Retailers rush in to capitalize on CBD skincare frenzy.
As the most hyped beauty ingredient of the past year, CBD may soon be poised to gobble up a sizable chunk of the conventional skincare industry, according to the research arm of Jefferies. The analyst firm recently noted that online searches for “CBD beauty” rose by 370% in the first two months of 2019. Based on their estimates, the CBD beauty and skincare industry on its own could potentially touch $25-billion in the next ten years, which would make up approximately 15% of the overall skincare market.
Once a beauty product for all-natural alternative lifestyles, the CBD health and beauty ethos has officially entered the mainstream (most of all, mainstream luxury). Kim Kardashian, for instance, announced last week that she would be having a CBD baby shower, while Martha Stewart is launching her own CBD line with Canopy Growth (TSE:WEED). It’s not all hype though: beauty experts and researchers say that there’s early evidence that CBD has several things going for it. First, the compound has shown anti-aging and antioxidant properties, with preliminary research demonstrating that CBD oil can help reduce visible signs of aging skin. It’s also anti-inflammatory, helping to soothe sensitive skin, while diminishing breakouts and redness.
In the US, however, CBD-based cosmetics still exist in a legal grey zone. This may soon change though as the FDA recently announced that it would be holding public hearings on CBD in May. Once hemp-based CBD is approved for use, the state-to-state confusion that has ensued should dissipate, allowing the market for CBD skincare products to flourish.
Luxury retailers are already ahead of the game, having dipped their toes in the waters earlier this year. One of the biggest upscale names to get into the CBD cosmetics has been Neiman Marcus, which announced in January that it would offer beauty products such as face balms, lotions, soaps, serums and masks in its physical stores and website. LVMH (OTCBB:LVMUY) owned Sephora has also added a curated cannabis-derived section to their stores which sports hemp seed facial oils as well as CBD body lotions. Finally, luxe specialty store Barneys New York got into the game this March by opening a cannabis-themed shop called “The High End,” at its Beverly Hills flagship store, which will sport the “Lab to Beauty” CBD skincare line. Barneys also announced plans to expand The High End to more locations soon.
In terms of suppliers, a majority of the top CBD skincare makers have been private labels such as Lord Jones, Josie Maran Cosmetics, Kiehl’s, Cannuka and Leef Organics, the CBD Skincare Company. One exception is Green Growth Brands, Inc. (CSE:GGB), whose Seventh Sense brand features CBD-derived beauty and personal care products such as skin lotion, body wash and lip balms. As a retailer as well, Green Growth is well positioned to capitalize on the skincare trend, and has begun to ramp up their focus on Seventh Sense. The company announced in February that it would launch a dedicated ecommerce site, as well a stand-alone shop in Lexington, Kentucky. GGB moved quickly after the signing of the 2018 Farm Bill by partnering with footwear retailer DSW (NYSE:DBI), which will start selling its products. According to its media release, almost 75% of Green Growth’s Seventh Sense products sold out in its stores in a 10-week trial period conducted by DSW last fall.
On the R&D side, The Yield Growth Corp (CNSX:BOSS) has been hard at work developing CBD skin care solutions, having recently completed initial testing for 10 new CBD-infused products, including four focused on skin care. Of course, the major producers of CBD should also stand to benefit. Tilray (NASDAQ:TLRY) and Canopy Growth have both ramped up hemp production operations, with Tilray acquiring world-leading hemp producer Manitoba Harvest and Canopy Growth setting up a large-scale hemp production facility in New York.