Exclusive news and research on the wine, spirits and beer business

CBD Beverages Could Reach $2 Billion In U.S. By 2025

June 18, 2019

With the market for cannabidiol (CBD) expanding at a rapid rate across the U.S. in myriad forms including tinctures, capsules, topicals, and beverages, the category was a hot topic at the Cannabis World Congress, held recently at New York’s Javits Center. Offering a market update at the conference, Cowen vice president Gerald Pascarelli drilled down on the opportunities ahead—including the development of CBD beverages, which he said could reach $2 billion in U.S. retail sales by 2025, out of a total CBD market of $16 billion.

Looking across all segments, a Cowen survey from January found that 7% of U.S. consumers are already using CBD as a supplement, which exceeded their expectations and leads them to believe that the total U.S. CBD market was in the higher range of their $600 million-$2 billion estimate for 2018. Currently, Cowen estimates that beverages account for around 20% of CBD use in the U.S.

“Ultimately, we think water will be the main source of market share in the beverage category,” Pascarelli said. “If you look at the price per milligram of CBD in beverages, it’s much higher than in areas like capsules and topicals. At the high end, super-premium CBD beverages will command over $1 a milligram of CBD.” SND recently took a look at some of the cannabinoid-infused beverages on the market, including both CBD and THC varieties.

Pascarelli said that a number of large companies that were previously focused specifically on THC are now also making moves in CBD, among them Canopy Growth, which is investing $100-$150 million in a hemp extraction operation in New York state. “Outside of pure-play CBD companies like Charlotte’s Web and Elixinol, you’ve seen crossover from tobacco in Turning Point Brands, from multi-state THC operators like CuraLeaf and Green Thumb Industries, and from Canadian companies like Tilray and Canopy Growth,” Pascarelli observed. He noted that CBD products’ high margins are likely to continue drawing new entrants to the category.

While the CBD category is rising fast, its growth has been hampered somewhat by FDA rules that do not allow CBD to be marketed as a dietary supplement or CBD-infused foods and beverages to be sold across state lines. We’ll explore some of the challenges for producers and distributors related to the evolving regulatory environment in an upcoming piece.—Daniel Marsteller

Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.

Tagged : ,

Get your first look at 2018 data and 2019 projections for the wine and spirits industries. Order your 2019 Impact Databank Reports. Click here.

Previous :  Next :