Marketing Week

High time: How brands can capitalise on the CBD explosion

By August 29, 2019No Comments

It is fair to say cannabinoid (CBD) is gripping the UK. From beauty masks to coffee, the seven-leafed symbol is popping up more than ever before, spanning sectors and target audiences.

The number of CBD consumers shot from 125,000 in 2017 to 250,000 in 2018, according to the Cannabis Trades Association UK. While a separate study by the Centre for Medicinal Cannabis (CMC) estimates there are 1.3 million regular users of CBD in the UK, with 6 million people having tried it in the last year. Furthermore, it predicts the UK market could be worth almost £1bn a year by 2025. In short, business is blazing.

CBD is a non-psychoactive found in cannabis. Unlike tetrahydrocannabinol (THC), the other major compound in cannabis, CBD doesn’t get you high and is legal in the UK, provided it has been derived from an industrial hemp strain that is EU-approved and contains less than 0.2% of THC.

Despite its many health and wellness benefits, CBD is a substance that still strikes up images of hippies and Howard Marks, though, so how should brands go about marketing it?

“We see CBD very much a health and wellness product rather than a 1970s class A drug,” explains Rebekah Hall, founder and CEO of juice business Botanic Lab.

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The brand launched a CBD soft drink in September 2018, with Hall deciding the time was right for this type of product given the rise in consumer awareness and interest around CBD.

“It was something the brand had been mulling over for some time and we wanted to be the first – that was the main driver – but I also felt the regulatory environment was comfortable [enough] where we could launch the product, even though there were some grey area” she explains.

Navigating complex regulations

The regulations around CBD are complex with the Committees of Advertising Practice (CAP) admitting the rules vary from product to product. CBD products usually fall into two categories – medicines or foods – both of which are covered by complex regulatory standards.

CAP states on its website there is no “one size fits all” definition that can be applied across all CBD-containing products. It says “it remains a marketer’s responsibility to establish which regulatory regime applies to their individual product”.

Hall says the key is working closely with regulators to stay on top of the ever-changing rules.

We felt CBD was a very much a health and wellness product rather than a 1970’s class A drug.

Rebekah Hall, Botanic Lab

“Regulators are playing catch-up and are going in a little bit blind in terms of how to deal with these things, so we are having to work totally with them [to ensure] we behave in a way that is responsible and [they] don’t pull the plug,” she says.

Heineken-owned craft brewery Lagunitas Brewing Company launched a Hi-Fi Hops, a CBD sparkling water in the USA last August, but although marijuana is legal in 11 US states there were still restrictions, which makes marketing more complex.

“It’s all relatively new so [regulators] are rightly being cautious. It’ll be interesting to see where we are in 10 years,” says Karen Hamilton, director of community relations at the at Lagunitas Brewing Company.

The business produced the sparkling water for the drink with medical marijuana company CannaCraft, which infuses the water with CBD and THC. Having a partner with more knowledge of the industry is something which Hamilton would strongly recommend to any brand considering launching a CBD product.

“It was so beneficial. Everyone needs a bit of a big brother: they were a big brother on the legal side and we’ve been a big brother on the flavour side,” she explains.

Hamilton also urges marketers to do “as much learning as possible”. She attended “a lot” of cannabis conferences to learn more about the substance.

It was at conferences and through experiences that CBD-only retailer LDN CBD was founded. The business was created last year after Joseph Oliver and his partner Aaron Horn discovered CBD could help both themselves and family members alleviate sickness and mental health.

“I was going to these conferences in the US and I was asking, ‘Do you have a retailer in the UK?’ and again and again they were saying, ‘No’.”

I’ve seen people break down crying because they can get these [CBD] products.

Joseph Oliver, LDN CBD

Following the success of a popup store to “try it out” the pair soon realised it was marketable and opened its permanent shop on Camden Road in July 2018.

It is no longer the only retailer stocking CBD, though, with Holland & Barrett introducing a range this year, but LDN CBD has developed something of a cult following.

“We’ve had people drive down from Manchester because they couldn’t wait 24 hours for it to be shipped to them. I’ve seen people break down crying because they can get these products,” Oliver says.

Oliver says that having a bricks-and-mortar store is vital as customers prefer to experience CBD in real life and talk to staff about its benefits. It also offers in-store workshops in wellness and yoga.

One marketer on the challenges of building a cannabis brand

However, Botanic Lab’s Hall argues it’s not just about the in-store experience. As the world “shifts from buying in-store to buying online” CBD is no different, with many consumers using people’s knowledge in-store to educate themselves about lesser-known ingredients like CBD before eventually buying online.

She explains: “People experience products offline but then buy online. So we ensure [our marketing] can translate to consumers online and offline seamlessly.”

The key is education. As the market is so young, consumers are looking for trusted resources and brands to educate them.

Hall adds: “Consumers are at a place now where they have probably heard of CBD, but to get to the next stage [to a place where they are ready to buy] is where we need to help educate.”

Brands have an important role to play in this education process, with research from GlobalWebIndex suggesting 56% of CBD users trust CBD brands more than some established pharmaceutical brands when it comes to information around how CBD works.

With a new ingredient – especially one which has links to illegal substances – household names will carry weight no matter the sector.

This is something that Lagunitas has found in the US. Hamilton explains: “Our name is very familiar… and people are drawn to brands they recognise because it is a new industry. It’s human nature that you pick the one you know.”

LDN CBD’s Oliver agrees and says the brand is on a mission to be the “most trusted retailer of CBD” in the UK.

Part of this is ensuring rigorous testing and a highly curated range. “We turn away 95% of the products [people want us to sell] in-store. We show lab certificates and we’re trying to be a beacon of truth,” he explains.

Hamilton agrees that quality is key: “It doesn’t make any difference how aware consumers are of your name if after they try your product they don’t care for it.”

A natural progression

When looking to launch a CBD product under an existing brand, companies need to ask whether it is a natural extension of the brand and whether there is demand for it.

Lagunita’s Hi-Fi Hops sparkling water, for example, was developed in response to growing consumer interest.

Hamilton explains: “Some consumers want beer in cans, so we put beer in cans; some consumers want low- and no-alcohol; some want CBD. We’re just responding to interest.”

Offering a CBD drink is not a huge departure for Lagunitas given its background in beer, according to Hamiton, but it allowed the business to tap into the growing marijuana market, as well as target consumers who are drinking less alcohol.

“We wanted it to be a natural extension of what we’ve been doing for over 25 years and that is hop-inspired beverages. We weren’t interested in going off on a separate tangent,” Hamilton explains.

She adds: “There is a whole bunch of people who don’t drink alcohol at all. It’s expanding our consumer base.”

This is something Hall echoes. As Botanic Labs produces naturally infused health drinks, a CBD drink felt like the right fit.

“We decided to do it because it was a very natural move for us and something we had been planning for a number of years. As a brand we deal in functional plants and there is no more functional plant with a huge heritage than cannabis,” she suggests.

Ultimately, any marketers looking to capitalise on this booming market need to work closely with regulatory bodies to ensure they are keeping up with the fast-paced rule changes.

But brands shouldn’t be put off. By acting now, companies can bring consumers on board as they learn about the CBD craze and establish themselves as a trusted name that will stand them in good stead as the market grows.

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