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Could alternative sourcing be the future of CBD?

Sales growth of food and drink products containing CBD has fallen drastically in recent years, largely due to regulatory and consumer acceptance issues. Some companies are exploring new sources, such as CBD made from the terpenes in orange peel.

Cannabinol (CBD) sales growth in the food and drink industry in the US fell off a cliff in recent years. Though sales of CBD saw a meteoric rise in 2018 and 2019, they have since declined drastically in 2020 and 2021, according to a report by the Nutrition Business Journal. In 2019, hemp-derived CBD growth peaked at around 90%, yet fell to negative figures in 2020 where it has remained ever since.

This downward trend in sales growth is set to continue, according to the same report, which predicts further stable declines each year in the foreseeable future. This is partly due to the fact that many leading industry regulators, including the FDA, have continually refused to regulate food and drink products containing CBD.

Regulation is stifling CBD market growth

The potential of hemp-derived CBD in food and beverage products has been a hot topic in recent years, with many companies eagerly investing in the ingredient in anticipation of a profitable future. Unfortunately, regulation (or the lack thereof) of CBD ingredients has presented itself as a common stumbling block for brands seeking to incorporate CBD ingredients in product formulations.

In yet another hit to the sector, on 26 January 2023, the FDA announced a refusal to regulate CBD products following a consumer petition calling for their approval to be marketable as dietary supplements. In a statement, the FDA’s principal deputy commissioner Janet Woodock expressed concerns about the long-term safety risks associated with the consumption of CBD.

“Studies have shown the potential for harm to the liver, interactions with certain medications and possible harm to the male reproductive system,” Woodock said.

Concerns were also raised regarding the effect of CBD containing products on children and pregnant women.

The FDA’s recent announcement could render the future of CBD as an ingredient in food and drink products even more uncertain, much to the disappointment of industry stakeholders.

CBD derived from alternatives sources could solve consumer acceptance issues

Despite the regulatory setbacks, there may still be hope for the industry. The European CBD market is expected to grow to €2.6 billion, with users of the ingredient reaching 50 million by 2026, a recent report by UK-based market research company, Prohibition Partners, found.

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The uptick in consumer interest in CBD products in recent years has led to a flurry of startups and industry players seeking to explore the possibilities of using CBD as a food ingredient, sparking innovation in the food industry.

To bypass barriers to consumer acceptance associated with cannabis-derived CBD, several companies are experimenting with CBD derived from alternatives sources, such as orange peel or hops. US-based CBD company Peels developed an oil which it claims is bio-identical to pure hemp-based CBD but is made from the terpenes found in orange peel.

Major flavour producer Symrise has produced a nature-identical, synthetically formulated CBD that is suitable for use as a pharmaceutical ingredient and as an immediate product for the development of new substances. The basis for the active ingredient, D-limonene, is derived from a group of terpenes and is a by-product of the orange juice industry.

In future, brands may benefit from growing consumer acceptance from millennial and gen Z consumers. In the US, Mintel data from 2021 shows that 17% of consumers are interested in trying hemp-derived CBD, compared to 26% of consumers aged 25-34.