Cannabidiol (CBD) sales in the convenience and petroleum channel are set to hit $171 million in 2021 — up 49% from 2020, according to market research firm Brightfield Group’s “US CBD Market Industry Update, October 2021.” The market is forecast to reach $449 million by 2026, representing a 21% compound annual growth rate (CAGR) from 2021 to 2026.
“We are seeing growth in the (convenience) channel uniquely, and we have it expanding more rapidly than the market in general,” said Brightfield Group Senior Insights Manager Jamie Schau.
While the CAGR for c-stores is only slightly higher than the overall market, Schau said, it’s especially promising considering initial projections.
“It’s not really what we were originally expecting,” she said. “We were expecting a whole lot of huge pharmaceutical change, grocery, mass (merchants), to move a lot more volume, and that’s been delayed. So it’s giving convenience stores, actually, unique access.”
Savannah, Ga-based Parker’s, which operates more than 70 stores throughout coastal Georgia and South Carolina, started selling CBD products about four years ago, said Mike Gancedo, senior category manager for Parker’s.
The chain now carries a variety of products, including Summitt Labs’ Hemplitude gummies, disposable vapes and cartridges, as well as cartridges and gummies from the Pur brand.
“We are going to keep some kratom,” Gancedo said, referring to an herbal extract that comes from the leaves of an evergreen tree grown in Southeast Asia that offers similar effects to CBD. “But delta-8 is just dominating — right now, it’s the gummies as No.1, and then the vape is No. 2.”
While tinctures have been holding about 25% of sales this year in the convenience channel, Brightfield Group expects capsules, drinks and gummies to see the strongest growth over the forecast period.
“Everyone is talking about drinks,” Schau said. “There’s a lot of excitement around it. … I think it is largely because it’s seen as this alcohol substitute, and a lot of people coming out of the pandemic slowly but surely are looking to cut back on alcohol consumption. This is a really
It makes sense to position CBD drinks alongside alcoholic beverages, Schau said — either as an alternative or even a mixer.
Still, many c-stores are holding off on adding CBD drinks to the lineup.
“And there’s a reason for that,” Gancedo said. “See, our CBD products, we’ve got them on the counter, but right now they’re installing doors. We don’t want anybody under 21 having access to those, even to steal the product. We don’t want it in their hands.”
If Parker’s had the space behind the counter to carry CBD drinks, Gancedo said, it might be different. For now, he sees CBD drinks as a better fit in tobacco outlets or vape shops, where employees are able to talk with the customers further and educate them on the different products.
But many of Parker’s competitors do sell CBD drinks, Gancedo noted — on the floor, on the counter, “everywhere.”
“Our customers, we tailor to soccer moms and ‘Bubba’ and everybody else,” he said. “The one thing that you do not want is you do not want to upset mothers. They’re our base customers, and we want to make sure that we’re doing things responsibly.”
Parker’s has seen huge success with its delta-8 products, which are considered to have many of the same psychoactive effects as tetrahydrocannabinol (THC) — albeit at lower levels.
“It’s a bit of a gray area,” said Brightfield Group’s Schau. “But I would say, generally, (delta-8 and CBD) are competitors.”
The convenience channel in particular has experienced significant disruption of CBD sales thanks to delta-8.
“Oh, it’s transitioned from CBD to delta-8, 100%,” Gancedo confirmed. “We went from selling, let’s say, $40,000 (a week) on CBD, and that’s just all transitioned to delta-8. It’s the same consumer, just transitioning.”
The good news is that sales keep growing as more and more customers learn about delta-8, mostly through word of mouth.
“You can see the sales picking up week after week after week. So you know the people who are buying it are talking and telling people, and they’re telling people, and so on and so on,” Gancedo said. “What we’ve learned and what we’ve seen is, the higher the milligram, the higher the potency, the more it sells — regardless of the price, too. … We’re changing up the whole entire lineup within a two-month period because we see the potential of what these higher-milligram delta-8 gummies and these vape products can do.”
Of course, some states have banned or restricted delta-8 sales, and potential FDA regulation is looming.
“I absolutely think regulatory adjustments or addressing of delta-8 could impact that market,” said Schau. “That probably is the biggest risk to delta-8 sales. Although, they’ve been allowed to go on for quite some time now. It’s not really clear how long that’ll continue or if it’s going to go unhindered.”
For now, Gancedo is catering to customer demand for delta-8, until rules and regulations require retailers to change course.
“We’re trying to sell as much as we can right now, and then we’ll transition to whatever the next big thing is,” Gancedo said. “That’s what we have to do here in the convenience store industry.”