CBD competition heats up as celebrity brands like Martha Stewart brand gain brand awareness
Summary
TLDRNew Jersey has legalized marijuana, allowing residents to possess up to six ounces without legal consequence. Despite the delay in legal sales, the state's move is a significant step in the northeast cannabis market. Meanwhile, CBD products, like Canopy Growth's Martha Stewart line, are booming, with Martha Stewart's brand outselling 94% of all CBD brands in the US, just four months post-launch. The CBD market, driven by e-commerce and digital marketing, is expected to reach $17 billion by 2025, while the broader U.S. cannabis market is projected to hit $45 billion.
Takeaways
- đ New Jersey has legalized marijuana, with Governor Phil Murphy signing laws allowing residents to possess up to six ounces without legal consequence.
- đż Legal sales and licensing for marijuana in New Jersey are still in progress, indicating a gradual approach to full implementation.
- đ„ The CBD market continues to thrive, with Canopy Growth's Martha Stewart line of CBD products outselling 94% of all CBD brands in the US just four months post-launch.
- đŻ A Brightfield Group study showed that 15% of CBD users were aware of Martha Stewart's CBD brand and 15.4% for CBD by Playboy, highlighting the power of celebrity endorsements.
- đĄ Brands are focusing on e-commerce and digital marketing as more consumers shift to online CBD purchases, with a significant increase from 22% in Q4 2019 to over 52%.
- đ Despite the CBD market's growth, some established players like CV Sciences have seen a drop in share value, suggesting market volatility and the need for strategic adaptation.
- đ The importance of converting brand awareness into purchasing intent and customer loyalty is emphasized, as not all brands with celebrity endorsements achieve the same success.
- đ Quality is key for CBD brands to retain customers and create a competitive edge, with some brands attracting higher-value consumers to boost their market position.
- đ The US cannabis market is expected to reach $45 billion by 2025, showing strong growth potential, while the CBD market is projected to hit $17 billion by the same year.
- đ« Regulatory challenges, such as the FDA's guidance, could influence the trajectory of the CBD market, with the potential for another growth surge expected in 2022.
Q & A
What significant action did New Jersey take regarding marijuana legalization?
-New Jersey Governor Phil Murphy signed laws that provided a legal framework to legalize marijuana, allowing residents to possess up to six ounces without legal consequence.
What is the current status of legal sales and licensing for marijuana in New Jersey?
-Legal sales and licensing for marijuana in New Jersey will take some time to work out, as the state is still in the process of establishing the necessary infrastructure.
How has the celebrity endorsement affected the CBD market, particularly with the launch of Martha Stewart's CBD line?
-Celebrity endorsements, such as Martha Stewart's, have significantly boosted brand awareness in the CBD market. Martha Stewart's CBD brand is outselling 94% of all CBD brands in the US just four months after its launch.
What percentage of CBD users are aware of Martha Stewart's brand according to a recent study?
-15 percent of CBD users are aware of Martha Stewart's brand, as found in a recent Q4 study that surveyed more than 5000 CBD users.
How has the COVID-19 pandemic impacted the CBD industry?
-The pandemic hit the CBD industry hard, particularly in Q2, with brands that relied heavily on brick and mortar channels struggling to promote and sell their products.
What shift in consumer behavior has been observed in the CBD market due to the pandemic?
-There has been a dramatic shift towards online purchasing, with more than 52 percent of consumers now buying CBD online, up from only 22 percent in Q4 2019.
How have established CBD brands like Charlotte's Web responded to the challenges posed by the pandemic?
-Charlotte's Web has been able to recover by focusing more heavily on e-commerce performance and digital marketing, adapting to the new consumer behavior of purchasing CBD online.
What strategies have been effective for Canopy Growth in leveraging celebrity endorsements and e-commerce?
-Canopy Growth has leveraged celebrity endorsements, such as Martha Stewart, to increase brand awareness and drive consumers to their e-commerce platform, benefiting their entire portfolio of brands.
What is the importance of repurchase rates in determining the success of CBD brands?
-Repurchase rates are crucial in determining the success of CBD brands as they indicate customer loyalty and the ability to retain customers, which is key in the competitive CBD market.
What are the projected market values for the U.S. cannabis and CBD markets by 2025?
-The U.S. cannabis market is projected to hit $45 billion by 2025, while the CBD market is expected to reach approximately $17 billion by the same year.
How does the expected FDA guidance in 2021 potentially impact the CBD market?
-The expected FDA guidance in 2021 is anticipated to lead to another year of rapid growth for the CBD market in 2022, as it would make CBD products more widely available across the country.
Outlines
đż New Jersey Legalizes Marijuana and CBD Market Insights
New Jersey has legalized marijuana, allowing residents to possess up to six ounces without legal repercussions. While legal sales and licensing are still being established, this move is significant for the northeastern U.S. In the CBD market, Canopy Growth's Martha Stewart line has seen remarkable success, outselling 94% of all CBD brands in the U.S. within four months of its launch. Celebrity endorsements are proving effective for brand awareness, but converting this awareness into purchasing power and loyalty remains a challenge. The COVID-19 pandemic has impacted the industry, with a shift towards e-commerce as the primary sales channel, increasing from 22% to 52% of consumers purchasing CBD online from Q4 2019 to the present.
đ CBD Market Dynamics and Future Projections
Despite celebrity endorsements like Martha Stewart's, not all CBD brands experience the same success. The CBD market is highly competitive, with quality and consumer trust being key to retaining customers. Established brands have a higher value consumer base, which helps maintain their market position. The U.S. cannabis market is expected to reach $45 billion by 2025, showing consistent growth with incremental legalization across states. In contrast, the CBD market, which has seen rapid growth, is expected to reach $17 billion by 2025. The addition of FDA guidance and the potential for more states to legalize marijuana could lead to another significant growth year for CBD in 2022.
Mindmap
Keywords
đĄCannabis Legalization
đĄNew Jersey
đĄPsychoactive Compound
đĄCBD
đĄCanopy Growth
đĄCelebrity Endorsements
đĄBrand Awareness
đĄE-commerce
đĄRegulatory Stall
đĄMarket Expectations
đĄHockey Stick Growth
Highlights
New Jersey has legalized marijuana, with Governor Phil Murphy signing laws providing a legal framework for its use.
New Jersey residents can now possess up to six ounces of marijuana without legal consequence.
Legal sales and licensing for marijuana in New Jersey are still being worked out.
Celebrity endorsements, such as Martha Stewart's, are driving brand awareness in the CBD market.
Martha Stewart's CBD brand is outselling 94% of all CBD brands in the US, just four months after launch.
15% of CBD users are aware of Martha Stewart's brand, and 15.4% are aware of CBD by Playboy.
Celebrity endorsements help grab consumer awareness but do not guarantee sales conversion.
The CBD market has seen a significant shift towards online purchasing, with over 52% of consumers buying CBD online.
Brands like CBDMD and Charlotte's Web have adapted to the pandemic by focusing on e-commerce and digital marketing.
Canopy Growth has leveraged Martha Stewart's brand to drive consumers to their e-commerce platform.
The CBD market is expected to hit $17 billion by 2025, smaller than the overall US cannabis market.
The US cannabis market is expected to reach $45 billion by 2025, with incremental growth from more states legalizing marijuana.
Quality and customer retention are key for CBD brands to create a competitive advantage.
The CBD market has experienced rapid growth, with regulatory shifts leading to a 'hockey stick' pattern of expansion.
The FDA is expected to provide more guidance on CBD in 2021, which could lead to another year of significant growth for the CBD market in 2022.
Transcripts
[Music]
well
in today's cannabis focus new jersey
finally made good on its ballot
initiative to legalize marijuana which
voters overwhelmingly approved last year
new jersey governor phil murphy signing
the laws that provided a legal framework
to move forward on that new jerseyans
can now possess up to six ounces of
marijuana without legal consequence
legal sales and licensing will take some
time to work out in that state
but it's a big step forward particularly
in the northeast
when it comes to legalizing the psycho
psychoactive compound in marijuana or
thc
the non-psychoactive compound of
cannabis though cbd
continues to be a big business with
canopy growth most recently celebrating
the explosive launch of its martha
stewart line of cbd products in the us
on the earnings call
the company noted that martha stewart's
brand is already outselling 94
of all cbd brands in the us just four
months after launch
according to their numbers so join us uh
now on all things cbd is the smartest
person i know that covers the space
uh brightfield group managing director
bethany gomez joins us once again
bethany thanks for taking the time i
mean you guys have
great data on which brands consumers
trust around this you fact check the
martha growth as well as
what playboy's ceo told us about a week
ago or so
on their cbd product my jaws hit the
floor and looking at their numbers
but cbd users actually know the playboy
brand so talk to me about what you're
seeing
sure so in a recent q4 study that we
surveyed more than 5000 cbd users we
found that already
15 percent of cbd users were aware of
martha stewart's brand
and a similar number um 15.4 percent for
cbd by playboy as well
so this is a really strong testament to
the ability of these brands to
leverage these strong celebrity
endorsements out of the gate to grab
awareness in that very crowded cbd space
so they're they're off to the races
there from an awareness standpoint which
is
is really great to see for the brand now
they still have a great deal of work
ahead of them
um in order to convert all of that
awareness into
um into purchasing and into loyalty but
those initial metrics are
are very strong there as well yep brand
awareness and then getting them to buy
it
is another thing purchase intent and
then getting them to buy it again is
also another thing
as well we're still we're showing we're
showing hemp
we're showing hemp fusion here too as
one of those new entrants they just
recently ipo'd i mean
their shares when they in that ipo uh it
was a dollar a piece
we've seen them now trade above three
dollars a share what's interesting
though is the cbd space
overall has not necessarily seen the
same boost
uh in some of those leaders charlotte's
web out there as well
uh when you look at it is that
potentially because there's been that
stall on the regulatory front where
people were expecting cbd to get added
to everything like we saw before
coffee what have you so where are we at
now in kind of that
i guess advancement of the overall cbd
market
yeah so it's been a very 2020 was a very
interesting year for cbd to say the
least right um
on the one side um the industry was hit
very hard by the pandemic um
particularly in q2
you know we saw you know brands that
were very heavy through the brick and
mortar channels
um really struggle to be able to
continue to promote their products and
get those
out to consumers um we also saw some
significant price drops that impacted
the industry so
charlotte's web for example was um you
know had been very very strong through
brick and mortar channels
and took a bit of a hit when the
pandemic hit
now what brands have been doing to be
able to
you know adjust to the new normal here
is really lean in on their ecommerce
performances
really lean in on digital marketing
today we see a more than
52 percent of consumers are now
purchasing cbd online
this is up from only 22 percent
in q4 2019 so that's a very dramatic
shift
um charlotte's web has been able to see
a bit of recovery from
focusing much more heavily on those
e-commerce uh
performance but brands like cbdmd and
that were very strong in e-commerce to
begin with
were able to pick up a great deal of um
of boost
from that switch to e-commerce canopy
for example
has um some pretty clever strategies
there to be able to leverage martha
stewart on brand awareness
drive consumers into their ecommerce
platform
and then their whole portfolio of brands
is able to benefit from that increased
awareness so
you know their first and free brand
which is one of their flagships was able
to see a boost
um you know in conversion um as a result
of more consumers coming to the site
because
of martha stewart so this is a a great
indication
um of how well the brands in the the
space have been able to pivot um and
focus much more heavily on e-commerce
as well well we've seen canopy stress on
the earnings call that they kind of
built on their brick and mortar rollout
too getting into some pretty important
stores with both those brands
but for me you know covering cannabis
not just on the marijuana side but also
the cbd side
we haven't necessarily seen this bounce
back from a lot of these cbd names and
my question
to you just to wrap things up would be
kind of those leaders who had
established
themselves in the space seem like it
seems like it's pretty easy all you need
to do is slap martha stewart or some
other big celebrity onto a cbd label all
of a sudden you're up there with the big
boys because you look at cv sciences
one of those companies we talked about
before that had been a leader in the
space
share's down 87 percent since april of
2019 they haven't necessarily seen that
bounce back so
talk to me about maybe protective moats
for some of these cbd players that had
been in the space
relative to new entrants like canopy
rolling out martha
yeah absolutely so you know the
celebrity endorsements can be helpful
for those awareness grabs but that
doesn't necessarily mean they're going
to be able to
convert through the funnel so martha
stewart is kind of the shining example
of the celebrity endorsements um
but most celebrities right now you'll
see in cbd
you know everything from dog the bounty
hunter endorsing cbd
to shaq and brett marvin you know you
name it there's
dozens and dozens and dozens of um
brands that are
endorsing um of celebrities sorry that
are endorsing cbd
that don't have the same level of
success of martha so
she is certainly a kind of crown jewel
of the celebrity endorsements because
she has so much equity and trust
um amongst consumers so it's not quite
that easily replicable
um what we see right now is it's
definitely very steep competition in
in the digital space very steep
competition amongst brands in the cbd
space overall
but really retaining those customers
comes down to quality
and many of the market leaders you know
have much higher value consumers
um you know that are able to um you know
to come back and back and back and boost
that um boost
that roi um and that value of um of each
consumer so brands like
you know green roads are um and
functional remedies are able to
gather more um high value consumers to
boost their overall
um performance and create a bit of a
moat there to help protect them
in that space so yeah we'll keep an eye
on those repurchase rates to really
figure out who's winning but lastly i
guess
and this is a tricky question because i
i assume that it might stem from the
timeline for when we're going to see
legalization of cannabis on a federal
level but when you think about the
growth of cbd versus
you know marijuana products here what
are your guys's market expectations for
that to come full circle as we see new
jersey now
start to get legal sales off the ground
hopefully by the end of the year
talk to me about which side of the
cannabis business
is worth watching absolutely
so at this juncture we are expecting the
um the u.s cannabis market to hit 45
billion dollars by 2025.
um so that's really strong kind of
consistent growth
um the u.s cannabis market even with
legalization
in place um increased access to
legalization in place that we expect
over the forecast period
is a matter of incremental growth more
states like new jersey
uh you know and in the future um you
know new york and other states like that
i'm adding on adult use markets piece by
piece by piece right um this
leads to that strong incremental growth
over time that is strong and sustainable
um the cbd market has been able to
experience a lot more of this
very rapid hockey stick growth right
where
you know when regulatory shifts come
into play um it's very
rapid to be able to push products you
know throughout the country
um in a very very quick turnaround so
you know with
the addition of more fda guidance um
that is expected in 2021
we would expect another hockey stick
growth year um you know in 2022
for cbd as those products become more
widely available but that market is
expected to hit
about 17 billion by 2025 so you know
smaller in nature
than um you know then the us cannabis
market if that gives you a beat on it
no for sure it does and still i have to
get used to seeing playboy up there as a
list
on our cbd companies but uh evan gomez
appreciate you joining us here
brightfield group managing director
thanks again
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