Direct Selling Companies Prove Attractive for CBD Market, Drawing Large Non-Endemic Cannabis Industry Partners
DENVER, January 22, 2019 /PRNewswire/ --
CannabisNewsWire Editorial Coverage
With experts such as the Brightfield Group predicting the hemp-derived CBD (cannabidiol) market will reach $22 billion by 2022, major industry players such as Anheuser-Busch are seeing value and viability in the direct selling approach to selling CBD products.
- With a predicted 130 percent compound annual growth rate (CAGR) over the next three years, the hemp-derived CBD industry looks primed to explode.
- The direct selling approach to selling CBD products pioneered by brands such as Youngevity International is attracting the interest of large-scale companies.
- Given new medical studies proving the efficacy of daily CBD intake, the market appears ripe for companies with vested interests in other lifestyle markets.
Following the passing of the groundbreaking 2018 U.S. Farm Bill that legalized the industrial cultivation of hemp nationally, scores of companies not endemic to the cannabis industry are looking to find a way to enter the booming CBD market. Partnerships and acquisitions look to be one of the most promising ways to do that, with many savvy companies utilizing the direct selling route originated by brands such as Youngevity International Inc. (NASDAQ:YGYI) (Profile), a leading omni-direct lifestyle company. New Age Beverages Corporation (NASDAQ:NBEV) recently merged with a direct selling company with the intent to distribute its CBD products inside - and potentially outside - the United States. Beer giant Constellation Brands, Inc. (NYSE:STZ) poured a $4 billion investment into Canadian cannabis company Canopy Growth Corporation (NYSE:CGC). Anheuser-Busch InBev (NYSE:BUD) (OTC:BUDFF) also partnered with a leading Canadian cannabis producer to research cannabis-infused drinks and owns 20 percent of Icelandic Water Holdings, which recently entered into an exclusive joint-marketing/development agreement with Youngevity to develop and sell CBD-infused products.
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A Market Primed to Skyrocket
The recent deregulation, legalization and proliferation of the cannabis industries in the United States and Canada made 2018 a landmark year for those industries, creating an ideal scenario for an astronomical growth rate. Canada's recent move to legalize recreational marijuana and the United States' decision to legalize the industrial cultivation of hemp nationwide has experts forecasting the global cannabis industry to exceed $39 billion by 2023 and possibly exceed $95 billion by 2026.
Within that market, the hemp-derived CBD segment will likely grow at an even faster rate, with that growth buoyed by the fact that it doesn't have to pass any state legalization hurdles across the United States. Brightfield Group expects the hemp-CBD industry's growth to outpace the rest of the cannabis industry combined, and Hemp Business Journal estimates the hemp market to grow around 700 percent by 2020. With the meteoric growth predicted, companies such as Youngevity International Inc. (NASDAQ:YGYI), which already have established direct-selling channels that can nimbly adapt and upscale marketing, production, and delivery, could see a boon in business.
Direct Selling Method Attracting Corporate Giants
Given the nascent nature of the cannabis industry, many consumers are just learning about CBD products, meaning that growth within the industry is happening in the most organic fashion possible: word-of-mouth marketing. Brightfield Group notes that more than 50 percent of CBD consumers in all U.S. regions first learned about CBD from friends or family, which makes direct selling companies a "fantastic fit" for the CBD industry.
Studies by Direct Selling News show that direct selling companies already lead the global market in sales of CBD products with more than $300 million in annual sales. Therefore, the interest of larger, non-endemic companies in the direct selling model of brands such as Youngevity only makes sense and may signal that, as the cannabis market continues its stratospheric growth, so too will the direct selling sector within the industry.
Increased Medical Studies Cause Increased Interest in CBD