Canopy Growth Corp. and Martha Stewart are starting their joint bid to break into the CBD market, betting that curated flavors and her celebrity name will bring the ingredient to a new demographic.
Use of CBD, which companies promote as a natural way to mitigate anxiety or manage pain without the high produced by cannabis, has exploded in recent years as attitudes shifted on marijuana and associated products. There are currently around 3,000 brands in a market that Canopy Chief Executive Officer David Klein predicts will reach $10 billion in annual sales in the U.S. by 2023.
Starting Sept. 10, Canopy will offer Martha Stewart-branded gummies in flavors ranging from kumquat to huckleberry, along with soft gels and oil drops, on its website. Later this year, Canopy will add a Stewart-branded line of CBD products for pets, a segment Klein sees reaching as much as $600 million in additional annual sales.
The products were developed with Stewart’s input on marketing and taste — she sees the products as comparable to French confections “rather than the sticky, overly sweet versions you might find elsewhere.” The launch comes as her brand is being revived by consumers looking to improve their quality of life in quarantine.
“I’ve found that CBD supplements are a simple way to enhance my own health and wellness, especially when it comes to managing the stresses of daily life,” Stewart said in a statement.
Klein said in an interview that the timing is good. The product is “coming into the marketplace now when there are high stress levels,” referring to the Covid-19 pandemic.
While consumers may indeed be looking for new ways to soothe their nerves amid this year’s historic upheaval, one expert says it will be challenging to stand out.
“It’s a fairly difficult battle right now, because it’s a very crowded space,” said Bethany Gomez, managing director at Brightfield Group, which tracks cannabis trends. Meanwhile, the category’s rapid growth has started to slow. According to Brightfield data, around 25% of CBD buyers just started using it in the last 12 months — down from 50% a year ago.
At the same time, CBD sales growth has slowed to 14% this year after jumping 562% in 2019. An oversupply of hemp in 2019 has also pushed the average product price down by 20% to 40%, Gomez said.
Nonetheless, a celebrity could make the difference for Canopy. “Adding a name like Martha Stewart may potentially entice more people to come into the space,” Gomez said.
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Stewart, 79, currently serves as chief creative officer for Marquee Brands LLC, an investment firm that owns her brand name and other consumer companies, including sportswear retailer Dakine. She also remains on the board of Sequential Brands Group Inc., which licenses apparel and home-goods brands and sold the Martha Stewart brand to Marquee as part of a $175 million deal last year.
Canopy says there’s still plenty of potential for CBD growth, estimating that while around 86% of Americans have heard of the product, only 18% have tried it. Stewart’s household name, meanwhile, should help attract female consumers in the age range of 46 to 65.
The biggest current celebrity with a CBD product so far is NFL star Rob Gronkowski, who is partnered with CBDMedic. Charlotte’s Web, which purchased the parent company of CBDMedic earlier this year, is the top selling CBD brand, followed by Medterra and Green Roads, according to Brightfield data.