How To Stand Out In A Crowded CBD Market
Demand for CBD products continues to grow, but the domestic hemp market is simultaneously stabilizing as big brands cement their footholds. Despite increasing competition within the CBD space, it’s still possible to capitalize on the unprecedented popularity of this natural health trend by leveraging the latest data and making informed choices. This guide will provide an overview of the most important factors you should keep in mind as you invest in a new or existing brand that’s competing for breathing room within the crowded CBD market.
Understand The Data
Partnering with an industry-leading supplier like GVB Biopharma will give you unprecedented access to the latest developments in cannabis science and the evolving cannabinoid industry. Understanding the data surrounding the hemp market will allow you to leverage information to effectively market a wide variety of hemp product types.
In the early days of the hemp industry, it was largely a guessing game, with no consumer insights to help guide brands in the right direction. As is the case in most emerging markets, lack of competition in the CBD space richly rewarded unbridled entrepreneurial experimentation. The Wild West era of CBD is now over, however, and it’s more rewarding to take a cautious and informed approach to floating a CBD brand on the ever-swelling waters of the hemp market.
Either compile your own market data, or find a reliable source of hemp industry analytics. Jumping into the contemporary CBD industry blind is more likely to deliver disappointment than success, but by understanding the current face of the hemp market, you can position yourself effectively and carve out your personal slice of the pie.
Factor In Recent Events
One of the most important factors to consider as you determine how to differentiate your CBD brand is the effect that COVID-19 has had on the hemp market. While the pandemic has largely boosted CBD sales and hasn’t caused an industry contraction, the subtle impact of COVID-19 has closed certain doors and opened up unprecedented opportunities.
Let’s start with the doors that have closed—in some cases, literally. Lockdown policies enacted in response to the novel coronavirus have forced many brick-and-mortar retailers to shut down temporarily or permanently. Brands that were highly reliant on B2B store sales, therefore, have suffered.
COVID-19 has, however, opened the floodgates of the online CBD market. In June, 45% of CBD customers had already moved their hemp shopping online, and more than half of Millennial hemp users both increased their CBD use and started shopping for CBD online in response to the coronavirus pandemic.
CBD brands seeking to effectively differentiate need to understand that now is not the time to focus heavily on developing B2B brick-and-mortar pipelines. Instead, the CBD companies showing themselves capable of competing with big brands are those that effectively leverage digital marketing to capture DTC online sales.
The unbounded scope of the online CBD space allows aspiring brands to target specific niche verticals. Therefore, this massive shift toward online CBD sales makes it easier for brands to corner specific untapped segments of the hemp consumer base.
Predict FDA Outlook
CBD brands seeking to stand out will also need to position themselves to effectively respond to inevitable clarification of the CBD policies provided by the US Food and Drug Administration (FDA). Regardless of the amount of effort you put into differentiating your brand amid increasing competition, the most important thing is to be recognized as reputable and reliable by your customers and respected regulatory administration. Be diligent about following the FDA regulations of similar industries to save yourself the hassle of making large adjustments to your business down the road.
While the FDA has yet to release guidelines for CBD, self-monitoring your practices and setting industry standards for transparency will bode well for your brand once the FDA releases its regulations. Predicting how this federal agency will choose to approach the CBD industry will allow your brand to thrive amidst any potential regulatory crackdown.
Adapt To Industry Influencers
Recognizing the players currently dominating the CBD market will allow your brand to rise with the tide. There is one thing that all the top retail brands have in common; a huge online marketing push! Marketing CBD products online has been tricky in the past, but the current retail leaders have figured out a formula that works! Take note of where you are seeing CBD and other hemp products advertised and figure out how you can get your brand showcased in similar networks. Track your successes and failures and adjust your marketing strategy accordingly. If you see an industry leader diversifying their content, consider if a similar campaign would be right for your brand.
Assess Product Types
As you position your brand for long-term success, it’s important to evaluate the current and projected popularity of various CBD product types. The CBD industry has recently admitted a massive influx of mainstream consumers, so hemp sales are no longer dominated by pain sufferers and cannabis users. As a result, unfamiliar product types like tinctures are gradually losing market share, and CBD capsules and gummies are rising to the fore.
The popularity of topical CBD products is holding steady, and this niche is being boosted by social media influencers and a younger generation of consumers more focused on self-care. Despite losing some steam due to the 2019 vape crisis, CBD vape products are gradually taking up a larger segment of the hemp market, and CBD-rich hemp flower is a dark horse that is likely to gain significant traction over the next few years.
Aspiring brands seeking to differentiate should steer clear of tinctures and focus instead on trending CBD product types with limited competition or mainstream appeal. As an example, CBD drinks presently take up less than 5% of the market, but if opening shots from Coca Cola and other major consumer packaged goods (CPG) companies are any indication, this category will become extremely competitive upon the advent of new FDA CBD regulations.
Evaluate The Domestic Market
The beauty of the online CBD market is the ability to market products to the entire nation simultaneously. Understanding the current status of the domestic hemp market will, however, help you target your marketing efforts to geographical areas and consumer subsets that will be the most receptive to your products. By evaluating which states have the most permissive CBD laws while simultaneously determining which consumer verticals are most receptive to certain products, you’ll gain the ability to use strategic marketing to target untapped segments of the increasingly competitive DTC hemp market.
Colorado, for instance, has some of the most permissive cannabis laws, so consumers in this state are more receptive to CBD flower and CBD vape products. States like Idaho, however, that have restrictive hemp laws and no history of widespread cannabis use, are populated by consumers who would be more receptive to CBD drinks and capsules.
Evaluating the domestic hemp market at the federal level will also provide you with unprecedented opportunities for long-lasting differentiation. Many CBD brands are still unaware, for instance, that the US Patent and Trademark Office (USPTO) now accepts trademark registrations for CBD products. If you have a great idea for a unique CBD product, therefore, you can now take action to ensure that your industry-shifting intellectual property remains exclusively yours in perpetuity.
Anticipate The Impact Of Emerging Cannabinoids
All eyes remain on CBD, but one of the most promising opportunities for differentiation within the hemp space lies elsewhere within Cannabis sativa. No, we aren’t talking about THC. Instead, we’re referring to the wide spectrum of non-intoxicating cannabinoids other than CBD that are poised to reinvent the hemp industry over the next few years.
Cannabigerol (CBG), cannabinol (CBN), and even lesser-known cannabinoids like cannabichromene (CBC) have unique properties that provide differentiation from CBD. While these alternatives to CBD currently take up an abysmally small portion of the overall hemp market, all that will soon change as consumers seek new ways to consume cannabis that don’t result in intoxication.
Leverage Data To Effectively Differentiate
The more that CBD becomes mainstream, the more that the CBD industry becomes data-driven rather than experimental. Brands that act based on trends and concrete data will enjoy sustainable (if incremental) growth, and brands that act based on intuition and hopeful thinking won’t capture enough of the hemp market to recoup their costs.
Market research is immense and ongoing, which can make jumping into the hemp market feel like a daunting task. That is why partnering with a well-established hemp supplier can be an easy solution to quickly gain industry knowledge and expertise. For brands seeking to break into the competitive hemp market, however, it’s extremely useful to follow the examples left behind by brands that rose to quick success and adapt your marketing strategy to mimic those key players.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.