Pandemic sees 9 million new users join the US CBD market

The latest consumer research from High Yield Insights has found that almost one in four CBD users entered the category in the last 6 months. This is equivalent to 9 million new users. In addition, more than one in three longer-term CBD users (an estimated 13.4 million adults) tried at least one new product format during this time.

The research was run in September and October 2020 by surveying over 35,000 adults living in 50 states. The resulting data enables a deep drill down into the lifestyles, attitudes, and usage habits of nearly 4,000 former CBD users, 4,200 current users, and 13,500 adults who have not yet used CBD but expressed an interest in trying it.

New users and higher volume sales underpin growth

With many unknowns surrounding the CBD market and CBD consumers themselves, it is difficult to project how rapidly the market will grow. Industry sources are predicting the market will reach $9 billion to $20 billion by 2024, growing at a 34% to 45% compound annual growth rate. This massive growth is expected to come not just from new users, but from existing users expanding their repertoire as well. Amongst US CBD consumers, 50% have tried at least one new product format in the last 6 months. Although this is largely driven by market newcomers, almost one in six longer-term CBD users have added 2 or more product formats to their repertoire since the beginning of the pandemic.

Soothing supplements to soar

The findings from High Yield’s consumer research have shone a spotlight on how the CBD industry continues to thrive in spite of (or perhaps because of), the difficulties posed by the global pandemic.

A significant 25% of the 4,177 CBD users surveyed said that they had bought their most recent CBD item in order to cope with COVID-related anxiety or stress. Perhaps because they better-understand the product benefits, formats, and dosage, those who have been using CBD for more than 6 months were more likely to have said that they purchased their last CBD product for this reason. COVID anxiety and stress may also have also been the purchase trigger for existing CBD users to expand the product ranges that they buy into. High Yield’s consumer research has found that almost half (46%) of the longer term CBD users bought at least one new product format in the last 6 months. This willingness to experiment within the market highlights the opportunities for newer categories, particularly food and drink.

The supplements sector is set to be the markets biggest winner as a result of the pandemic with research finding that irrespective of whether they are market newcomers or have been using CBD for longer, CBD users were most likely to turn to products within the supplements sector in order to take the edge off their pandemic blues. Although the newcomers are more likely to enter the category with oils and topicals, almost 6/10 (56%) who only started taking CBD since March have used gummies. One in four COVID commencers who have only tried one or two product formats since entering the market in the last 6 months have used gummies.

Who are the “COVID Commencers”?

The market newcomers have a distinct demographic profile. Largely because men are more likely to have been early adopters of CBD, the newcomers to the market are more likely to be women, especially those who are retired. Amongst the adults who only started to use CBD in the last 6 months, men have a far broader product repertoire than women. Some 31% of male newcomers bought into 10 or more different format types compared to just 10% of the female newcomers.

Demonstrating the growth of market appeal amongst the silver-haired crowd, almost two-thirds of retired CBD users joined the market in the 6 months to October 2020.

Among existing users who are expanding their product repertoire, overriding characteristics are:

  • Female (almost 6/10 CBD users who increased their product repertoire in the last six months were women)
  • Separated (almost half of CBD users who describe their relationship status as separated tried at least one new CBD product in the six months to October 2020. This compares to an average of 35%)
  • Working full time (55% of those who have increased their product repertoire are in full-time employment).

The gap in knowledge among newcomers

For the uninitiated, the CBD market can be extremely confusing and our recent blog post looked at the role of customization in helping new consumers find the shortcut to the products that will meet their needs. However, there are stark differences in industry knowledge between CBD novices and those who have been using it for longer. This further demonstrates the need for a guiding hand from the industry:

  • One in ten CBD newcomers don’t know the difference between hemp and marijuana,
  • Almost one in ten don’t understand the difference between CBD and THC,
  • Newcomers are significantly less likely to understand the difference between full spectrum, broad spectrum, and isolate.

It begs the question as to why the newcomers enter a market that they know so little about and it would appear that the main attraction is curiosity coupled with recommendations from trusted sources. It is arguable that once they have experienced product benefits, they may be more inclined to repeat purchase to address specific health concerns, or to improve their health.

However, the industry is at real risk of losing newcomers with the most recent joiners being less likely to say that they have found a product, format, or brand that works for them. There is still a huge deal of trial and error with market newcomers being significantly more likely than longer-term users to say that they are still trying to find the product format or brand that works for them (34% vs 25%).

In many ways, the requirements of new CBD users are much more simplistic; they want a product that works at a reasonable price. The market newcomers are slightly more likely than average to be influenced by special offers and promotions for products and they are also much less likely to pay more for CBD-only products from specialist CBD brands (13% vs 19% amongst longer-term users). At this stage of their CBD journey, the way in which a product is sourced is less of a concern for the market newcomers and this is further supported by the fact that they are also less likely to do extensive product research before selecting an item for purchase (just 22% do so compared to 29% amongst longer-term users).

It is critical to find a way to decrease the experimental stage of their purchase journey if the market is to secure future sales from this group. There are obviously limitations to the claims that brands may make regarding product benefits, but the fact that market newcomers are heavily influenced by friends/family (50%) and also health providers (47%) can be used to spur growth and help them find the right products faster.

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