CPG marketing teams should take note; hemp is hot, according to Nielsen’s latest findings. The company projects the US hemp market could hit the $2.75 billion mark this year. CPG marketing of these products will help drive this demand, and Nielsen’s report shares some industry insight shaping the market this year.
Nielsen Defines Hemp/CBD Market Imperatives for 2020
Education will always play a role in the transition of CBD and hemp products to “legitimate” consumer items in the eyes of federal legislators. Nielsen suggests CPG marketing will play an important role in educational efforts with healthcare providers, in addition to manufacturers and retailers. The study showed that, while medical practitioners discuss CBD with patients, only one in three were aware of the laws regulating hemp and CBD.
The study stated, “If the medical community is properly educated, its influence will be profound for the help-based CBD industry.” Medical advice is still a primary motivator for consumer purchases of these products, with free trials as the only category even cutting it close to a clinical referral. According to Nielsen:
50% of adults interested in hemp would be motivated to try it with a medical recommendation.
16% said a family recommendation would motivate them.
17% said a friend’s recommendation was most important.
15% said brand recognition was key to selecting the product.
Nielsen said CBD and hemp products would increase as alternatives for over-the-counter solutions for pain, arthritis, and sleep aids. As the popularity of CBD increases, a price drop is predicted, making these products more competitive against other CPG brands. Production and harvesting issues will always affect pricing, they stated, but as the market establishes itself, more US hemp farmers will produce more products to counteract cultivation issues. Over time, existing hemp farmers are also expected to increase the acreage they devote to these crops.
What Lies Ahead for Hemp and CBD Products?
CPG marketers should also pay close attention to the edible markets, as researchers expect beverages, capsules, and gummies to expand their consumer bases in the coming years. While the FDA’s approval is still pending for manufacturers to infuse CBD/hemp into ingestible products, Nielsen predicts a spike in sales of up to 375% the year after approval occurs. This is particularly true in categories that consumers use regularly in a daily routine; CPG marketers should consider CBD-infused coffee, tea, and energy drinks as potential growth areas.
The CBD and hemp market will also expand into the multi-billion dollar pet industry. Nielsen data reports 37% of dog owners who currently give supplements and vitamins to their pets will likely also try a CBD vitamin in the next year.
CPG marketers can expect a battle in retail and e-commerce as these products gain both federal approval and more widespread consumer acceptance. The task initially will be to snag market share from online retail channels and vape or tobacco brick and mortar storefronts. The Nielsen study suggests that consumers that haven’t tried CBD or hemp will be most likely to purchase these products from a grocery, drug store, or another mass merchandiser.
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