Growth is good. Ask any one of our nation’s 3,500 CBD companies, many of which clocked triple-digit, year-over-year growth over the last five years.
The next 10 will require a far more strategic approach, according to Nielsen, which predicts the next decade for the hemp-based CBD market to be a “game-changer.”
Our nation has become more mindful as a result of the coronavirus pandemic. And that collective consciousness is impacting everything. Bottom line:
Consumers expect more from brands, particularly as it relates to social justice and environmental stewardship.
Millennials and Gen Z are driving the trend, holding brands to a higher social standard than ever before. Customers want to buy from companies that share their beliefs and values, especially now, in the midst of a pandemic-induced recession when spending is limited.
An estimated $1.2 trillion opportunity exists for brands that make their sustainability credentials clear, according to a Unilever study.
In regard to racial parity, experts project that the United States could gain $8 trillion by closing the U.S. racial equity gap, according to a National Civic League report. The move would receive widespread support from 85 percent of Americans, who expect companies to help address racial inequality (up from 81 percent in 2018), according to the Porter-Novelli 2020 COVID-19 Tracker.
Meaning matters. And in an industry smack in the middle of the wellness space, what we do matters more than ever.
For many CBD businesses, that means focusing on a relatively untapped audience of African American and Hispanic consumers. The focus is expected to pay dividends and will quickly become a market differentiator as the general marketplace shrinks and becomes more congested.
The Hispanic market has grown in both size and influence over the last decade. Today, our nation’s 62 million Hispanic consumers have combined purchasing power of more than $1.5 trillion.
In addition to representing a lucrative consumer audience, Hispanic consumers have a higher propensity to rely on organic remedies in part based upon cultural norms and low access and/or reliance on traditional healthcare. Their purchasing preferences also are different than the general market, according to a High Yield Study provided exclusively for CBD Marketing Hub (see chart).
AdAge reports that more Hispanics than non-Hispanics view Cannabis as beneficial, citing an MRI-Simmons study, which revealed Hispanics are 19 percent more likely to fall into what researchers label the Wellness Pot and are two times more likely to use CBD products.
The Black consumer market remains relatively untapped by CBD companies. With a consumer base of 48 million and command $1.3 trillion in spending power, the African American market has proven potential, according to Nielsen’s It’s in The Bag: Black Consumers’ Path to Purchase report.
Like Hispanic consumers, African Americans are among consumers less likely to seek treatment from and trust medical professionals. But that shared value system stems from very different roots.
For African Americans, reasons include lower rates of health coverage, communication barriers, and distrust, attributed to a 40-year “Tuskegee Study” by the U.S. Public Health Service that shook African American confidence in our health system.
In that study, more than 600 low-income African American males with syphilis were issued sham treatments in a study whose only purpose was to better understand the natural course of the (untreated) disease.
Given these historical trends, both Black and Hispanic consumers are more likely to seek and support alternative products to help relieve pain, anxiety, sleep, and other conditions.
Given market growth and spending projections, these two lucrative markets will not remain untapped much longer. Forward-thinking CBD brands are making more visible inroads as evidenced by the U.S. Hemp Roundtable’s recent announcement of its unanimous adoption of the equity and inclusion framework developed by the Annie E. Casey Foundation.
The move, endorsed by industry’s key leaders, signals a commitment to racial equity and inclusion in every link of the U.S. hemp industry, according to Ola Lessard, president of the U.S. Hemp Roundtable.
“Adoption of this framework is just the beginning of our critical journey to promote equity across the hemp industry,” says Natasha Cuda, chair of the Roundtable’s Minority Economic Empowerment Committee, which leads and will monitor and implement these efforts.
The move is important and timely, according to Amber Littlejohn, who serves on the Roundtable’s committee and is the Policy Director of the Minority Cannabis Business Association.
“It is encouraging to see the Roundtable take such decisive action, not just give lip service to addressing systemic racism in our society,” says Littlejohn.
The Black Lives Matter movement elevated calls to address inequalities in hiring, pay and promotion, workplace cultures, and consumer discrimination.
Behemoth corporations like Walmart and Sephora are responding.
The nation’s largest retailer, Walmart, pledged to move its multicultural hair products housed in locked display cases, mainstreaming them in more assessable aisles. Walgreens and CVS are following suit.
Sephora, one of the world’s most powerful beauty brands, committed to devoting at least 15 percent of its shelf space to Black-owned beauty brands.
A guidepost for brands is key. Actions need to be authentic and supported throughout organizational structures — from the backroom to the boardroom. Forced or performative responses do not resonate.
It’s important for brands to listen and understand their audience before wading in. Consumers are hyper-sensitive today. They want companies to be sincere in their actions and deeds and are more willing than ever to hold them accountable for lapses.
More than 81 percent of U.S. consumers say that trust in a brand to do what’s right is a deal-breaker or deciding factor in their brand’s buying decision, according to Edleman.
Do what’s right and you’ll be rewarded by a fiercely loyal consumer base.
For those global brands with natural ties to home countries like South America, the link is obvious. Leverage your brand’s birthplace and authenticity within the U.S. Latinx market, which is more likely to trust a brand with relatable roots.
Hispanic consumers recently surpassed African American shoppers and now rank among the most loyal of all ethnic groups. In 2019, according to customer.com’s groundbreaking Retail Customer Loyalty Study, 53 percent of Hispanics that find a good brand stick with it.
CBD Marketing Hub agrees with experts who believe that Black consumers will become even more discerning and loyal customers as a result of the Black Lives Matter Movement.
We expect that the 46 percent brand loyalty rating among African-American consumers will rise substantially over the next five years and become a major determinant of our industry’s future market success.
Expectations of inclusivity are no longer reserved for underserved consumers.
Hispanics are among the nation’s earliest assimilators of technology, particularly in regard to mobile devices. Year over year, they rank among the most smartphone-dependent group, according to Pew Research.
Hispanic millennials rank high among everyday influencers. Nearly 50 percent of this tech-savvy group talked about a brand online or referenced its hashtag, according to a Viant study. That’s a big cache for an audience that dominates Twitter and Instagram channels.
This millennial base, which spends roughly $828 million on Amazon and $408 million on Sephora, is budget-conscious. More than 81 percent of purchase intent is driven on smartphone or store card coupons.
African-American women are among consumer groups most likely to change brand preference, according to new research from Omnicom’s Ketchum agency, which also highlights that more than 62 percent of all Americans will change brand preferences permanently before the pandemic is over.
With the #BlackGirlMagic social movement, more African-American women are using social media for a higher purpose. More than 43 percent share their opinions about products online, according to Nielson’s Black Girl Magic report.
And with Black women spending $465 million on skincare, this is a consumer group worthy of additional investment.
CBD Marketing Hub helps brands capitalize on consumer engagement with innovative platforms built to connect with consumers the moment they are most ready to engage.
Our multicultural market experts possess uncommon cultural competence built on decades of first-hand experience in African-American and Hispanic consumer marketing initiatives and are excited about the opportunity to elevate forward-leaning brand’s multicultural marketing efforts.
The CBD marketplace is shifting. Today, Hispanic consumers represent 10.5 percent of the U.S. CBD market, according to the Brightfield Group, which reports that African American consumers comprise only 8.8 percent today’s (CBD) consumer market. Given growth projections and the move toward more inclusionary marketing, it makes sense to target these growth audiences.