Hemp Food and Drink Expected to Reach $6 Billion in Sales

(Photo credit: Performance Tea)

Since January, when thecultivation 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 JoeGagnon, founder of Performance Tea, a brandlaunched in 2018 with a legacy dating to 2008. A decade of development givesGagnon’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 consumerinterest in natural products that reduce stress, ease chronic pain, aid sleepand assist with recovery.

Since March major groceryand pharmacy chains including CVS, Vitamin Shoppe, and the Walgreens BootsAlliance (1,500 stores in select states) have stocked their shelves with CBDproducts labeled supplements (typically creams, sprays and transdermalpatches). Supplements that do not claim therapeutic benefit do not have toundergo more stringent U.S. Food and Drug Administration (FDA) rulesregulating drugs.

The FDA has yet to rule on whether CBD is a supplement or afood.

"The FDA requires acannabis product (hemp-derived or otherwise) that is marketed with a claim oftherapeutic benefit, or with any other disease claim, to be approved by the FDAfor its intended use before it may be introduced into interstate commerce,”according to legislation that de-criminalized hemp. FDA chiefScott Gottlieb said he is “disappointed” at the rush to market CBD since manyissues remain unresolved, but retailers view CBD as a safe way to enter amarket that will someday include cannabis.

In June the FDA beganhearings to de-regulate CBD from hemp within food products.  “Legalization of edible CBD from hemp wouldhave a major impact on the U.S. consumer packaged goods (CPG)industry-particularly for the snack and confectionary category,” according toNielsen market research.

(Photo credit: Sky & Wyatt)

Regulations governing the sales of CBD-infused edibles,including beverage tea, remain murky but as the Natural Marketing Instituteobserves: “Consumer demand for CBD, and cannabis has reached critical mass, sowhat is your organization going to do?”

The Tea Spot answered that question by partneringwith Sky & Wyatta Colorado-grown CBD hemp tea blended with all-natural herbs. The Tea Spothandles sourcing, blending and manufacture of Sky & Wyatt teas. The teasells for $34.99 for 12 pyramid sachets. Formulations include “Take Charge,”“Turn On” and “Be Still.”

Denver-based New Age Beverageslaunched Marley CBD-infused tea in cans with formulations promising a MellowMood in three flavors. The blends are packaged in 15.5 ounce cans, and eachserving contains 25 milligrams of pharmaceutical grade CBD. Michael Cunningham,senior vice president of sales for New Age, said the company already hasdistribution agreements totaling 125,000 outlets.

Market research by Nielsenconducted in March shows 34% of Americans were interested in consuming legalCBD/Cannabis for the Memorial Day holiday. Nielsen predicts the food andbeverage share of hemp-derived CBD products will reach $6 billion in sales by2025. Nielsen estimates beverages will account for $1.6 billion of this totalwith foods and stacks (including confectionery) accounting for $950 million inannual sales. Although a small segment compared to powders, oils andsupplements, Nielsen predicts CBD food and beverages will account for a 44%share in the years ahead.

Full spectrum CBD (whichpairs the compound with one or more of the 100 cannabinoids in cannabis) islegal for medical use in 46 states. CBD derived from hemp (which has little orno psychoactive properties) is legal in all 50 states so long as concentrationsof THC (tetrahydrocannabinol) remain below 0.3%

Performance Tea is marketedas rejuvenating, or for recovery and sold in single-use packets labeled“Balance” and “Energy” and “Focus.”

“The line between food andhealth is disappearing,” said Gagnon, citing an Accenture report on “The Futureof Food: New Realities for the Industry,” “There is greater awareness of thelink between nutrition, health, longevity and sustainability. The shift iscreating threats and huge opportunities for incumbents and start-ups alikeacross the food and healthcare industries,” according to Accenture.

Gagnon said even if FDA“asserts its authority to clamp-down on CBD-related products and interstatecommerce, it can choose not to do so.”

“Enforcement action dependson, among other things, available resources and the perceived threat to publichealth,” he said.

Given the large numbers ofconsumers already exposed to CBD and a trend pointing to legalization ofcannabis, Gagnon expects his $49 jars to prevail. Consumer surveys show that47% of the buying public is familiar with CBD and, of those who are familiarwith CBD, 30% have purchased CBD. The rush is on, he said, with 65% of supplementcompanies planning to launch a CBD product in the next 1-2 years.

Gagnon is an accomplishedlong-distance runner and has finished six Ironman Triathlons. He is the authorof Living the High Performance Life. Gagnon said he favors beverage formulationsbecause of their convenience and effective delivery of the relatively largequantity of CBD needed for the chemical to be effective.

Mellow Mint Tea (Photo credit: Stillwater Brands)

Stillwater Brands 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. The company also markets a soluble coffee that contains a dose of CBD with 0.5 milligrams of THC and 50 milligrams of caffeine. 

Hemptealicious, a Brighton Colo., Division of Advanced Extraction, also markets teas with 25 milligrams of Hemp Extract per serving. Their flavors include spearmint lemongrass, ginger turmeric, chamomile lavender, and apple hibiscus that sell for $12.95 for 16 tea bags in eco-friendly recycled packaging.

Market leaders will be natural, plant-based, super functional, made without sugar, convenient and good tasting, he said.

The race is on.

Source: Performance Tea, WorldTea News