Why CBD's Invasion of the CPG Space is Inevitable
While cannabis has caught the eye of many investors in the pharmaceutical industry after Novartis partnered with Canadian cannabis company Tilray , the beverage industry after Constellation Brands' blockbuster deal with Canopy Growth Corporation , and the tobacco industry after Altria doled out $1.8 billion in an equity deal with Cronos Group , the buy in from the consumer-packaged goods (CPG) space has been more tentative.
However, after the passage of 2018's farm bill and the slew of opinion polls showing broad support for cannabis infused consumer products, the incursion of cannabis into pantries and medicine cabinets in the United States may be inevitable.
One company making a move as of late is Unilever , the Anglo-Dutch conglomerate responsible for such iconic products as Dove Soap, Lipton Tea, and Axe Deodorant.
Through the company's recently acquired subsidiary, Schmidt's Natural, the next frontier for the CPG giant is in CBD, a potentially $22 billion market segment that simply has too much pent-up demand to disregard.
DionyMed Split From Eaze to Affect Revenue "It's a multi-billion business," Schmidt's Natural CEO Michael Cammarata told TheStreet.
"The closest thing to give you a glimpse at is how the essential oils business has taken off." According to Grand View Research, the essential oils demand has grown from 61.8 kilotons in 2014 to 226.9 kilotons at the close of 2018, and is only set to accelerate through 2025.
Quite the precedent.
Cammarata noted that the opportunity for CPG companies is largely being overlooked and could come to outweigh the already largely realized value-add in tobacco, pharmaceutical, and beverage spaces.
"The day to day use is going to be more frequent for personal care than, say, certain drinks," he explained, "Creams, deodorants, or toothpastes, those are the ones we'll start to see a lot of impact." The analysis explains why his company is currently creating a CBD infused deodorant to target a demographic already reflected in the offerings of retailers like CVS Health and Walgreens Boots Alliance .
For Cammarata's thoughts on how the "powerful product" could affect soft drinks, the science behind the products, and a tentative timeline for full FDA regulation of the space, click the video above.