In nascent CBD coffee market, first-time exposure is ‘make-or-break,’ Nielsen says

With consumer interest in hemp-derived CBD showing no signs of waning, a growing number of companies are looking to one particular consumer product good as a conduit for cannabidiol: coffee.

Around 70% of the U.S. adult population consumes coffee in some form, and 14% of regular ground coffee drinkers who are interested in a CBD-infused coffee claim to have already tried one, data from market analytics giant Nielsen Global Connect shows.

This means that 86% of people interested in trying CBD-infused ground coffee, single-serving coffee pods or cold brew beverages have yet to do so.

Only 3% of the US adult population surveyed by Nielsen in September of this year have said they would consider using a CBD infused ground coffee or whole bean product in the next 12 months, but more than one-third of those surveyed regularly uses non-CBD ground or whole bean coffee.

“This means there is still significant growth to be had in bringing new customers into the hemp-CBD (coffee) market as a whole,” Nielsen’s Rick Maturo told Hemp Industry Daily.

“Relative to other categories, there are still lots of coffee drinkers who are interested in a CBD-infused coffee with no first-hand experience,” Maturo said. “This means that for brands breaking into the CBD coffee space, there’s lots of room to garner potential loyalty to a given brand.”

Brand loyalty is a hallmark of the typical coffee consumer, who will commit to a brand and a coffee routine that fits with his or her lifestyle, taste preferences and budget.

In trying to disrupt that brand loyalty and routine, CBD coffee makers need to offer a product that meets or exceeds consumer needs and expectations in at least one of those three categories.

Retention: A tale of two coffees

The selling point is two-fold for New Hampshire-based Vera Roasting Co., whose flagship product is coffee infused with resveratrol, a powerful antioxidant found in the skins of red grapes that has been linked to improved cardiovascular function and neuromuscular health.

Vera has used its resveratrol-infused coffee as the base for a wellness blend coffee infused with CBD isolate.

The health benefits of resveratrol, combined with the smoother flavor profile compared to other CBD-infused coffees, gives Vera Roasting Company’s’s CBD coffee an edge, CEO Tom Polcaro told Hemp Industry Daily.

“One of the side benefits of the infusion of the resveratrol is it actually helps in making the coffee smoother from a mouthfeel standpoint,” Polcaro said. “We continually get feedback from people who try it that this is the best tasting CBD coffee that they’ve ever had.”

That contributes to higher conversion rate from a first-time CBD-coffee user to a repeat consumer.

“Our retention numbers, once we get a client, is very, very high,” Polcaro said.

Laura Fuentes, CEO and co-founder of Florida-based CBD retailer Green Roads, said the company’s hemp-flower infused coffee has also been successful when it comes to retention, citing positive feedback and enthusiastic, loyal customers.

“We have repeat customers that buy it every month and they love it and they give it to their friends and family,” Fuentes said.

Despite the positive feedback – and being cited by Nielsen as one of the top 10 CBD-infused coffee brands in the United States – Fuentes doesn’t see the same potential for growth as she does with CBD gummies.

“I don’t see a lot of movement out there with the coffee,” Fuentes said. “People kind of have their routine in the morning and they don’t like to disrupt it. It’s a steady market, but I wouldn’t say it’s booming.”

The lesson? Convincing a coffee drinker to veer away from that brand and routine to try something new can be a major challenge and a major opportunity, and it is incumbent upon hemp-derived CBD coffee makers to make the first taste experience a positive one, Nielsen’s Maturo said.

“First time exposure to a CBD coffee product with this audience could be a make or break for the category, but assuming that first time experience is satisfactory, brands playing in this space reaching first time CBD-coffee drinkers could do well in generating loyalty and repeating purchasing,” Maturo said.

Marketing strategy

Vera Roasting Co. has had success using social media influencers raise brand awareness among younger consumers who attach less stigma to hemp-derived products, Polcaro said.

That stigma can be hurdle in attracting coffee drinkers in the 40+ age group, Polcaro said, but the legalization of hemp cultivation in the 2018 farm bill and consumer education has led to increased curiosity and a willingness to experiment with low-THC CBD products among that demographic.

The lifestyle changes that accompanied the COVID-19 pandemic mean that CBD-infused coffee makers might want to focus more on the needs of a home-bound consumer who is spending less time out and about.

“I think the opportunity is for organizations looking at how are they going to get that product more to that home consumer,” Polcaro said. “More consumption is happening in the home environment versus the business environment as we’ve gone through this crisis.”

Monica Raymunt can be reached at [email protected].