Operators in the CBD and infused cannabis products markets have tremendous opportunities for growth, particularly those that understand and cater to an evolving consumer base, according to a new industry report released Thursday.
The report, titled “Cannabis-Infused Products: Navigating the Complexities to Market, Vol. 2,” was published by New Frontier Data. It examines developments within the industry in an effort to aid businesses as they shape their strategies.
The 38-page report, which is largely based on point-of-sale data from 30 U.S. jurisdictions and online surveys, outlines a growing industry with a consumer base that is both expanding and becoming more engaged. Operators that stay abreast of changing regulations and keep their focus on consumer trends are poised to benefit, the report suggests.
“With the explosive growth seen in the cannabis market to date, and the strong interest that consumers have expressed in finding ways to integrate cannabinoids into their lives, a rich and sustained market opportunity is anticipated for infused products throughout the foreseeable future,” the report concludes. “Rules governing cannabinoid-infused products are still in flux, but if the final rules permit an open and competitive market, the infused-product sector is poised for dramatic growth in the years ahead.”
Twelve percent of all cannabis products sold in the U.S. from January to September were infused products, according to the report. That percentage is the third-highest product category, following flower (41%) and vape products (29%).
In legal U.S. markets, sales of high-THC infused products were on track to account for about $2.2B in sales this year, a 37% increase over 2019, according to the findings.
Further, the report found, about one in six U.S. adults reported purchasing at least one CBD product, “suggesting a nascent but fast-growing market.”
“With 27% of purchasers reporting having only first heard about CBD within the previous year, New Frontier Data estimates retail sales of marijuana-infused products alone to exceed $21.5 billion between 2020 and 2025,” the report read.
That growth would be in line with expectations for the overall cannabis industry.
In 2019, the total U.S. legal cannabis market accounted for about $14.4B in sales, with $2B of that coming from infused products. New Frontier estimates that legal U.S. cannabis sales will total nearly $154B from 2020 to 2025.
Those figures take into the account the COVID-19 pandemic, which the report states “will drive new online sales growth opportunities in ways not yet fully understood.” Still, the findings suggest the health crisis won’t hinder the industry going forward.
“As an emerging market, the cannabinoid-infused product sector is well-positioned to innovate how wellness-oriented products are sold online and delivered to consumers,” it read.
Key for companies will be capitalizing on that anticipated growth.
The report suggests that CBD and infused-product companies should invest in intimately understanding their consumers, which the report broke into different archetypes with different needs, motivations and behaviors.
It lists a wide range of attributes for companies to consider, including ingredients, product quality, shelf stability and serving sizes, among others. It also suggests that companies be creative and unafraid of differentiating themselves.
“Since the market remains immature, and consumer preferences are still evolving, product manufacturers have broad latitude to innovate new product profiles,” the report states.
New Frontier Data, which is headquartered in Washington, D.C., has a stated mission to “elevate the discussion around the legal cannabis industry globally by providing unbiased vetted information and educating stakeholders to make informed decisions.”
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