CBD

How is COVID-19 Affecting the CBD Industry?

As the response around COVID-19 has ramped up and stores are shutting down, we are seeing e-commerce sales spike amongst some of the largest CBD companies. This is an interesting shift, as so many brands worked so hard to get on the shelves of mass retailers over the past year, but those that are best positioned for success through the COVID-19 crisis, are those who have a robust Direct-to-Consumer strategy. But questions abound on whether this is not only a factor of people stockpiling, just as they are stockpiling toilet paper and rice or if this is an indicator of future usage.

 

Consumers Plan to Use More CBD

Our recent consumer research indicates we can expect increased consumption, particularly amongst heavier users which is a positive indication of how the market may fare over the weeks and months to come. In a survey of CBD consumers fielded between March 16-19, 39% indicated they expected to use more CBD during the COVID-19 crisis. This is particularly true amongst Millennials and Gen Z consumers - 49% plan on using more CBD in the weeks and months to come. 

 

Anxiety, Insomnia, and CBD's Place in a Pandemic

There is no question that with much of the country recommending to shelter at home and a pandemic sweeping the globe, anxiety levels are skyrocketing. Anxiety is the #1 ailment of CBD users - 53% of them report it. Depression and insomnia, which likely to spike over the coming months, are #3 & 4. For those that truly need CBD and are relying on it for their health and wellbeing, consumption is expected to continue or increase. Interestingly, when we analyzed the social media posts involving CBD and the coronavirus, we found that the most common topic people were discussing was self-care. With so much of the country in quarantine right now, many are turning to self-care indulgences to keep themselves sane and even just pass the time, which is likely to help boost some CBD self-care products during quarantine time.

 

However, while CBD usage may continue through the crisis, many brands will be disproportionately affected. The industry was already suffering from overcrowding (we are tracking more than 3500 brands in early 2020) and limited access to capital which was making it very difficult for many brands to keep the lights on before the crisis. Many of these brands have lost tens of thousands of dollars tied up in trade shows that have been canceled, putting them in a vulnerable position coming into the heart of the crisis. Smaller brands often rely on small or local retailers to distribute the bulk of their products. In the current environment, mass shuttering of retailers around the country is likely to deal a death blow to many of the smaller brands in the market. This could actually work in the favor of many of the larger brands, who are better positioned to weather the storm and be able to support a robust e-comm strategy. If they can keep the lights on over the next few months, they may be competing in a much less crowded field once we emerge from the crisis. 

 

For more insights on how COVID-19 is impacting the CBD industry and how consumers are talking about it on social, click here.