CHICAGO – Like most things in 2020, the sale of CBD products was shaken up by the pandemic.
According to data from Management Science Associates (MSA), convenience-store sales of hemp/cannabidiol (CBD) products remained strong in the first several months of the pandemic but slowed in the latter half of 2020 as economic concerns took hold.
“It appears consumers had to cut discretionary expenditures, and CBD seems to be an item that was cut,” Don Burke, senior vice president of the Pittsburgh-based data company, told CSP Daily News. He added, however, that the industry is beginning to see a rebound.
Part of the rebound and continued growth of convenience CBD sales will come from new product innovations and categories. Here’s a look at three segments of the relatively new category currently garnering consumer interest, … and how they’re specifically performing within convenience retailing.
Smokable hemp—or flower—was recently called out byCannabis Business Times as a “bright spot” for the market, with several industry analysts touting the segment as “fast-growing” and “lucrative.”
The segment specifically includes hemp flower, prerolls or most any inhalable product, excluding hemp and CBD vape pens. Nielsen estimates smokable hemp products netted upwards of $80 million last year.
MSA tracks this segment as “hemp smokes,” and Burke says such products are still relatively new to convenience retail. “They came a little later to the party,” he said. “However, they have been picking up quite a bit of steam.”
Unlike most of the CBD product category, hemp smokes saw strong increases in the third quarter of last year, albeit with a slight decline in the fourth quarter.
“The jury is still out because I think it’s too nascent. We’re just at the beginning of consumer acceptance of that category,” Burke said. “It certainly has strong potential based on what we’re seeing.”
CBD beverages are a tenured segment compared to smokable hemp, and more data about CBD-beverage consumers is starting to emerge, including a recent survey by High Yield Insights. The Chicago-based cannabis market research company surveyed more than 1,000 CBD-beverage consumers and found beverage shoppers tend to be:
- Young: 63% were Gen Z or Millennials.
- Affluent: 33% had household incomes over $100,000.
- New to the category: 60% reported that they started using CBD after the COVID-19 pandemic began.
- Seeking convenience:42% said convenience was a top purchase driver.
“The beverage format appeals to consumers new to CBD because it is accessible, easy to dose and resembles functional drinks in the mainstream market,” Mike Luce, president of High Yield Insights, said. “Picking up a single can or bottle is a relatively inexpensive solution for curious mainstream consumers.”
Luce described CBD beverages as being “an omnichannel category,” with the survey showing beverage consumers as being twice as likely to have purchased from a mainstream brick and mortar retailer location than CBD buyers overall.
The category has done particularly well in convenience.
“Beverages came on strong in second half of 2019,” Burke said, adding that the category saw declines in part with overall convenience foot traffic declines in the first half of 2020. “As foot traffic in convenience stores has picked up some during the second half of 2020 into 2021, we’re starting to see CBD beverage sales pick up.”
Delta-8-Tetrahydrocannabinol, an alternative form of THC, is beginning to get a lot of attention, including a recent New York Times story.
Chemically speaking, Delta-8 is only slightly different from the more common Delta-9-Tetrahydrocannabinol, the main psychoactive ingredient in marijuana. David Downs, senior content editor for Leafly.com, told the Times it’s often described as “marijuana light” or “pain relief with less psychoactivity.”
The key difference is that because Delta-9 is extracted from the marijuana plant, it is explicitly illegal under federal law. Delta-8 is extracted from hemp, so feasibly legal under the 2018 Farm Bill, although federal agencies (including the Drug Enforcement Agency) are paying attention.
Delta-8 is likely too new to be showing up in c-store data, for now. Burke said that new products, potentially including Delta-8, are researched first before MSA determines the proper way to code and track.
“Likely, it is gaining somewhat in distribution, but nothing yet of any significance,” he said. “We’re not yet seeing any substantial volume in the data.”