As the Hemp-CBD Industry Booms, Here’s What Brands Need to Know About the Trend

What landmines marketers need to avoid to prosper

Hemp-CBD products are showing up in everything from makeup to beverages. - Credit by Getty Images
Headshot of Katie Richards

Cannabidiol—CBD for short—products aren’t just the latest fad. There’s baked goods (at By Chloe), a trendy sparkling water brand (Recess) and a beauty brand (Milk Makeup), but it’s not just small marketers stepping into the space. Late last year, rumors surfaced that The Coca-Cola Company was getting into the hemp-CBD industry, which analysts at the Brightfield Group project will reach $22 billion by 2022. Coke is reportedly in talks with Canadian company Aurora Cannabis to create a CBD beverage, made without THC (the psychoactive ingredient that gets you high). Others are speculating that Starbucks could be the first fast-food chain to roll out CBD beverages. Another brand, Barneys, recently shared plans to open The High End, a luxury cannabis store, in its flagship space in Beverly Hills, Calif., in March.

As more brands vie for consumer attention in the exploding CBD marketplace, analysts point to two areas where marketers need to be careful: Product claims and their partners must be thoroughly vetted, and they need to be transparent with consumers.

Shannon Jones, co-founder of consultancy and agency Verb, believes CBD “will definitely have longevity, especially if brands are able to substantiate the claims they are making.” Transparency has been a big concern within the industry so far, as brands struggle to explain to some consumers that CBD and hemp are different from THC—the former helps with anxiety, relaxation and more, while the latter gets you high. Others need to be wary of making claims that their product has certain health benefits when there’s no proof.

Michael Klein, CEO of platform CannabisMD, said consumer interest is driving the explosion and “with that comes a lot of misinformation, a lot of myth-busting has to be done around it. A barrier for a brand is exactly that—when consumer adoption has outpaced the ability for there to be an authoritative voice that can cut through the clutter for consumers.”

Transparency was certainly a challenge and a major focus for beauty brand Kiehl’s when it decided to launch a cannabis sativa seed oil designed to reduce facial redness and calm skin. “Many of our customers have heard about cannabis in beauty products, and are eager to try it with a brand that they already use and trust,” said Megan Grant, U.S. brand president, Kiehl’s, adding it’s important to be transparent about how the different types of cannabis ingredients are used in a variety of ways. For Kiehl’s, that means communicating the benefits of cannabis sativa seed oil for skin care.

For those not looking to fully launch a CBD product, Jones believes brands will find success in partnering with companies already operating in the space by helping to create experiential events around those brands and products. With that approach, though, Jones says it’s crucial for brands to vet the players they decide to work with. Some brands may claim to contain CBD when they don’t, while others might suggest their products cure specific ailments like dementia—the FDA recently sent 12 warning letters to companies including DK Vitamins and Blue Ridge Silver—but there’s currently no evidence to back up those claims.

As the industry continues to grow, Jones explained that more platforms and websites are popping up, like CBD Oil Review and even Consumer Reports, to help consumers vet these new products. “Even if someone has beautiful packaging and branding, you still have to make sure you are aligning with a partner that can substantiate the claims they are making in the space,” she said. “Someone might have a really big name or be a burgeoning brand but still might not be the right fit, and you don’t want to burn your existing customers.”

Finally, experts suggest staying clean and creating healthy products is key to finding success with CBD and hemp. Nicholas Balzer, co-founder and CEO of Queen City Hemp (which started as a CBD sparkling water brand but has grown to include oils, salves and more), pointed to the fact that more consumers are looking for healthy products with fewer sugars and fats.

“As a culture, we’re really focused on reducing waste and creating a healthier lifestyle, so that’s something we really wanted to focus on and we would encourage other brands to do as well,” Balzer said.

This story first appeared in the March 4, 2019, issue of Adweek magazine. Click here to subscribe.

@ktjrichards katie.richards@adweek.com Katie Richards is a staff writer for Adweek.