CPG firms not ready—yet—to plunge into CBD watersCPG firms not ready—yet—to plunge into CBD waters

Josh Long, Associate editorial director, SupplySide Supplement Journal

May 7, 2021

2 Min Read
SupplySide Food & Beverage Journal logo in a gray background | SupplySide Food & Beverage Journal

by Josh Long

Consumer packaged goods (CPG) firms may have been eying the market for ingestible CBD in late 2019 and early 2020. However, many of them pulled back in 2020 as the year progressed, according to Kelly Nielsen, vice president of insights and analytics with BDS Analytics, a market intelligence firm.

By and large, established food and beverage companies haven’t ventured into the U.S. CBD market. FDA has asserted CBD cannot be lawfully marketed in dietary supplements or added to food and beverages because, essentially, the compound was first studied as a drug.

The CBD market has “a lot of regulatory gray area, especially when it comes to putting CBD in food,” David Abernathy, principal at Arcview Management Consulting, said in an interview.

FDA devoted many of its resources in 2020 responding to a global pandemic. While it had drafted CBD guidance under the former Trump administration, the document was never published and was eventually withdrawn—consistent with a freeze on regulations and guidance documents issued by the current administration of President Joe Biden.

Addressing the perils facing CPG firms if they entered the CBD market today, Nielsen said in an interview, “Their entire organization could be at risk if the federal government decided to come after them.”

Nielsen predicts CPG firms will dive into the cannabis pool if and when FDA issues rules governing hemp-based CBD or otherwise opens up the market to general retail. BDS Analytics anticipates that will occur by 2022, the same year it forecasts CBD sales—including sales through cannabis dispensaries—will reach a whopping US$10.1 billion.

Assuming FDA eventually allows CBD ingestible products to be marketed, “major CPG manufacturers are likely to get involved in the market,” Nielsen said. She said these companies boast strong distribution networks, marketing budgets and innovation platforms.

The CPG firms, Nielsen added, tend “to be able to innovate very quickly” and have “distribution networks at their fingertips.”

But first, FDA and/or Congress must devise a solution to end the regulatory uncertainty plaguing the CBD industry, analysts and executives agree.

Will the federal government issue a “common sense and workable regulatory framework for the CBD industry,” Abernathy asked? “That … will be a game changer one way or the other.”

The government’s actions, the consultant said, could either “severely hurt” the CBD market or offer “clarity for the industry to start to thrive.”

About the Author

Josh Long

Associate editorial director, SupplySide Supplement Journal, Informa Markets Health and Nutrition

Josh Long directs the online news, feature and op-ed coverage at SupplySide Supplement Journal (formerly known as Natural Products Insider), which targets the health and wellness industry. He has been reporting on developments in the dietary supplement industry for over a decade, with a focus on regulatory issues, including at the Food and Drug Administration.

He has moderated and/or presented at industry trade shows, including SupplySide EastSupplySide WestNatural Products Expo WestNBJ Summit and the annual Dietary Supplement Regulatory Summit.

Connect with Josh on LinkedIn and ping him with story ideas at [email protected]

Education and previous experience

Josh majored in journalism and graduated from Arizona State University the same year "Jake the Snake" Plummer led the Sun Devils to the Rose Bowl against the Ohio State Buckeyes. He also holds a J.D. from the University of Wyoming College of Law, was admitted in 2008 to practice law in the state of Colorado and spent a year clerking for a state district court judge.

Over more than a quarter century, he’s written on various topics for newspapers and business-to-business publications – from the Yavapai in Arizona and a controversial plan for a nuclear-waste incinerator in Idaho to nuanced issues, including FDA enforcement of the Dietary Supplement Health and Education Act of 1994 (DSHEA).

Since the late 1990s, his articles have been published in a variety of media, including but not limited to, the Cape Cod Times (in Massachusetts), Sedona Red Rock News (in Arizona), Denver Post (in Colorado), Casper Star-Tribune (in Wyoming), now-defunct Jackson Hole Guide (in Wyoming), Colorado Lawyer (published by the Colorado Bar Association) and Nutrition Business Journal.

Subscribe for the latest consumer trends, trade news, nutrition science and regulatory updates in the food & beverage industry!
Join 30,000+ members. Yes, it's completely free.

You May Also Like