Since January, when the cultivation of commercial hemp in the United States was decriminalized, manufacturers have scrambled to carve a niche in the cannabidiol (CBD) food and beverage market.
That path is well tread by Joe Gagnon, founder of Performance Tea, a brand launched in 2018 with a legacy dating to 2008. A decade of development gives Gagnon’s powdered CBD teas a head-start on what he calls “a natural gold rush.” Gagnon told World Tea Expo attendees “sales are ablaze” thanks to consumer interest in natural products that reduce stress, ease chronic pain, aid sleep and assist with recovery.
Since March major grocery and pharmacy chains including CVS, Vitamin Shoppe, and the Walgreens Boots Alliance (1,500 stores in select states) have stocked their shelves with CBD products labeled supplements (typically creams, sprays and transdermal patches). Supplements that do not claim therapeutic benefit do not have to undergo more stringent U.S. Food and Drug Administration (FDA) rules regulating drugs.
The FDA has yet to rule on whether CBD is a supplement or a food.
“The FDA requires a cannabis product (hemp-derived or otherwise) that is marketed with a claim of therapeutic benefit, or with any other disease claim, to be approved by the FDA for its intended use before it may be introduced into interstate commerce,” according to legislation that de-criminalized hemp. FDA chief Scott Gottlieb said he is “disappointed” at the rush to market CBD since many issues remain unresolved, but retailers view CBD as a safe way to enter a market that will someday include cannabis.
In June the FDA began hearings to de-regulate CBD from hemp within food products. “Legalization of edible CBD from hemp would have a major impact on the U.S. consumer packaged goods (CPG) industry-particularly for the snack and confectionary category,” according to Nielsen market research.
Regulations governing the sales of CBD-infused edibles, including beverage tea, remain murky but as the Natural Marketing Institute observes: “Consumer demand for CBD, and cannabis has reached critical mass, so what is your organization going to do?”
The Tea Spot answered that question by partnering with Sky & Wyatt a Colorado-grown CBD hemp tea blended with all-natural herbs. The Tea Spot handles sourcing, blending and manufacture of Sky & Wyatt teas. The tea sells for $34.99 for 12 pyramid sachets. Formulations include “Take Charge,” “Turn On” and “Be Still.”
Denver-based New Age Beverages launched Marley CBD-infused tea in cans with formulations promising a Mellow Mood in three flavors. The blends are packaged in 15.5 ounce cans, and each serving contains 25 milligrams of pharmaceutical grade CBD. Michael Cunningham, senior vice president of sales for New Age, said the company already has distribution agreements totaling 125,000 outlets.
Market research by Nielsen conducted in March shows 34% of Americans were interested in consuming legal CBD/Cannabis for the Memorial Day holiday. Nielsen predicts the food and beverage share of hemp-derived CBD products will reach $6 billion in sales by 2025. Nielsen estimates beverages will account for $1.6 billion of this total with foods and stacks (including confectionery) accounting for $950 million in annual sales. Although a small segment compared to powders, oils and supplements, Nielsen predicts CBD food and beverages will account for a 44% share in the years ahead.
Full spectrum CBD (which pairs the compound with one or more of the 100 cannabinoids in cannabis) is legal for medical use in 46 states. CBD derived from hemp (which has little or no psychoactive properties) is legal in all 50 states so long as concentrations of THC (tetrahydrocannabinol) remain below 0.3%
Performance Tea is marketed as rejuvenating, or for recovery and sold in single-use packets labeled “Balance” and “Energy” and “Focus.”
“The line between food and health is disappearing,” said Gagnon, citing an Accenture report on “The Future of Food: New Realities for the Industry,” “There is greater awareness of the link between nutrition, health, longevity and sustainability. The shift is creating threats and huge opportunities for incumbents and start-ups alike across the food and healthcare industries,” according to Accenture.
Gagnon said even if FDA “asserts its authority to clamp-down on CBD-related products and interstate commerce, it can choose not to do so.”
“Enforcement action depends on, among other things, available resources and the perceived threat to public health,” he said.
Given the large numbers of consumers already exposed to CBD and a trend pointing to legalization of cannabis, Gagnon expects his $49 jars to prevail. Consumer surveys show that 47% of the buying public is familiar with CBD and, of those who are familiar with CBD, 30% have purchased CBD. The rush is on, he said, with 65% of supplement companies planning to launch a CBD product in the next 1-2 years.
Gagnon is an accomplished long-distance runner and has finished six Ironman Triathlons. He is the author of Living the High Performance Life. Gagnon said he favors beverage formulations because of their convenience and effective delivery of the relatively large quantity of CBD needed for the chemical to be effective.
Stillwater Brands, a Brighton Colo., Division of Advanced Extraction, originally released teas with 10 miligrams of CBD. Recently the company revamped their caffeine-free Mellow Mint Tea — it now contains four times more CBD and 25% more tea. Hemptealicious flavors include spearmint lemongrass, ginger turmeric, chamomile lavender, and apple hibiscus that sell for $12.95 for 8 tea bags. The company also markets a soluble coffee that contains a dose of CBD with 0.5 milligrams of THC and 50 milligrams of caffeine.
Market leaders will be natural, plant-based, super functional, made without sugar, convenient and good tasting, he said.
The race is on.