Although in 2019 cannabis started to inundate the food and beverage scene, 2020 could be the year the big players distinguish themselves from the pack. Despite the regulatory issues, analysts predict that companies will push past that by developing a marketing strategy that tells a story about the substance and educating consumers on the different types of cannabinoids.
Kara Nielsen, an expert in food and beverage trends, states that there’s pent up demand for cannabis, but companies will need to talk about the quality of the hemp ingredients and continue to inform consumers so that when the legal landscape shifts, there will be more high-quality products.
Although the 2018 Farm Bill legalized hemp cultivation and an increasing number of states are making their own laws about cannabis legalization, the substance is still in a regulatory gray area. The FDA held a public hearing to determine if there could be a pathway to market last year, but the agency came out and firmly told manufacturers in December that cannabis was not “Generally Recognized as Safe for use in food.”
As regulation remains complicated in the U.S., many companies and regulators will be watching the cannabis space in Canada this year since the country started to allow cannabis-infused products — edibles, beverages, topicals and extracts — to be sold in stores in December. The results of that roll out could impact the future of the space in the U.S. While there are some companies gearing up to be legitimate winners in these spaces, despite regulation, there still is not enough clinical research about what CBD really does for people, Nielsen said. Manufacturers that provide that research in the upcoming year could lead the space. “It’s very anecdotal,” Nielsen said. “So that also has to catch up a little bit.”
Rich Maturo, vice president of the cannabis practice at research firm Nielsen, has stated that the company predicts the U.S. hemp-based CBD market could be a $2.25 billion to $2.75 billion industry in 2020. These projections are conservative because they account for hampered FDA rulings and other possible speed bumps, he said.
“While the regulatory roadmap remains ambiguous, one thing is clear: The next decade for the hemp-based CBD market has the potential to be a game changer for the traditional CPG and retail industry,” Maturo said.
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