Functional Beverages: The Next CBD Frontier

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CBD Enters the Functional Beverage Market

CBD products are infiltrating the market, and it seems limitless, as new products are being introduced to consumers at rapid speed. The health and wellness industry is certainly no exception to the CBD craze as wellness bars, protein shakes, and even CBD-infused water promise to help you get fit. Following general consumer trends towards more health-conscious practices, the CBD industry is introducing CBD products into the functional beverage market.

CBD is made from hemp plants which contain less than .3% of THC. THC, also known as tetrahydrocannabinol, is the psychoactive constituent of cannabis. Or to put it simply, the component that gets you high. Because CBD is derived from hemp, thus containing minimal THC, their benefits and properties work differently. Most notably, consumers turn toward CBD to help with better sleep, anxiety, and even pain- so it is no surprise that CBD has piqued the beverage industry’s interest when it comes to functional beverages.

40% of consumers willing to try CBD

According to data produced by High Yield Insights, around 40% of consumers in the United States said they are willing to try CBD. These days CBD products are numerous and can be found anywhere from your local mom and pop shop and have been found in major retailers like Whole Foods and Walgreens. CBD is present in a wide-ranging array of products, from face cream to vape pens to capsules. There is undoubtedly a product to suit everyone’s needs these days.

Millennials and CBD

Millennials and Generation X’ers are among the age group consuming and using the most CBD products. It’s been argued that widespread CBD acceptance is being propelled by the younger generation’s actions- like speaking openly about using products and posting on social media about them.

Millennials are well-known to seek out brands that mirror their ideals, which often includes companies with corporate social responsibility programs or other positive features. A recent survey in the U.K. reported that 38% of Brits, representing almost 17.5 million U.K. adults, would prefer to use CBD oil to manage their mental health issues. Moreover, a staggering 50% of those aged 18-34 supported that claim. As millennials and GenXers are turning their heads seeking products and brands that support their ideals, CBD product manufacturers are seizing the opportunity to provide healthier, holistic options.

Why specifically beverages?

While Generation Xers are mostly using vape pens, industry experts see a spike in millennials interest in consuming beverages. This is likely because CBD in a beverage form is consumable and non-inhaling. The trajectory of consumable CBD products is predicted to increase. Bobby Burleson, an analyst at Canaccord Genuity, stated that beverages infused with CBD or THC components could account for nearly 20% of the U.S. edible products markets by 2022, which makes for an increase of 6% from 2018.

The turn toward beverages specifically may have something to do with old stereotypes concerning products like the ubiquitous pot brownie. A CBD infused functional drink, unlike the brownie, can become an integral part of a larger healthier and holistic lifestyle (think: managing stress, wellness routine) without ruining your whole day (as the THC in a pot brownie could do).

Traditional producers of soda are even pivoting their strategies to cater to more healthier functional beverages. Their focus on CBD is centered around the millennial drive to shift from a traditional high-sugar drink to a more healthy option.

Major Beverage Manufacturers Take Note

Major beer companies have also taken note of this trend. Anheuser-Busch, one of the world’s leading brewers, announced a partnership with Tilray to conduct research non-alcohol beverages containing tetrahydrocannabinol (THC) and cannabidiol (CBD). Anheuser-Busch is not the only major beverage producer to take note. Harvest Health & Recreation Inc. recently announced they would be bringing their popular products like Colors, CBx Essentials and Harvest-branded CBD product lines to over 10,000 retail stores. This will include gas stations and other convenience stores across the country- making access to CBD-infused functional beverages more mainstream and widespread.

Even though the FDA is still currently conducting data and producing research on CBD products, major beverage manufacturers have moved forward in a significant way, often with substantial investment, to begin creating their own CBD beverages. Since the passing of the 2018 Farm Bill which legalized hemp across the United States, the FDA has mainly come down on those who market CBD product effects and benefits without basing it on conclusive research. With major beverage companies diving into the CBD-arena with both feet, the regulatory battle remains to be seen.

Recently Launched Products

So what kind of beverages are we talking about here? Everything from coffee, pressed juice, water, energy drinks, and meal replacement shakes have all recently hit the shelves across the United States. Sunday Scaries’ Yolo Shot, for example, has brought CBD-infused caffeine to the market with a critical mission statement that will speak directly to its audience (millennials), “Unlike some of our competitors which get a lot of their CBD from China and other sources with loose regulatory requirements, our CBD is sourced directly from farms in the USA and grown in accordance with the 2018 Farm Bill. These farms are regulated by the states’ Agriculture Departments. This requires our CBD to be pesticide-free.” Home-grown and chemical-free are precisely in line with what young consumers are after, and it is expected that the CBD functional beverage market will experience tremendous growth in the coming years.

What’s ahead?

Last year beer sales in the United States reached $38 billion. Compare that with the growth of CBD sales expected to hit $25 billion in the next seven years. With such rapid growth, it is no wonder startups, and major beverage manufacturers alike are turning toward the millennial-aligned functional beverage at rapid speed. Looking ahead, we suspect producers of CBD products to navigate FDA marketing regulations with more ease to better target and strategize their product development to reflect key trends and demographics. If health, wellness, reduced anxiety, and stress are your things- good things are coming in the pipeline.

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