Industry Analysis: CBD in the United States

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Industry Analysis - CBD - US

According to the Hemp Business Journal, the CBD industry in the United States is expected to reach $1.92 billion by 2022 from $534 million  in 2018 at a projected cumulative annual growth rate (CAGR) of 53.14%. Four key players in the CBD market include Charlotte's Web Botanicals, CV Sciences, Bluebird Botanicals, and Green Roads. A deep dive into our findings has been provided below.

MARKET SIZE FINDINGS

During the course of our research, we found that while the current market size of the CBD industry in the United States did not vary much, the projected market size varied across different sources. Hemp Business Journal, a division of the New Frontier Data puts the current market size at $534 million  for 2018 and a projected market size of $1.92 billion in 2022. On the other hand, analysts at BrightGroup project that hemp-derived CBD alone will hit $22 billion by 2022 from $591 million in 2018.

Our research also showed that the source, of the market size, Brightfield Group, has received criticism for their methodology and approach. One of the criticisms amongst others of the Brightfield Group's report is that it "lacks an accurate overview of the current and proposed legal landscape and fails to give an analysis of the real market factors in play, which calls into question the projected figures contained in it." Based on the aforementioned, we have based our market size on the data provided by Hemp Business Journal. More so, the data provided by the Brightfield Group is only based on the hemp-CBD market alone.

According to data from the Hemp Business Journal, the past and projected market size for CBD products in the United States is:
2015: $178 million
2016: $260 million

GROWTH RATE: 2015 TO 2018

Using an online CAGR calculator and imputing the following variables, we were able to calculate the growth rate between 2015 and 2018.
Initial value (2015): $178 million
Final value (2018): $534 million 
Period (2015-2018): 3
The cumulative annual growth rate between 2015 and 2018 is estimated at 44.23%.

PROJECTED GROWTH RATE: 2018 TO 2022

Using an online CAGR calculator and imputing the following variables, we were able to calculate the growth rate between 2018 and 2022.
Initial value (2018): $534 million 
Final value (2022): $1.918 billion
Period (2018-2022): 4
The cumulative annual growth rate between 2018 and 2022 is estimated at 53.14%.

MArket Breakdown

The breakdown of CBD-branded products by the product type is:
  • Tinctures: 34%
  • Candy: 20%
  • Chocolates: 15%
  • Pills: 13%
  • Topicals and patches: 9%
  • Beverages & infused foods: 8%
  • Others: 2%

Key Players in the CBD Market

The CBD market in the United States is "a market that is and will likely remain highly fragmented" with no dominant player per se. "An indication of the fragmentation of this market is that 79% of the market is made up of companies with very low sales comparatively." One of the primary reason for this fragmentation is the presence of hemp and all of its derivatives formerly being on the controlled substance list, which put CBD in a legal gray area. This prevented CBD products from making "its way to the shelves of larger scale, mainstream distribution channels and pave the way for the large mainstream consumer packaged goods companies in industries like drinks, beauty, pet, skin care, and tobacco to develop CBD products and capitalize on this emerging industry." According to Brightfield Group, these are the biggest players in the United States CBD industry.

1. Charlotte's Web Botanicals
Reason for inclusion: 7% market share
Primary segments: Tinctures, capsules, and topicals and patches

2. CV Sciences
Reason for inclusion: 5.2% market share
Primary product segments: Pills through its Pharmaceutical Division, and consumer products such as topicals and patches, and tinctures through PlusCBD Oil.

3. Bluebird Botanical
Reason for inclusion: 2.1% market share
Primary product segments: Pet products and tinctures

4. Green Roads
Reason for inclusion: "Largest private company specializing in hemp-derived CBD"

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