- A new Rabobank report found that CBD has been entering food and beverage products — beer, coffee, cocktails, jelly beans and others — at an “astounding pace.”
- However, the substance remains illegal in foods and beverages on a national level, and it may not be approved for several more years barring congressional action, according to the report.
- Meanwhile, the market appears poised for more CBD-infused products, and Rabobank said the demand is likely to continue. But it will be easier to assess the long-term market opportunity once the industry hits “peak hype,” allowing more cautious companies to develop products in a lower-risk environment.
Regardless of its federal regulatory status, CBD-infused foods and beverages continue to appeal to consumers because of the substance's association with indulgence as well as health and wellness. The Rabobank report said consumers are using CBD for chronic pain, anxiety and insomnia despite a lack of scientific evidence that it's effective for these conditions. The report found about 40% of CBD consumers use the product for general health and wellness.
The dual role of CBD as a functional food and beverage ingredient and a mood enhancer is blurring the lines between pharma and food, Rabobank noted. This could be further enhanced if its purported therapeutic benefits are proven. But until then, companies need to be cautious in making promises on CBD-infused products because the FDA has cracked down on unfounded claims.
But consumers don't seem to really care that CBD is only being regulated on the state level so far and that the U.S. Food and Drug Administration hasn't approved it for nationwide use in foods and beverages. The recent passage of the Farm Bill has helped to provide more clarity, but there are still many questions when it comes to regulating hemp and CBD products. The FDA set a public hearing for May 31 to begin the conversation about regulating the substance.
From jelly beans to beer, CBD-infused products are already available, with more in development, so some consumers are already trying these items without FDA action. The potential market remains potentially lucrative so several small food and beverage makers are eyeing the opportunity. The revenue potential is quite promising. Spending on all cannabinoids, which also includes marijuana and its psychoactive THC derivative, is projected to grow to $4.1 billion by 2022 from $1.5 billion last year, according to a report from BDS Analystics. A study from A.T. Kearney in 2018 found 40% of U.S. consumers said they would be willing to try a cannabis edible.
Food and beverage manufacturers have the incentive and an audience, so they may decide to enter this market as soon as the regulatory picture clears. The risk, of course, is that the negative halo tied to CBD might taint the positive perception consumers have of their other line of products. As a result, manufactures may opt for an entirely separate division or decide to partner with another company.
Food manufacturers are exploring CBD product lines and laying the groundwork to make a fast move once permitted. Snack maker Mondelez, for example, which makes Triscuits and Oreos, told CNBC recently that CBD could be part of future snack innovations. Large food manufacturers like Mondelez are taking a wait-and-see attitude before rushing to add CBD or hemp to their products, so these items have largely come from smaller companies. But as more players enter the industry and new products make their way into retail, that could quickly change.