Convenience store operators across the U.S. increasingly are stocking cannabidiol (CBD) products on their shelves.
These businesses are tapping into this market to boost revenues and attract canna-curious customers — an effective strategy in the short and medium term as the Food and Drug Administration (FDA) continues to drag its feet on any meaningful regulatory updates.
According to Brightfield Group’s Q4 2021 Evergi Wellness survey, which identifies trends and consumer behaviors across the wellness, tobacco and beverage-alcohol (bev-alc) spaces, 14% of U.S. consumers have tried CBD in one form or another in the last six months.
This growing adoption of CBD, or at least growing willingness to try CBD, is translating into a booming market. In 2021, CBD sales generated $4.7 billion in revenue in the U.S., according to Brightfield Group market sizing data. That figure is expected to balloon to nearly $5.8 billion in 2022, and $12 billion by 2026 (the end of Brightfield’s current forecast period).
While still relatively small compared to other distribution channels, c-stores nevertheless represent a high-growth channel for most CBD brands, as most producers still are looking to build brand awareness. Convenience and gas station sales of CBD products topped $170 million in sales in 2021, and are set to grow nearly 30% to $221 million by the end of 2022, before more than doubling to $449 million by 2026.
Drinks and gummies are some of the most popular CBD product formats in the industry, and that is mirrored in c-stores. Gummies are popular due to being a familiar format — vitamin-packed chewables have been available in pharmacies and large retailers for years. Drinks also have been a mainstay in the functional ingredient space, making consumers comfortable turning to beverages to treat issues and promote general health and wellness.
Drinks are projected to contribute $44 million to c-store revenues in 2022, while gummies are set to generate more than $42 million over the course of 2022. CBD gummy sales are likely to more than double in size by 2026 to more than $93 million. Drinks are the real growth driver: CBD drink sales are projected to more than triple to $151 million by the end of Brightfield’s current forecast period.
Less Alcohol, More CBD?
C-store operators looking to capitalize on CBD’s growing adoption have a few options. One interesting way to position CBD products is as a substitute to alcoholic beverages.
According to Brightfield’s Evergi data portal, more than 10% of consumers looking to reduce their alcohol consumption are turning to CBD products. For context, a similar portion is replacing alcoholic beverages with non-alcoholic beer, which is a $20 billion market according to Future Market Insights.
Positioning cannabis drinks alongside non-alcoholic beverages can build product awareness and provide further options to consumers looking to cut back their alcohol consumption (as well as recapture potential capital flight from lost alcohol sales).
Education remains a major hurdle to product trial and adoption. C-store operators, thanks to the volume of people they service every day, have a great opportunity to fill that education gap and direct curious consumers to CBD products. One entry into that conversation can be through highlighting CBD products’ health and wellness benefits (within what is legally allowed). These conversations can help build consumer trust in CBD products and brands that c-stores carry.
Positioning CBD as a wellness product could yield strong returns for c-store operators, as many consumers already are familiar with wellness trends and concepts. According to Evergi data, 47% of U.S. consumers used vitamins and supplements in both Q3 and Q4 2021.
Pet CBD products make up a large portion of total CBD sales. In 2022, these products are expected to generate more than half a billion in sales before nearly doubling to $910 million by 2026.
However, c-store sales only contributed $1.8 million to the category in 2022, a figure expected to less than double by 2026 to $3.4 million. That doesn’t mean the category should be avoided — c-store operators can change that trend by stocking more pet CBD products and learning and communicating the potential benefits of CBD for their customers’ pets. This education could ultimately translate to higher sales of human CBD products as customers familiarize themselves with the cannabinoid.
There remain plenty of opportunities for c-store operators to further delve into the CBD market, whether for humans or their pets. C-stores see a wide range of consumers every day and, as such, can play an outsized role in educating consumers and building awareness around CBD.
Brian MacIver is a senior insights manager for Brightfield Group, a consumer and market research company covering the cannabis, CBD and wellness industries.