CBD competition heats up as celebrity brands like Martha Stewart brand gain brand awareness

Summary

New 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

• 📜 New Jersey has legalized marijuana, with Governor Phil Murphy signing laws allowing residents to possess up to six ounces without legal consequence.
• 🌿 Legal sales and licensing for marijuana in New Jersey are still in progress, indicating a gradual approach to full implementation.
• 🔥 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.
• 🎯 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.
• 💡 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%.
• 📉 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.
• 🛒 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.
• 🏆 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.
• 📈 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.
• 🚫 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.