According to foreign reports, the economic turmoil caused by the global new coronavirus pandemic will force thousands of CBD enterprises to close down. According to brightfield group, a hemp research firm, although many industry players will leave, the CBD market will still be filled with about 1500 brands competing for market share.
In a report released last week, the company estimated that by the beginning of 2020, the top 20 off-site CBD companies accounted for only 17% of the total CBD market, while about 3000 other competitors accounted for 77% of the CBD market.
According to brightfield, the largest CBD manufacturer, GW pharmaceuticals in London, produces CBD prescription drugs, accounting for the last 6% of CBD sales in the United States.
According to an article in the Wall Street Journal, the phenomenon is caused by entrepreneurs’ enthusiasm for a boom trend that has few established brands. Throughout 2019, a large number of new CBD market participants have emerged in the CBD market, and people with an annual income of less than $1 million occupy more than 97% of the market share.
Bethany Gomez, managing director of the Florida based research firm, is reported to have said the number of CBD companies will drop significantly by 2020, with half or more of them likely to face “exit.”.
“A lot of Companies in this area find it unsustainable for them,” Gomez said. Many brands have tried this, but this is not an industry where they can make a profit. “
Not all new CBD startups will be discouraged by the influx of competitors. For Jennifer capeper, who helped launch CBD skincare line I + I botany in mid-2019, the market is already very crowded.
“Our biggest challenge is to find out where we are and how we differentiate from other brands,” says Maryland based capeper. “We think of ourselves as a skin care or self-care company based on CBD. That’s what makes us different. “
This strategy is supported by the brightfield study, which points out that the market share of traditional CBD products tincture and fudge is declining. “The market is no longer entirely dominated by people with extreme pain or epilepsy, who have to do their best to get the product, and are no longer primarily controlled by marijuana consumers,” the brightfield report said.
Brightfield’s analysis does give CBD manufacturers some positive signs, especially during the pandemic, when overall sales did not decline significantly. Gomes said the industry’s resilience is particularly encouraging given the country’s uncertainty about the economy and the rising level of unemployment that the federal government stopped paying last week.