A central challenge for success in consumer health is not so much the shortage of innovative ideas, but rather determining which ideas to support and scale, write Christopher Brown and David O'Kelly of our Deal Advisory team.
CBD - cannabidiol, a non-psychoactive component of the cannabis plant - has experienced a greater hype on the consumer market than almost any other product over the last two to three years.
Besides promising growth rates, the CBD consumer health market is a fragmented industry in upheaval, challenged by a confusing regulatory landscape. While the industry is expected to continue to display strong sales growth in the future and many market participants are currently growing, most companies have been unprofitable over the past several years. Proving to be a winner in this industry thus remains exceedingly difficult in the current market climate.
The paper “New kid on the block? - A look at CBD in consumer health” examines the when, where and how when it comes to planning an entry into the CBD consumer health market. We collected data, conducted research, spoke to market participants about its regulatory status and drew out potential market entries. Furthermore, we surveyed (potential) customers in the USA and Germany, because however good the theory on the success of CBD in consumer health might be, it cannot be effective and sustainable without considering the customer.
The outcome is clear. A lack of dominant players, a currently fairly valued market climate after years of CBD “hype” and a promising regulatory scenario, in which future regulatory developments are likely to open up the market, form the basis for a market entry. And the customer? Well, while efficacy and price are currently important, successful claims with regard to safety and trustworthiness will become key.
It is therefore now the time that consumer health companies should explore the opportunities of CBD, play to their strengths and make their move.