Insider’s Take
- Brands would be wise to appreciate the diversity of CBD customers and how considerations like format and cost can affect their preferences.
- Notable trends serve as cultural drivers in the space, informing how consumers engage with CBD food and beverage products.
- The growth drivers that exist for CBD products more generally overlap with those for CBD food and beverage products.
Consumer demand in the U.S. for the cannabis derivative CBD continues to rise despite its questionable legal status at the federal and state levels. CBD has been legally authorized for use only in one epilepsy drug on the federal level, although the state of Virginia recently authorized its use as a food additive. FDA is also active in enforcing federal guidelines against its use, having issued 22 warning letters regarding CBD products in 2019 alone. Yet even that legal risk has not deterred brands like Coca-Cola and Edible Arrangements from investigating the space, suggesting the potential profit at stake. Even brands unprepared for such investigations are keeping an eye on the segment.
Despite intense consumer interest in CBD products, detailed insight into consumer attitudes can be hard to come by. Brands and marketers have appropriately focused on regulatory and scientific issues, dedicating less attention to what drives consumer interest in CBD foods and beverages. As you consider this segment, it’s important to appreciate the diversity of CBD customers and how considerations like format and cost can affect their preferences. The success of your CBD food or beverage product will depend largely upon which consumer segment you’re best positioned to serve, so understanding the nuances of this market is crucial.
Although CBD’s popularity has exploded, largely due to its perceived benefits in health, pain and anxiety management, consumers engage differently with these products in supplement form as opposed to food and beverage form. CBD supplements, though still federally unauthorized, often tend to be the province of highly informed, active consumers who believe in the health benefits of CBD and are willing to pay for products that contain more potent and sophisticated, yet non-psychoactive, forms of CBD. Consumer cost expectations for food and beverage are different; the formulation and regulatory challenges are also different. Thus, it can be financially and logistically impractical to deliver potent and higher-grade extracts of CBD in foods and beverages.
Accordingly, brands may not significantly reach the supplement consumer with CBD foods and beverages. A CBD beverage or snack is more likely to be attractive to a consumer with a more casual relationship to CBD—perhaps those who consume the product much as they would other food additives that provide perceptions of wellness (think ginseng in energy drinks), or even those who embrace a bold or rebellious self-identity.
Both the food and beverage and supplement markets exist and can be expected to grow, especially with federal approval and ideally with appropriate regulation and the support of validated third-party clinical studies. Though, in food and beverage products, many brands should expect to find their audience with lower price expectations, expectations of good sensory quality, and brand aesthetics. For many CBD-infused food and beverage manufacturers, then, a brand informed by appropriate cultural drivers will be a key to success.
Three trends serve as cultural drivers in this space, informing how consumers engage with CBD food and beverage products. Each informs how savvy brands employ CBD ingredients in different ways. While these are factors to a successful product, safety, quality and regulatory best practices should never be discounted.
Many younger consumers are drawn, in fashion, entertainment and lifestyle, to the aesthetics of decades they never experienced. Rather than making the ever-popular move of appealing to a consumer’s childhood, brands and entertainment platforms are promoting a nostalgic, enthusiastic encounter with the look and feel of a decade their audience may have experienced only through photo albums and memories. For food and beverage brands seeking to launch a new product integrating CBD, this trend opens up the possibility of launching brands that are both nostalgic and contemporary, whimsical and reflective. Whether a beverage or an indulgent snack, consider how your brand can call consumers back to the aesthetic of a bygone era, but with a colorful, contemporary twist.
Whether on Instagram or lately emerging visual platforms, many consumers experience much of life through a lens. Products are chosen for their visual appeal and as a contribution to the consumer’s personal lifestyle brand. This trend is no longer limited to the youngest and most-online consumers, touching as it now does several generations in different ways. Food and beverage products, which have always been prominent on social media, have a particularly central role in this trend. Products including CBD will play a distinct role here, and not just in obvious ways. Although CBD products could certainly form a part of edgy personal brands, with appropriate branding they could also signal relaxation, playfulness, or an aspiration of wellness. Don’t feel your brand is limited. Consider the audience you already have and what role CBD might play in their lives.
The third cultural drive for CBD product consumption also arises from social media behavior. For many consumers, the optics of personal health and wellness are central to their self-conception and their buying patterns. These consumers may be professional performers, or they may be weekend warriors, but they just as well might be neither. More and more, consumers couple the aesthetics of wellness culture with a much more everyday workout routine. For these consumers, consumption of wellness-oriented CBD products would be a natural addition to their lifestyle. Brands that already engage with this audience, such as those offering healthy snacks or indulgent performance beverages, ought to be among the first to consider adopting CBD should regulators OK it.
In summary, the growth drivers for CBD products more generally overlap with those for CBD food and beverage products, but they are not identical. Brand leaders need to bear this in mind as they consider their next step in this growing sector.
Megan Hook works as growth strategy director at MarketPlace, a food and beverage branding firm, where she applies her brand strategy, design and business experience toward assessing investment opportunities, launching new ventures and branding new services.
