CBD products have taken over the food and beverage, nutraceutical and even cosmetics markets — and there are no signs of a slow down coming any time soon
The exploding CBD market has drastically affected industries as diverse as beverages, nutraceuticals and even cosmetics over the past several years. According to a recent cannabis report, CBD sales in the U.S. are projected to surpass $20 billion by 2024.
There are countless CBD products available to consumers today and many brands are seeking to expand their operations as the demand for transparent, quality ingredients continues to grow. Although the industry has taken a few steps forward to legitimize itself in recent years, manufacturers and suppliers have a long way to go to improve the transparency and trust consumers have in CBD brands.
Let’s take a closer look at some predictions for the next year and beyond in the CBD space.
1. Increased Federal Regulation
A current issue facing the CBD industry is the lack of federal regulation and how this impacts the quality of ingredients. In the absence of clarity from federal government agencies, several leaders in the CBD industry have appealed to the U.S. Food and Drug Administration (FDA) for regulation to protect consumers.
Across the board, everyone will benefit from both increased regulation and trust. Producers
need manufacturers to trust processes and products, while manufacturers need consumers to trust their ingredients and labels. On top of this, all parties want and need regulators to create and uphold standards that protect the best interests of each stakeholder. Regulation from the federal government, establishing industry benchmarks, will only help to better shape the conversation around quality.
2. More Demand for Organics
According to a recent Bloomberg report, COVID-19 has accelerated organic food sales in the US due to increased demand for health-conscious foods and beverages. According to Nielsen Data, “sales of organic food and drinks surged 25% during the 17-week period ended June 27.”
The United States Department of Agriculture’s (USDA) organic certification program is a rigorous multi-step audit process to increase supply chain sustainability. Organic certification is a form of elective, self-regulation for manufacturers which consumers have eagerly welcomed into the marketplace.
From a consumer perspective, organic certification provides both supply chain transparency and increases confidence with brands and products they already love. It also provides a form of quality assurance to skeptical consumers, especially those who avidly read product labels prior to making a purchasing decision. Members of this “label reader” demographic will consistently choose organic products for the quality and transparency they provides with pure and natural ingredients.
USDA certifications allow consumers to make informed decisions while feeling confident that they are purchasing products from reputable sources. Research has shown that today’s CBD market lacks credibility while consumers are desperately seeking comfort and are eager to purchase from trustworthy brands.
3. Elevated Product Diversification
Currently there are only a handful of CBD brands who are willing, or even able, to be certified organic. USDA certification is an opportunity for brands looking to adapt to changing consumer preferences, diversify their product offerings and invest in supply chain transparency.
In the past, product differentiators involved third-party lab testing or providing COAs — today that’s just industry standard. The USDA organic seal is becoming one of the hemp industry’s most coveted certifications because it is a product differentiator.
Innovation and creativity will continue to be important differentiators due to high competition in the CBD marketplace. Especially with new ingredient innovations such as water dispersible material, the applications will be endless. Currently CBD encompasses products such as tinctures, softgels, gummies, topical ointments, chewing gum, and energy drinks — but that’s just the start.
By Josh Epstein, CEO, Socati
About Josh Epstein
Josh Epstein is the CEO of Socati, a leading processor of broad-spectrum hemp extracts. He was previously the president and chief operating officer of Nuvera, an international cannabis company that sold for $826 million in 2018. Prior to that, he was a partner with FastForward Innovations, an early stage venture capital firm, and practiced law with the international law firm Baker Botts, where he focused on venture capital, mergers and acquisitions and private and public securities offerings.
Socati is a leading processor of broad-spectrum hemp extracts. The company provides a top-quality and consistent product for a market projected to reach $22 billion by 2022. Leveraging investments in new technologies, Socati engages in large-scale manufacturing and has logistics in place to process increasing amounts of hemp biomass to meet demand. With the ability to manufacture broad-spectrum hemp extracts at scale, Socati is built to serve the needs of large, international CPG companies that are seeking high quality raw materials.
For more information, please visit www.socati.com