In a Q&A with BusinessCann Eoin Keenan, CEO & Co-Founder, Goodrays, says after seven years working in the industry he expects 2022 to be a break-through year
BC: What developments should we expect to see in the European cannabis industry in 2022?
EK: I’ve been working in the cannabis and CBD industry for seven years now. I’ve worked across multiple markets and multiple sectors from policy and innovation to media and events.
And without fail, every turn of the year we hear about ‘mainstreamisation’ and ‘normalisation’ in the cannabis and CBD market. Now, for once, I genuinely believe it.
From a consumer brand perspective, we believe the best way to bring cannabis to the mainstream is through the commercialisation of CBD. As with any consumer brand, the key to that process is distribution, a word we focus on daily at Goodrays.
That means having access to trusted and high-quality cannabis-based products in your local grocer, your daily cornershop or in your local gym. This is the sign of true mainstreamisation, when the vast majority of the public are exposed to your products on a daily basis.
For the last year, we’ve been having those conversations in depth. Every major grocer in the UK is looking at the CBD-infused products category.
Amazon has launched an invite-only programme for the most compliant and high-quality CBD oils, CBD gummies and CBD drinks, which we’re delighted to be included in.
Airlines, gyms, petrol stations, pharmacies, clothing stores, hotels and even some of the finest restaurants in the country, are showcasing CBD on the menu. As a result, UK CBD brands are becoming increasingly desirable for foreign markets.
After distribution comes education. In 2022, the CBD consumer is going to be far more sophisticated and educated than they were in 2018. Through trial, error and brand education consumers are now beginning to understand what constitutes high-quality CBD, how much CBD they need to feel the effects and what the endocannabinoid system is.
We’ve seen this in action already, with higher dose products generating higher rates of sale than those with low doses (or worse, no doses).
Most new product launches in sophisticated markets are focusing on products with at least 20mg per serve and brands are beginning to learn that they need to take the consumer on an educational journey, offering clear FAQs, evidence bases and certificates of compliance.
Lastly, there will likely be further segmentation of the market in 2022.
The Novel Foods ruling, while well intentioned, has restricted the growth of smaller and less experienced CBD brands in the space.
Across the CBD drinks and CBD gummies market in particular, we’ve seen some of the smaller brands shutter doors early because of a multitude of reasons; lack of stability data, poor quality Novel Food applications or inability to raise capital in an unregulated environment.
What this leaves behind is a segmented market with two tiers; compliant and well-financed brands and a series of smaller less-compliant brands that will continue to sell direct to consumer but lack significant distribution.
BC: How did you see 2021 for the industry?
EK In a global pandemic environment, 2021 has been a challenging year for any startup brand. This is true five-fold for FMCG brands and ten-fold for CBD brands.
However, in the midst of the supply chain chaos, there have been momentous strides forward for the category. Increased compliance and regulation has separated the wheat from the chaff, global distribution opportunities have increased market and brand potential and changes in the CBD consumer in a post-COVID environment has rapidly increased the growth of the wellness market.
We’ve spent the bulk of this year, and much of 2020, on compliance, working with manufacturing partners and third-party testers to demonstrate stability and safety within our range of CBD oils, CBD gummies and CBD drinks.
This has resulted in hundreds of pages of studies on stability testing, safety testing and dosing accuracy. As the market enters the next stage of development, this compliance work is providing a foundation for growth. We’ve been taking this data to the major retailers to understand the CBD category and set best practices for product admission.
This work has gone all the way up to the C-Suite of major UK grocers as the first ever cannabis-based products make their way onto grocery shelves.
From a strategic perspective, the basis of any good challenger brand is understanding the problem, the occasion and the consumer. Gathering this data and building a foundation for growth has been a key focus for 2021.
In a post-COVID environment we wanted to understand what health and wellness consumers really needed. According to Mintel, mental wellness was the most significant food and drink trend in 2021 and functional beverages are one of the fastest growing segments of the drinks market. Consumers were cutting down on alcohol and caffeine in a bid to curb anxiety and stress.
They were seeking products that offer wellness solutions to balance busy and stressful lives that help people manage anxiety and sleep, the most important factor in human wellbeing. These consumer trends have helped ramp up demand for CBD drinks, CBD gummies and CBD oils and given birth to a new category on shelves across the country.
At a more granular level, we wanted to understand what the CBD consumer needed from their product range. Most brands now know that the answer is education, but importantly, what form of education?
Consumers are looking for trusted brands with high-quality products backed by regulators and retailers. They want consistent doses in easy to measure formats that are widely available and well understood. They wanted clear and concise educational information on packaging, websites, in-store and online.
The best-performing brands in the space will do this well but to do so, they need to be well-financed. Building a category doesn’t come easy and it doesn’t come cheap.
Earlier this year Goodrays secured a multi-million investment from Private Equity, a range of successful founders and executives from finance, tech, FMCG and media, and some high profile celebrities. This has helped us ramp up to scaled production, bring on an experienced team of FMCG operators and increase distribution globally.