How to be successful in the CBD market

Cannabidiol (CBD) is a non-inebriating component of cannabis (including hemp) that has been gaining attention in consumer-packaged goods over the past few years. Its benefits range from helping consumers with chronic pain, sleep issues, and mood problems like anxiety and depression, to everyday wellness and health maintenance objectives like workout recovery and neuroprotection.

The CBD market is growing fast, with sales of nearly $25 billion expected worldwide by 2025 according to Grandview Research.

However, CBD is not just another ingredient. Due to its association with cannabis, its arrival on the market has been accompanied by still-incomplete regulatory evolution. While CBD from hemp in particular is legal in most markets, the regulatory landscape detailing how it can be included in food and beverage is a patchwork of sometimes contradictory and opaque rules – even in big markets like the US and Europe. Regulators have been moving sluggishly in their attempts to clarify matters, yet many brands have been rushing full speed ahead.

In this environment there has been an unfortunate profusion of poor-quality products. Studies in the US have found that many CBD products contain less CBD than their labels state, and sometimes none at all, while others contain elevated levels of THC (the compound in cannabis that gets you ‘high’, capped at 0.3 percent in the US and 0.2 percent in Europe). Some have even been found to contain dangerous synthetic cannabinoids.

So how can brands enter the CBD market responsibly, balancing consumers’ desire for this new compound with their fears that your product might be snake oil?

The answer is judicious openness that simultaneously provides information to consumers and educates them about its importance. In our experience developing CBD consumer products for our clients, we have created a series of best practices that help our clients to provide every customer – from CBD newbies to experts – with the information they need to understand the quality of the products they are selecting and to feel assured in their choices:

Certificates of Analysis

Certificates of Analysis (lab test results, or COAs) are becoming a critical element in consumer communication around CBD products. While COAs are an everyday component of the consumer packaged goods (CPG) product manufacturing process, they are not usually offered to the consumer.

In the sometimes chaotic CBD market however, COAs provide consumers with proof that a product contains the CBD it purports to and does not include excessive amounts of THC or other contaminants like heavy metals, pesticides or mycotoxins.

It is important that consumers are able to access COAs readily, as informed consumers now commonly seek them out before purchase. Several US states require QR codes on CBD product packaging, allowing consumers to access COAs, and this is quickly becoming a standard feature of CBD packaging.

Broad or full spectrum vs isolates

CBD can be introduced into products in a number of ways. Isolate is virtually pure CBD and is commonly found in pharmaceuticals and lower cost products. Full spectrum CBD includes trace amounts of other components of the cannabis plant, while broad spectrum CBD is full spectrum minus any THC.

Research shows that the other compounds in cannabis help CBD do its job, so well-informed consumers seek out full or broad-spectrum products. These formats are less highly processed than isolate, which also appeals to health-conscious consumers.

It is easier to formulate with CBD isolate, but resist the urge. Isolate is considered an inferior CBD source by many consumers and gives the impression that the brand is heedlessly adding it to jump on the CBD bandwagon, rather than carefully formulating to bring the benefits of plant medicine to the public.

Third-party certifications

Just as they do with any other CPG product, third-party certifications provide consumers with a shortcut through the maze of considerations when making their buying decisions. And just like in food and drink more broadly, organic certification is quickly becoming a major differentiator.

While organic certification does not explicitly address CBD, it does rule out the chemical processes involved in isolate production, and it gives consumers the sense that the manufacturing process is careful and audited by outside experts.

The same can be said for CGMP (current good manufacturing practice) certification. While there is no standard CGMP certification mark, products manufactured in CGMP facilities should let consumers know. Educated consumers increasingly see this as a differentiating factor in a sector characterised by a profusion of unknown brands.

And lastly, a new family of CBD-specific certification marks is emerging. The best known is from the US Hemp Authority. This mark provides consumers with assurance that the hemp growing and product manufacturing has been audited to ensure that the operations are professional, reliable, and safe. Certified operations must meet quality, training, and record-keeping standards that set them apart from the herd.

Trusted reviews and word of mouth

CBD’s efficacy is supported by a growing body of scientific research, but that’s not nearly as compelling to consumers as rave reviews from their friends and family. This is the reason social media is a major driver of CBD adoption.

But beware: in many places, such as the US, brands are barred from making health claims about CBD, and even from including third-party claims like reviews in their communications. It’s a fine line to walk, but those brands that get it right see tremendous customer loyalty.

Additionally, independent third-party reviews of CBD products, especially those that do independent lab testing, are very influential with consumers because they cut through the noise to highlight the truly high-quality products on the market.

Lifestyle fit

Finally, it is important that CBD be offered to consumers in formats that fit the intended use. Simply adding CBD to an existing product and hoping it will meet consumers’ needs does not cut it anymore.

That means knowing your customer and knowing why they are interested in CBD. People looking for workout recovery might be offered ready-to-drink (RTD) beverages, while people seeking pain relief might prefer topical ointments, and those with sleep issues might look for pastilles.

Focusing on the consumer’s need state, rather than on CBD per se, will lead to products that fit consumer desires and keep them coming back.