While marijuana remains illegal in the U.S., at least on the federal level, CBD oil has nonetheless grown in popularity—and could provide a meaningful leg up for food and beverage companies, argues Bernstein.
The back story. CBD, short for cannabidiol, has been growing in popularity as both a stand-alone product and an additive to things like coffee, with purveyors claiming it helps with everything from anxiety to hair growth.
What’s new. On Friday, Bernstein analyst Alexia Howard takes a look at what CBD could mean for food companies. It’s no small market: Products containing CBD generated sales of $1.9 billion in the U.S. last year alone, by some estimates.
Technically, the Food and Drug Administration prohibits the sale of foods and drinks infused with CBD, but some individual states have allowed these products, leading to companies like
(HEIA.Netherlands) offering CBD- and THC-infused beverages via subsidiaries in certain areas.
“If CBD-infused foods were to become legalized across the retail channel nationwide, there could be significant growth potential from here,” for both human and pet consumption, Howard writes.
Looking ahead. At present, CBD-infused products account for less than 0.1% of U.S. food sales, but if they reached a 3% market share in the coffee/tea and snacks and 5% in pet treats in five years, that would lead to a $5 billion market by 2024.
Snacking seems like an obvious area for new CBD products, Howard notes. “On this front,
[MDLZ] has already expressed interest in exploring CBD-infused options,” she writes. “Could
[HSY] be the next to follow?” On the coffee front, she argues that the new alliance between
(CH.Switzerland) will have to respond to the trend—or risk being overtaken by other players, potentially
(KHC). In addition, Smucker and
(GIS) may also jump to add CBD to their pet product lineup if science and regulators agree on the health benefits for animals.
And more categories remain up for grabs. “Could CBD revitalize declining categories such as cereal, yogurt, or even canned soup? Or will it become simply another ingredient that is added to multiple food products for those who are willing to pay a bit extra for it and thus becomes fairly commoditized?” Howard writes. “We are still in the very early innings of CBD development and could very well see disruptions to many food categories down the road.”
Write to Teresa Rivas at firstname.lastname@example.org