Too Much Competition Has Caused A Massive Drop In Sales For Many CBD Companies

Sales were soaring for most CBD companies up until right around the time the pandemic started in February of 2020. Then sales started falling apart for many companies. Part of the sales drop was initially attributed to people staying home and not shopping at retail locations. But there was a bigger issue at work having to do with competition, especially considering that most CBD sales were probably taking place online.

In the beginning, sales of CBD products were soaring for the small handful of companies that offered these products. Initially, there was some concern over the legality of the products so many potential companies stayed away, as did virtually all of the national retailers. To this day, CBD is not sold on Amazon or in Whole Foods. As time went on, those legal concerns diminished and new companies sprouted up like weeds… please excuse the pun. Sales continued to soar as public acceptance embraced the new products. It was a giant gravy train for CBD companies for a couple of years.

The early companies offering CBD mostly offered simple CBD products that were available as an oil, called tinctures, which would be consumed by applying a few drops of the oil under the tongue. Later, the early companies expanded to offer CBD pills in either softgels or capsules form. One of these pioneering was CBDPure, a company that offers pure CBD as a tincture or capsule.

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As time went on and sales continued to soar, more and more companies were created and day-by-day the market got more and more crowded. In an effort to differentiate themselves from one another, companies started offering adulterated CBD products. So, instead of just a simple CBD oil in a carrier liquid, these clatter entries into the marketplace started adding various ingredients and flavorings in an effort to set themselves apart from the competition. One of those companies was Garden of Life, a well-known nutritional supplements company that makes a wide variety of popular products. The Garden of Life CBD products are a good example of CBD products with many different ingredients. Some view the amount of ingredients as confusing and unnecessary. But, this is how companies do marketing. They try to make their product more appealing than the competition’s by doing something different. For the consumer, it all gets very confusing. Many buyers seem to want to stick to the basics and keep it simple with a basic CBD oil or capsule with no added unnecessary ingredients.

An extraordinary amount of new CBD products from an onslaught of new companies have divided up the pie in too many ways. At the market peak in 2020 there was an astounding 3,500 CBD companies vying for the same customer base. In fact, new CBD companies are being created even now. 

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Although the CBD consumer base is still expanding, there are simply too many CBD companies going after their business to the extent that CBD companies are unlikely to enjoy the market share they once enjoyed. So, it seems reasonable to assume that a market shakeout is coming. Likely, many CBD companies will fail in the next year or so, especially as some of the big players in the food, beverage and supplements industry enter the market and divide the pie up even further.

Johnny Thompson

Johnny Thompson is a senior reporter for Generator Research in Los Angeles, reporting on technology, business, finances, and more. He previously worked as a reporter for the Wall Street Journal and got his start at newspapers in New York, Connecticut, and Massachusetts.

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