5 Insights Into CBD Beverages

CHICAGO — For some time, convenience retailers have touted the promise of CBD-infused beverages, despite the segment remaining a very small piece of overall CBD (cannabidiol) product sales. Mike Luce, co-founder of High Yield Insights, a Chicago-based cannabis research firm, says he understands the appeal for retailers and consumers alike.

“When I think about CBD, I always look at form and function,” he told CSP Daily News. “Beverages are a very accessible form. A trend I’m seeing are more and more functional ingredients: antioxidants, vitamins, etc. Beverages are calling out a number of things; CBD can be one more positive.”

Extensive consumer survey data conducted by High Yield Insights provides additional support for why CBD beverages are likely to rise in coming years.

Here are five takeaways from that data ...

Over the years, beverage consumers’ share of the total percentage of the CBD product market consumers has grown steadily. In early 2019, 17% of CBD-product consumers used CBD-enhanced beverages; that grew to 29% by late 2021. Perhaps more importantly, 37% of CBD consumers expressed interest in trying CBD beverages.

“Beverages smack less of that medicinal application. I think that helps,” Luce said. “It’s a format we’re familiar with. [There’s] no mystery to how much you take. It’s on-the-go friendly. Nobody’s going to look twice at someone drinking a seltzer or energy drink.”

Pictured: Karma CBD Water

Of those 29% of CBD consumers using beverages, some distinct and dynamic demographic patterns arose. Specifically, survey data showed beverage consumers are often:

• Young: 62% of CBD beverage consumers are millennials or Gen Z (vs. 45% of all CBD consumers). Only 8% are baby boomers or seniors (vs. 26% of all CBD consumers).
• Male: 59% of CBD beverage consumers are men (vs. 40% of all CBD consumers).
• New users: 59% of CBD beverage consumers have been in the category for one year or less; 24% have been in the category for one-to-two years; 12% for three-to-four years; 5% for five years or more.

Pictured: A88CBD Water

Though they may be new to the CBD category, beverage consumers report themselves as fairly savvy about cannabis: 65% look for specific terpenes (naturally occurring chemical compounds responsible for the aromas, flavors and even colors associated with different cannabis strains), and 68% prefer products with other minor cannabinoids, such as CBG.

Even if retailers aren’t offering terpene-specific or minor cannabinoid beverages, this knowledge suggests CBD beverage consumers would be drawn to a number of functional ingredients.

“Hit on dayparts: Lavender, chamomile for at night; energy-focused ingredients for the day,” said Luce. “The inclusion of those functional ingredients, paired with the CBD and desirable flavors, hits on a couple points all at once that are really great for c-stores.”

Pictured: Aprch CBD Sparkling Water

Many CBD beverage drinkers reported using these functional beverages in place of alcohol. Forty percent said they view CBD as a healthy alternative to alcohol, 28% said they drink less when using CBD, and 24% said they outright substitute CBD for alcohol.

Luce said price and single-serve options could be driving this trend.

“Price is important to the CBD beverage consumer,” he said. “I can spend whatever it is on a single beverage and not have to buy a four-pack or six-pack.”

Pictured: Unity Wellness drinks

Luce said another reason for beverages’ popularity is that many CBD beverage brands were “more out of the gate” on category-management practices than other CBD brands have been.

“You have someone from a CBD brand that comes in, explains the product, merchandises it,” he said. “A lot of that is not yet being done in cannabis.”

There are not, however, clear brand leaders in the space. “It’s a little early,” Luce said.

It’s likely also too early for long-term format winners in terms of CBD water, tea, juice and other products. But Luce said the industry is seeing some trends.

“Carbonated, by far from my perspective, is one of the most dynamic spaces,” he said. “It fits nicely within the c-store environment. Whether that seltzer category will lead in the long-term, I can’t say. But in terms of trends that are happening right now, it’s there.”

Pictured: Kalo Hemp-Infused Seltzer