It’s been a big week for CBD.
First, HerbalGram, published by the American Botanical Council (ABC), released its annual Herb Market Report. Utilizing US retail sales data provided by SPINS and the Nutrition Business Journal (NBJ), it shows that CBD continued to see accelerated growth both in the natural and mass market channels in 2019. CBD remains the top-selling ingredient in the natural channel with almost $91 million in sales, fueled by high double-digit growth (71.3%) from 2018. In the mass market channel, it experienced high triple-digit growth (872.3%) to place it firmly within the top ten ingredients at almost $36 million in sales.
Second, bipartisan legislation was introduced in the US Congress to make hemp-derived CBD lawful as a dietary supplement, a step taken to ensure the foothold that CBD already has in the market is codified, given that for the last few years it’s fallen into a regulatory gray area due to inaction by the FDA.
When CBD initially exploded into the market, many in the supplement industry had the perception that it could be the gateway for new consumers into the dietary supplement category. Many of our colleagues hypothesized that consumers did not see CBD as a dietary supplement but rather a miraculous plant substance derived from the heretofore forbidden cannabis plant, and that CBD’s extraordinary sales numbers were due to growth coming from outside the supplement consumer market.
As we began reviewing the data and conducting our own research on CBD attitudes, beliefs and behaviors, certain factors kept appearing that caused us to question the construct that growth was coming from outside of current supplement users. Certainly, there were consumers unfamiliar with dietary supplements who bought CBD, and there were non-supplement retail channels (such as cannabis dispensaries and convenience stores) that were selling CBD. But something about the buyer decision process seemed familiar to us, which was reminiscent of that of supplements.
In early 2020, we completed a rigorous, census-balanced research study of more than 3,000 US adults. In it we asked if they had purchased or used CBD within the past year.
Supplement CBD versus Non-Supplement CBD Users
Our proprietary Supplement Brand Accelerator™ utilizes a segmentation study of US adults (over age 18) who utilize herbal and dietary supplements. This research determined that 72% of adult Americans use supplements. We were narrow in our definition of supplements: to be considered a supplement user, study participants had to have used or purchased a vitamin and/or supplement, an herbal or botanical supplement, or a probiotic in the past year. If a participant used protein powder but none of the three required options, then they were considered a non-supplement user. Similarly, if a study participant had purchased CBD but not the three supplement requirements, they were classified as a non-supplement user.
Of all the CBD users in the United States, 85% are supplement users.
What we found was that of all the CBD users in the United States, 85% are supplement users. So although 15% of CBD users are not supplement users, the overwhelming majority are.
The data show that if you have CBD products and you want to reach the masses, look to those who currently use supplements.
Drilling Down
But 15% of US CBD users is still a significant number, right? And if these consumers aren’t using other types of supplements, it provides CBD brands a less competitive arena for offering natural solutions to stress, sleep, pain, and everything else CBD offers.
So what is the difference in demographics between the supplement and non-supplement CBD user?
Starting with age, the non-supplement CBD user is younger (average age of 35.2 years vs. 39.6 years), with 56% of them under the age of 35. But before you get too excited, remember that we are looking at 15% of the CBD market. And when you look at the larger 85% of the CBD market, the under-35 group is 43% of supplement users. The actual numbers of consumers under 35 in that group is much larger than the non-supplement users. Still, it is good to know that when trying to reach the non-supplement consumer with your CBD, millennials and Gen Z are your target consumers.
There is also a common belief that men utilize CBD more than women. That is true for the non-supplement CBD user (56% male vs. 44% female). But for the supplement CBD user, it’s not the case (48% male vs. 52% female).
In terms of where they live, the non-supplement CBD user is more likely to live in a small town or rural area (31% vs. 25%), and the supplement CBD user is more likely to live in the suburbs (41% vs. 32%).
Because the non-supplement CBD user is younger, their average income is less than the supplement CBD user ($71,249 vs. $81,061).
So consider this as busting the myth that CBD users are not supplement users—supplement users are the dominant consumers in the category.
These demographic differences give us some perspectives on non-supplement CBD users. However, for the more important and larger group—the supplement CBD user—we have a robust set of data from our Supplement Brand Accelerator.
So consider this as busting the myth that CBD users are not supplement users—supplement users are the dominant consumers in the category. Growth in CBD is going to come from companies that understand this and use it for their brand strategy and product innovation.