Recent earnings results from the likes of CV Sciences Inc. and Charlotte’s Web Holdings Inc. highlight a grim reality: The CBD gold rush is clearly in the rearview mirror.
Growth in the CBD industry “has flattened out considerably since the pandemic hit,” said Bethany Gomez, managing director at Brightfield Group, a CBD and cannabis market intelligence firm.
“There was a dramatic increase in adoption in 2019 when CBD first went mainstream and the market grew by 560%,” she said in a Nov. 21 email to Natural Products Insider, “but since that time we have seen much more flat market performance.”
Several reasons account for the shift. The first comes down to price compression. Most brands have slashed prices by 20% to 40% in the last two years, and continue to offer significant discounts, Gomez said.
At the same time, price-conscious consumers have turned to less-expensive CBD products such as gummies, just as Charlotte’s Web has noted.
“American consumers are settling into their daily usage patterns, but looking to save money on their spend,” Gomez said. “This has made it difficult for companies to drive value growth, even if they are protecting margins.”
Meanwhile, when Covid-19 and all the subsequent shutdowns hit, most CBD brands “pivoted heavily” to e-commerce, Gomez noted. Those sales “soared” in the U.S. until the fourth quarter of 2021, she said.
Then, throughout 2022,…