No one knew what to expect when the coronavirus pandemic hit U.S. shores in early 2020. Even the world’s experts gave us little insight on how long the pandemic would last and what kind of rippling ramifications we could expect in the professional world.
As shutdowns and layoffs tore through the U.S. economy, the hemp industry was hit with surging sales in some areas and plummeting revenue in others. Now that we’re nearing the light and the end of the tunnel, what can we glean for the future outlook of hemp on the other side of the pandemic?
Pandemic anxiety drives demand—but not in retail
Before the 2020 coronavirus pandemic, hemp extract oil retail stores dotted the landscape across the U.S. These stores took on all kinds of identities, styled after natural medicine, cannabis culture, vaping, or organic foods. Unfortunately, once the shutdowns began, hemp extract oil specialist retailers were largely deemed as “non-essential.”
While some retailers were able to recoup a portion of their losses through curbside pickup, many struggled to make ends meet through the shutdown.
With specialty retailers closed during shutdowns or for good, the average hemp extract oil user pivoted to two major venues: online and large retailers.
Booming demand in online Hemp Extract Oil Sales
According to a study in July 2020 by Brightfield Group, 45% of hemp extract oil users moved to purchasing their hemp products online after the pandemic shutdowns. Sales during the beginning of COVID-19 were fueled by anxiety, sleepless nights, and general life stress, especially among millennials.
However, with the market largely saturated, this pivot to online only drove success for certain key groups of hemp players—companies who were already well-established in online sales, pharmaceutical companies, supplement brands, and those with creative ways to drive industry innovation.
In the end, 2020 and its aftermath is expected to see up to 45% of small hemp extract oil brands go under in what the Brightfield Group refers to as a “mass extinction,” but it’s true impact is yet to be fully seen.
Hemp and Hemp Extract Oil Find Some Life in Major Retailers
The grey area that hemp extract oil exists in made major retailers uncomfortable during the meteoric rise of the industry. But now, with new clarifications to the U.S. Farm Bill, hemp extract oil began to find a home with major retailers starting in 2019.
During the pandemic, small brands have struggled to find their space on major retail shelves. With tradeshows halted and retailers focused on keeping their staff safe and stores stocked, it seems that innovative hemp extract oil products may have to wait a bit longer before finding their place in familiar storefronts.
In the meantime, major brands are finding their footing with the general public in these major spaces with not only tinctures—in fact, topicals, beauty products and gummies are far more likely to make it into a shopping cart.
Demand Drives Hemp Innovation
With the web market saturated and major retailers feeling the crowding pinch of major brands competing for space, innovation will be the major driver in hemp. Even with a huge shift in hemp extract oil brands, the industry is quite saturated. Instead of focusing on hemp extract oil or cannabinoids alone, we’re seeing a change in mentality. Companies that succeed are no longer simply a hemp extract company, but instead a wellness company or a beauty company that happens to feature hemp extract oil.
This is not only because of the massive amount of competition but also due to limitations in online marketing.
When advertising or selling products online, hemp extract oil companies are limited on the health claims they make. They also struggle with many hemp extract oil products sharing similar effects, ingredients, and visuals.
This drives a need for small companies to innovate their online approach in order to survive.
We’re seeing companies differentiate their products by combining them with popular health or nootropic supplements for new and creative effects. Other companies are investing heavily in interesting or convenient packaging that makes their products easy to use. Hemp topicals are easy to market, as they aren’t as limited by online advertisers and are more easily trusted by consumers.
The biggest winner of all though falls in the edible category. Candies and gummies are the most popular ways for people to try or buy hemp extract oil products, though it seems like the food and beverage category that is currently blossoming will blow up to new heights as the pandemic eases.
Cannabis Brings an Uptick in Customer Acceptance
Cannabis’ reputation has been steadily rising through legalization for years now. Hemp Extract Oil and Hemp have always struggled with existing in the legal and stigmatized shadow of cannabis. Fortunately, during the COVID-19 pandemic, cannabis dispensaries and processing facilities were deemed essential businesses.
While the same couldn’t be said for hemp extract oil companies, much to the frustration of specialty store owners, this could prove to be useful for the hemp industry in the long term.
Cannabis being considered essential legitimized it in a lot of people’s minds who may have previously only seen it as a recreational drug.
As cannabis continues to gain the trust of the people, so too will hemp and hemp extract oil.
The New Hemp Consumer
Early adopters of hemp extract oil and hemp have largely been male and relatively knowledgeable about the industry. During the COVID-19 pandemic, however, we’ve seen a huge uptick in a newer demographic that is largely female, relatively affluent, and either retired or working full-time.
These new consumers tend to be a little less savvy about hemp in general and require a bit more education. These buyers tend to be curious and appreciate guidance about full spectrum vs. broad spectrum, THC levels, product format, and cannabis.
While these buyers are often heavily swayed by family, friends, and even healthcare providers, they’re also excited to try new formats and are most interested in finding something effective and affordable.
Hemp Beyond Cannabinoids
Finally, let’s look to hemp growers. During the pandemic, as people have thought more about their health and learned to cook more at home, there has been an uptick in demand for hemp products outside of cannabinoids.
Cooking products and nutritional hemp seeds, as well as hemp fiber, have all seen growth in demand.
Future of hemp
The future of hemp, especially as cannabis finds its footing and the hemp extract oil market matures, is bright. The most successful companies, regardless of it there is a pandemic or not, are ones that keep an ear to the ground, pivot when necessary, and aren’t afraid to innovate.
If you are in the hemp industry, look for creative ways to present your product that differentiate your tinctures from the pack. More than the pandemic, market saturation and emerging large brands are the hurdles to jump this year. Look for the possibilities in hemp beyond cannabinoids and find new or exciting ways to incorporate this beneficial plant into health or beauty products.
If you’re in the hemp industry, how did you fare during the coronavirus pandemic? Did you see an uptick in new sales or customers? Did you pivot to e-commerce or did your retail sales rebound?