the FDA, the U.S. Food and Drug Administration does have control over topical products, it seems to be more concerned about CBD products that are consumed as an ingredient in food, beverages, and dietary supplements. So, and this is because the FDA has already approved CBD as a pharmaceutical drug for epilepsy. So, right now, it's examining whether it can allow CBD to be used as an ingredient in food or beverages or for use in over-the-counter supplements. And topicals also, according to Nielsen Research has shown to be a little bit of a lower barrier for consumers to try because aren't ingestible. So, they may be perceived as lower risk.
Joe: And, you know, for us or from a retailer standpoint, it's the easy end to start off in CBD words, kind of that low risk, where a consumer may turn to it as, as you mentioned, pain relief.
Laura: Yeah. Right. Exactly.
Joe: So, the report shows that over the next 5 years, the industry is shown to grow substantially from $1.8 billion to nearly $7 billion by 2025. And we talked about that big increase, including 961% increase when it comes to beauty. So, not only are retailers enjoying success with topicals, but it's also where consumers seem to be turning. When it comes to other categories, what does the forecast look like for other categories? And we talked about this just a little bit such as edibles, which include your gummies and your oils. And another product seems like picking up...another category picking up a lot of steam is the pet category for everyone's furry friends.
Laura: Yeah. Yeah. And we actually, on pets, we did have a separate report just specifically for the pet category. So, we have seen quite a bit of interest. In fact, Nielsen estimates that 1 in 4 pet supplements by 2025 will include CBD. So, that is quite a big growth within the next five years, an interest in CBD pet products. Beyond the formulations that have already seen the most adoption like topicals, for example, Nielsen Global Connect, which is our partner expects to see the most rapid growth in capsules and beverages. And especially if the industry receives regulatory clarity from the Food and Drug Administration, you know, on using CBD as an ingredient. So, consumers also have indicated high interest in both of these areas. They're also very highly interested in edibles and tinctures as well as similar products that are formulated specifically for pets. And in our research, we did find, also, Nielsen did find that people are using products that are specifically formulated for pets rather than giving them human-formulated CBD products. So, we found that to be very interesting as well. So, Nielsen estimates that over the next 5 years, we're going to see a 428% increase in sales of edibles and beverages, showing the market in 2025 to be $1.3 billion for beverages, which is huge, and $596 million for food products. And there will be looks like 164% increase in purchases of pet products, which will be a $506 million industry, and then 159% increase for over-the-counter supplements. So, that will be a $1.5 billion industry in 2025.
Joe: Can we talk about...and a lot of that is going to hinge on our next topic. We talked about it on past episodes, we've talked about it a few times today, so let's just get it out there. The FDA, is 2021 the year where we have something from the FDA when it comes to this industry?
Laura: That's the billion-dollar question, right? So, I know that the hemp and CBD industry is certainly hoping so that 2021 will be the year, and advocacy groups across the industry have been pushing for that to happen. The FDA back in July submitted its CBD enforcement policy draft guidance, like the industry guidance to the White House, Office Management and Budget, so the OMB. And that means basically, if the White House approves that draft guidance from the FDA, then those rules could be approved any day now. But whether or not that happens, remains to be seen. And if we don't see any guidance from FDA, it's possible that Congress could move forward with CBD legislation. But right now, it's anyone's guess considering that there are a lot of other issues that lawmakers are dealing with currently like the election and coronavirus.
Joe: What should retailers know about barriers to consumers wanting to try out CBD products?
Laura: Yeah. You know, it's interesting, you know, some consumers are aware that the FDA has not approved these products yet or has not provided a new regulation. And so, that's really one of the biggest issues. The biggest issue is really that there isn't any regulation. And then that there's very little known research showing the effectiveness and the benefits of CBD, and whether or not it works. So, consumers are also worried that they wouldn't like the effects of CBD, or you know, that they may see some physical or mental harm from using it. And they also just don't trust or don't know whether or not CBD products actually contain the ingredients that they say that they contain because there isn't FDA regulation. So, you know, a lot of that has to do with education. The level of education on CBD has been limited because manufacturers just are not allowed to make any claims about products, and you know, they're just very limited in what they can educate.
Joe: For retailers looking to partner with CBD manufacturers, as we were just talking about the manufacturers and distributors, what are some tips that the report provided for navigating the CBD industry, and without giving too much of it away so we have folks maybe take a look at that report?
Laura: Yeah. Good question, Joe. So, because there aren't, you know, all the different categories in retail stores yet, because a lot of retailers have really kind of backed away from selling ingestibles, you know, like gummies or beverages or anything like that until they receive guidance from FDA, but you know, so it's kinda hard to tell because right now, you know, there's not a huge number of CBD products in the main retail channels yet. So, but right now, hemp CBD products are predominantly sold direct to consumer sales, you know, online, specialty brick and mortar channels, and then also in some of the traditional, like mainstream retailers that, you know, consumers who would go and buy their other products. So, right now, from what we've seen so far, and Nielsen research shows that like convenience stores and gas stations mini marts have really embraced more of the ingestible forms of CBD, like tinctures, gummies, and capsules. But they're like lower price per unit products, and you know, they happen to show up more in some of the franchise-based ownerships structures. On the shelf, they're usually also stocked together versus like being put throughout of the store and other, you know, like categories. So, the other thing for like convenience stores and gas station mini marts is that some of the smokable products are a little bit more commonly sold in those stores, which makes sense because that's where a lot of people who use tobacco will get their products as well. So, that makes a lot of sense.
And also single serve hemp CBD beverages, Nielsen sees some really good opportunities in that channel as well for beverages. And then on the grocery side, in the grocery channel, there will probably be more of a wider category or wider assortment of products and also maybe larger scale products, more expensive products. So, like larger size bottles and higher price products will be more available or more appropriate for the grocery and drug channels as well. So, some of the ingestibles right now are not widely sold in groceries, but they can be found in like wellness centers or like stores, in-store formats that are found in the grocery channel. And then of the medically positioned products like for pain and sleep like capsules and tinctures and topicals, right now, they could maybe do better in drugstores, but there is a blurring of the lines there, so grocery stores are starting to pick those up.
Joe: If you'd like more information on the report, again, you can visit www.hempindustrydaily.com, a lot of great information in there for retailers and even consumers if you want to get some extra information about the industry. Before we wrap up, though, I certainly wanted to mention an event taking place virtually this year. It started at the beginning of November just before we first published this episode and it continues really through the 4th of December if I'm correct with the main event December 2nd through the 4h, that's the MJBizCon virtually. In-person event's maybe next year, hopefully. So, if you're listening in, prior to that time period before it wraps up on December the 4th, Laura, what can folks look forward to?
Laura: Yeah, yeah. As you mentioned, this year, unfortunately, we had to go virtual, but in place of the one-week program, we were able to change the event into a five-week program, which includes 60 educational sessions and Passholder Day Forums. So, an example of that is on November 30th, we have a full day Hemp Industry Daily forum, and that is going to include information on the Farm Bill and where we stand with that, the interim final rule. And then also where we stand with the FDA rules and regulations, and just like a variety of topics that are interesting to the hemp crowd. And then we have a whole host of new and exciting elements and lots of different topics depending on what your area of interest is, you know, for Canadian industry members, international industry members, people who are based in California, you know, it's just like a whole variety of different sessions. So, it's gonna be really exciting.
In our main event, the first week of December that includes a keynote address from John Mackey, who's the CEO and co-founder of Whole Foods and the co-author of "Conscious Capitalism." So, he's going to be weighing in on marijuana and hemp and CBD, and you know, where that's going from his perspective. And then we have, like I said, a whole host of new and exciting elements that we're trying to make it fresh and exciting so it's not just like everyone's sitting there and staring at the screen the whole day. So, I think it'll be a lot of fun and definitely, you know, really exciting. You know, it's still gonna have that exciting feel of MJBizCon. And so, definitely make sure that you register, it'll be a lot of fun.
Joe: And once again, you can find out all the information on hempindustrydaily.com. We'll have the links to where you can register. We'll also share some of the registration links on our social media channels after we've published this episode, and then as we wait up to that to December 2nd to 4th main event. Laura, thanks so much again for taking time out of your day to join us for this episode of the "CBD University Podcast." I think all that's left now as we head into 2021, maybe having you and the team on for a collection of predictions if we dare, try and predict what's going to happen in 2021, we think threw out all of our 2020 predictions by February. So, we'll love to have you guys back for a look at the industry as we head into the new year.
Laura: Yeah, that sounds like a lot of fun. Thanks so much for having me today. This is great.
Joe: Thank you, once again, that's Laura Drotleff from Hemp Industry Daily. My guest on this episode of the "CBD University Podcast." And reminder that if you have not yet done so, to subscribe to our podcast on your favorite podcast platform of choice, you can do so by hitting the subscribe button wherever you get your podcasts, or also on the YouTube channel of both Global Widget and our brands, you'll get notifications when new episodes are published by video or audio each week, depending on where you subscribe. I'm Joe Agostinelli, the host of the "CBD University Podcast." Thanks for tuning in.
These statements have not been evaluated by the Food and Drug Administration. The CBD products are not intended to treat, cure, or prevent any disease or condition. Always consult your personal physician about CBD and using CBD products. CBD should never be used by anyone under the age of 18. This content is not intended to provide legal advice regarding the legal status of CBD and CBD products.