The word hemp seems to be everywhere. While the market has seen remarkable recovery since the 2020 crash, the industry is still finding unique niches to diversify. Niches such as fiber, minor cannabinoids, and innovated products have gained greater influence over the industry. Once grossly overlooked, these industry paths has seen outstanding growth in just a short amount of time and is projected to keep expanding.
According to Grand View Research, the hemp industry increased from a $925M to an $1124M profit margin just from 2020 to 2021. Based on these numbers, the US Market CAGR for 2020 – 2030 is an anticipated 21% growth. While CBD has seen a comeback since the pandemic, other niche sectors have helped this industry stay afloat.
Similarly, Business Wire projects that the global industrial hemp market will reach $17.4 Billion by 2027. Analysts site shifting customer preferences, the different applications of hemp oil, and the growing beverage industry as playing factors in growth projections. However, they also project that unclear regulations and a “Deficiency of processing facilities and planting & harvesting equipment” as having an impact on industry growth.
Additionally, consumer demand for minor cannabinoid products derived from hemp have been a massive driving force for the industry. During the hemp market crash caused by factors like the COVID-19 Pandemic, brands diversified into minor cannabinoid niches to help stay afloat.
According to Grand View Research, “The U.S. minor cannabinoids market size is expected to reach USD 26.2 billion by 2028, at a compounded annual growth rate (CAGR) of 20.1% over the forecast period.” As it stands, the minor cannabinoid market was reported to already hit $7.3 Billion in 2021.
While the hemp industry is growing and is projected to continue to get larger over the next decade, the industry will continue to face hurdles. Counterfeit products infiltrate the market, driving down prices and creating distrust with consumers. Unclear regulations that change state by state create pitfalls for both consumers and brands alike.
Brands can help combat these pitfalls by taking proactive measures in consumer education and brand transparency. Establishing communication and providing educational content promotes goodwill between brand and customer while providing valuable marketing content that can be upcycled over time. Educational content can come in the form of blog posts, social media campaigns, videos, and online lectures.
Among consumers, millennials and Gen Z are at the top of the consumer list. According to CBD Choice, younger consumers are more likely to try CBD products, but middle-aged individuals are more likely to use CBD consistently. According to their research, the majority of individuals use CBD for pain or inflammation purposes, while anxiety/stress management and sleeplessness trail as a close second and third most popular reasons for usage.
These demographics coupled with the above industry market predictions point toward a younger consumer base taking more charge within the global economy. As Gen Z and millennials gain more buying power, they will continue to influence the market. And while some may claim they are ruining the diamond market, it is clear they are helping the hemp industry grow and thrive.
No matter how you look at it, the hemp industry is recovering and growing at a rapid rate. This growth can be attributed to several factors such as consumer education and the niche sectors within the market. While the industry is presented with pitfalls, brands can mitigate them with proper planning, communications, and transparency. Understanding the consumer base for hemp products also plays a contributing factor in industry growth. While focusing on building a healthy relationship with consumers, brands should also know who their target audience is and how they are helping drive this unique industry forward into the future.