CBD and Plant-Based Foods Strengthen
Competition against National Brands

By Jack Grant

Shopper interest in hemp-derived CBD products and plant-based foods and are among the hottest trends to hit the world of consumer packaged goods in years. And store brand versions of these products present a new front in the sales competition with national brands.

Innovations with cannabidiol (CBD) are speeding their way to market across hundreds of nonfoods offerings in health and wellness categories, personal care, hair and skin care, beauty, therapeutic and fitness products, pet care and more. The plant-based meat movement is also coming quickly into the mainstream as foods products that closely mimic the look, feel and taste of hamburgers, ground meats, poultry and more are increasing turning up in restaurants and stores across the country.

And like many of today’s fastest growing food trends, retailers are developing their own store brand lines of plant-based foods and CBD products, among them chains like Whole Foods, Kroger, Trader Joe’s, Walgreens, CVS and others.

“National CPG manufacturers are already facing stiff competition from brands launched by the likes of Costco, Kroger and Target,” said Todd Maute, a partner at brand strategy and design agency CBX, during a recent analyst conference organized by Stifel Financial Corp.

Store-brand leaders must continually innovate, according to Maute. He cited Kroger’s ongoing test of plant-based products in the meat departments of 60 Kroger stores as an illustration of just how quickly retailers can respond to market trends today. “Kroger jumped on the plant-based thing right away,” Maute said. “That's something that would have taken years to happen before, if at all. Investors should take note: Store brands are giving CPGs a run for their money.”

Visitors to PLMA’s 2019 trade show in Chicago in November were able to see for themselves what’s driving all the buzz and the sales thanks to two new dedicated sections of the show floor.

Products touting their CBD credentials at the PLMA show included broad spectrum cannabidiol formulations in tinctures, gummies and soft gels, oils, balms and lotions, as well as dietary supplement capsules and other nutritional products. In the plant-based foods section products ranged from burgers, sausages and sliders, to meatballs, meatloaf, chicken-less tenders, strips, nuggets and cutlets, mini pork tacos and entrees.

In the case of both CBD and plant-based, the attraction of well-documented growth today combined with prospects for even greater expansion in the future are driving retailers to search for new and innovative suppliers to help bring more of these high-consumer-demand products to their store brands assortments.

Already the nation’s largest drug chains —Walgreens, CVS and RiteAid — the #1 supermarket Kroger and others, are selling a variety of CBD items. Many more leading retailers have committed to exploring the trend, as CBD and hemp-derived ingredients are expected to expand across more nonfood products and eventually into food categories as well.

“Interest and curiosity on the part of American consumers with regard to both CBD and plant-based products is intense, coupled with a growing awareness of the availability of these products,” said PLMA president Brian Sharoff.

Speaking on “Opportunities in Hemp CBD,” Virginia Lee, research manager with Brightfield Group, said that sales for the CBD and cannabis industries are expected to chart growth in excess of 700% for 2019, with dramatic growth sustained through 2023 and beyond.

In his assessment of “Plant-Based Products and the Store Brand Opportunity,” Jim Wisner of Wisner Marketing Group noted that the term “plant-based” grew 2,462% on U.S. restaurant menus in the last 4 years.

“We're seeing a shift toward truly brand-led strategies, as opposed to merely securing a place along the spectrum of 'good,' 'better' or 'best' relative to competing products at shelf,” Maute said.   “Retailers that fail to grasp the need to fully commit to their store brands risk missing out on an opportunity to drive loyalty to their stores and create meaningful differentiation in the markets they serve.”

Investors should pay close attention to the potential for store brands to create new winners and losers in retail and CPG, advised Maute. That applies to CBD, plant-based foods and other innovative products in the future. 

                                                                           January 2020
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