Cannabis Products Are Coming to the Grocery and Health Store
According to independent market research firm Euromonitor International, the global cannabis market is $150 billion today and legal sales are expected to grow to represent 77% of the total global market by 2025. Cannabis is one of the hottest topics in the food and beverage industry and many believe it will be one of the major trends in 2019.
What is Cannabis?
The two most well-known cannabinoids are cannabidiol (CBD) and tetrahydrocannabinol (THC). CBD is used as a medical ingredient in a range of products, from foods to cosmetics. THC is a psychoactive ingredient and is restricted to medical use only or banned outright. Since CBD is non-psychoactive and thus legal, it is the current functional ingredient of choice. Some of the potential applications of CBD include anti-anxiety relief, pain-relief, anti-nausea, anti-inflammatory and anti-spasmodic.
Cannabis regulation is currently divided into medical and recreational or "adult" use. Medically, cannabis can only be used legally through a prescription or by registering as a medical patient.
Recreational use allows cannabis products containing THC to be sold freely through licensed, taxed outlets. Recreational marijuana is now legal in Canada and in 10 US states. Medical marijuana is legal in 33 US states, which is often a pre-cursor to recreational legislation.
President Trump signed the Agriculture Improvement Act of 2018 into law in December 2018, which, along with extending, expanding and modifying federal agriculture and nutrition programs, also made changes to hemp production laws. The law alters certain federal authorities relating to the production and marketing of hemp, including removing hemp from the Controlled Substances Act, meaning it will no longer be an illegal substance under federal law. However, the FDA retained the authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act.
Today's Cannabis Market
Alcohol companies are getting into the cannabis market. As of the end of 2018, the volume of U.S. beer sales have declined for five years straight. As sales drop, beer producers are experimenting with lower-alcohol and non-alcoholic beer offerings. Some major players such as Constellation Brands, Molson Coors Brewing and AB InBev have pushed the envelope even further and invested in CBD and THC-infused nonalcoholic beverages. According to a study from A.T. Kearney, 30% of Americans are willing to try a cannabis-infused nonalcoholic beverage, and 17% would be interested in an alcoholic drink containing the substance.
Similarly, soft drink companies may eventually have to ease into the cannabis space. Consumers are moving away from sugar-filled drinks in favor of healthier alternatives like water, which in 2016 surpassed soda consumption for the first time. Cannabis plays squarely into the health and wellness space, and in markets where it has launched, cannabis soda has been successful. Howard Telford, head of soft drinks at Euromonitor International believes, "In the short-term, the main opportunity for cannabis within the soft drinks industry will be CBD-infused drinks. These products can be positioned as naturally sourced relaxation beverages and provide a new functional angle. We can expect the major beverage companies to acquire and create new CBD beverage brands over the next few years."
Cannabis is also making its way into the packaged foods space. Experts in the industry anticipate the level of disruption will be comparable to that of plant-based foods. As CBD and THC become more mainstream, manufacturers will need to alter the ingredients they include in their products.
The trend is to more outcome-based products, which will address a specific condition. This will converge product lines between food and consumer health. Currently, CBD food products are included in sweet categories. As markets expand and cannabinoids as added ingredients become more universal, cannabis will become prevalent in other categories, such as bakery products, savory snacks, pasta and soups.
According to Pinar Hosfaci, Head of Packaged Food at Euromonitor International, "Whilst current penetration of cannabis and related ingredients remain niche in foods, there are strong growth opportunities. Similar to the way plant-based disrupted the entire packaged food industry, cannabis is expected to bring a brand-new edge to mindful consumption. Today's functional food-seeking consumer will convert into tomorrow's mindful/mood-boosting consumer."
Outlook for the Future
Recent legislation has led to expanding and modifying current regulations. The pace of these changes means that consumers will be able to use cannabis products within the next decade for their daily needs. Over time, products using CBD as an ingredient will be considered part of the health and wellness space. Depending on how FDA regulation for the substance shakes out, this could potentially present a problem, especially in the realm of label claims allowed for CBD.
Either way, food and beverage manufacturers should pay strong attention to this trending ingredient and how it is impacting their respective industries and be proactive with adapting their products to include the substance to tap into its potential popularity.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
