Beauty category, retailers eager to include CBD-infused products
Even the beauty category wants a piece of the CBD boom.
As many big chains take a wait-and-see attitude while the legalities of CBD products are being sorted out, there are growing signs among retailers and suppliers that the category could be the next big item in beauty.
A recent Gallup poll found that the majority of survey participants familiar with CBD believe the compound has health benefits. Google searches for the term “CBD beauty” have soared, surpassing such terms as “natural” and “clean.” One of the two most asked questions via Google is where to buy CBD oil.
Still, the paths vary from retailer to retailer and brand to brand, but whether it be hemp seed oil, which contains no actual CBD, or full-spectrum CBD, the number of items on beauty shelves is growing. The beauty sector is expected to be one of the largest portions of what Piper Jaffray estimates could be as large as a $500 billion long-term opportunity. Shorter term, the Brightfield Group has pegged the market at $22 billion by 2022. Officials at many of the leading brands have predicted that all big-box retailers will have some form of cannabidiol beauty products on shelves by the end of this year.
CVS Pharmacy, which is said to be planning to go even deeper into CBD, as well as Rite Aid, Walgreens and Kroger, all recently announced they were adding such CBD products as oils, balms and creams. What they are not stocking yet are CBD-infused drinks or food. Bartell Drugs, considered the first retail chain to enter the space, added such brands as Shikai, Charlotte’s Web and CV Sciences last year.
Wegmans, Ulta Beauty and Safeway also are testing select products. The luxury market — from Sephora and Neiman Marcus to Barneys — has gone full throttle with CBD departments. Based on typical beauty market trends, the mass market often follows the prestige beauty industry, suggesting the second half of the year will see an explosion in CBD beauty products at chains.
The move to CBD fits snugly into the wellness movement, engulfing consumer lifestyles.
“We view the burgeoning trend of cannabis-based beauty as an extension of the natural and beauty movement,” Erinn Murphy, research analyst at Piper Jaffray, said.
Deborah Weinswig, founder of Coresight Research, said that CBD beauty products do not only cross into health and wellness, but customers are willing to pay more for them — an important fact for mass merchants in need of building margins and shopping baskets.
Chris Husong, vice president of marketing at Elixinol, a brand that has been in the hemp industry for more than three decades, illustrated how consumers are taking a holistic approach to beauty that includes supplements and combining CBD with other beauty staples. “You can maintain a youthful glow by adding CBD drops or tinctures to your favorite beauty care products for anti-inflammatory properties, or even putting it into your daily bath,” he said. Elixinol also offers a skin care range called Sativa Hemp Skincare made with 100% organic hemp.
As mass merchants, especially those with pharmacies, seek to become wellness destinations, they can cast a larger net over the CBD business, according to Tariq Hasan, president of Terraform, which sells a wide range of products, including a Probiotic Peat Moss Mask and a Rice and Hemp Exfoliating Powder. “The pharmacist can be the best educator about CBD,” he said.
The emergence of CBD beauty comes at a pivotal time for mass merchants, especially as makeup and fragrance sales have stalled and skin care has slowed a bit. Though there is much activity and numerous brands are making waves in the space, with bountiful opportunities come challenges. Among the hurdles are murky regulatory standards, a lack of transparency in ingredient labeling, the need for more research to support claims, and eradicating any stigmas associated with the category.
The legalities of selling CBD still are hazy outside of states where marijuana is legal. Although the Agricultural Improvement Act of 2018, or Farm Bill as it’s called, contains provisions allowing the cultivation, production and commercialization of industry hemp and hemp-derivatives like CBD, the law does not change the Food and Drug Administration’s authority over the use of those ingredients in FDA-regulated products. That’s led to confusion and some hesitation for big chains.
That said, the FDA held its first hearing with hemp and CBD advocates to learn more about marketing, manufacturing and selling cannabis and cannabis-derived compounds — a good step forward, experts said.
The consensus from the hearings is that there needs to be standards in place. “In the CBD market right now, ‘caveat emptor’ is very real,” Laura Mahecha, Kline’s Healthcare Industry Manager, said in a report from the hearings. “Oversight on consumer-use CBD products is required because there are many producers operating with various levels of standards. Labeling, dosing and contents of products need to have some minimum requirements quickly in order to protect American consumers.”
Brands said retailers have advanced light years in their understanding of the market. They no longer ask, “Can it get you high?” and are digging into more complex issues. Still, murky areas remain.
“From my perspective, the fogginess for CBD really falls on ingestible versus topicals. However, most of the questions we receive now are on a state-by-state issue,” said Michael Bumgarner, founder of Cannuka, a fast-growing brand that combines cannabis and manuka honey. “A few states use confusing language and all retailers want to make sure they are following the rules. It complements the anti-inflammatory properties of CBD by helping heal and hydrate the skin.”
Cannuka is now in the mix at Ulta Beauty, Neiman Marcus and Free People, and Bumgarner said he sees opportunities for select expansion in mass. “Drug stores are such a great place for people to shop, and one of my goals is to make our products more accessible for more people,” he said. “My mission is to ultimately create brands which help destigmatize cannabis, while increasing demand for industrial hemp.”
While users have stories of monumental improvements in skin and overall health using CBD, more education and research are needed to convince consumers that the benefits are not just smoke and mirrors. Terraform’s Hasan is investing in videos to post on social media that take viewers through the production process.
“The cannabis/CBD industry can be very confusing, and because it is such a new area within skin care, many consumers don’t know the difference between the ingredients used. There is a lot of education needed on this front,” said Nick Christensen, co-founder of Cannabliss Organic, which is sold in premium doors such as Neiman Marcus and Urban Outfitters. Of particular focus is the difference between CBD isolate and full-spectrum hemp extract, which includes CBD among various other cannabinoids.
Only full-spectrum hemp is used in Cannabliss Organic products. “We often see CBD oil or CBD extract highlighted on products and in conversation, but replacing that overused term with hemp extract would be more accurate if you are using a broad- or full-spectrum oil because of the many other cannabinoids in a whole plant extract,” Christensen said. “It’s understandable that many companies just call out CBD because CBD is the dominant cannabinoid found in hemp, but it is one of many.”
Opportunities in CBD have brought out hundreds of companies looking to cash in. That puts pressure on retailers to properly vet suppliers. Anthony Saniger, founder of CBD retailer Standard Dose, stressed that third-party testing is paramount.
“You don’t want people getting THC who aren’t expecting it,” he said “As I was doing my own research, I discovered brands had packaging that didn’t say truthful things — they listed a certain milligram of CBD, but they didn’t have anything [in the product]. They were saying, ‘We cure everything,’ which is kind of snake oil. Yet, there are symptoms that are documented that CBD will help. So, I felt it was time to put standards in place.”
The crucial issue of testing moves to the front burner considering a fact that Jessie Van Amburg, senior food and health editor at Well+Good shared at a recent talk that a recent study found that some product samples contained as much as 53% THC — well above standard.
Industry sources said that brands that are not transparent can sully future sales. A shopper disappointed by a product that isn’t what is advertised won’t buy again. That’s why vetting resources is mission critical.
Testing is paramount at Soji Health, according to Helen Christoni, the company’s vice president of brand strategy. “Unlike many competitors, we triple test each batch of Soji Health products with in-house and independent third-party labs to ensure accurate and consistent milligram count,” she said. “We also provide full copies of our Certificates of Analysis on our website.”
Soji Health’s Collection of full-spectrum hemp products consists of a full skin care regimen, several flavors of gummies, sublingual oils and we even have something for our favorite furry family members. Soji Health offers a nano-liposomal delivery system.
At Elixinol, Husong said its practices are aimed at establishing a reference point for other manufacturer. “Standards for labeling is something that will be important as the industry grows,” she said. “We want to be category captains and help retailers find the good players in the business — those who are following established good practices.”
Another roadblock in building CBD sales is the fact that traditional advertising, including platforms like Facebook, are not an option. “You have to get creative,” Husong said. His brand has used digital media campaigns in high traffic spots like New York’s Times Square. Most CBD brands also said they are seeking out key micro influencers to help build a following, while also helping shoppers shuffle through the crowded product claims. The number of CBD influencers soared 60% from April 2018 to March, according to Traackr.
Without advertising, in-store presentation also becomes more crucial so consumers can see and experience the products, as well as have secure payment channels, which has been a thorny issue for some online retailers that struggled to find resources that would deal with CBD. Saniger, in fact, opened his first store in May to serve as a way to build awareness of his company.
The emerging leaders in CBD come from many walks of life. Some started to solve founders’ health problems, and several were offshoots of already successful businesses.
Sky Organics already was a leader in plant-based, natural beauty, so the transition into CBD-infused beauty was a natural progression, according to the company. Its portfolio includes CBD-infused face masks, lip balms and body butters, as well as full-spectrum tinctures and muscle rubs.
Most recently, traditional cosmetics brands also are teaming CBD up with their products. Revolution Beauty, for example, has added CBD to its skin care range. In the luxury space, Argan powerhouse Josie Maran also teed up CBD with its formulas.
Manufacturer Reserveage leveraged its knowledge in nutrition to expand into topical CBD skin care. The brand has positive feedback, seeing improvements in skin conditions that exceed 60% after four weeks of use.
Yamit Sadok, director of the company’s brand strategy, said, “Women make up a large portion of the CBD market, and while we know that CBD skin care is in its infancy, it’s in high demand by our customers.”
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