Cannabis in Beauty and Personal Care: Prospects, Opportunities and Challenges

November 2019

Beauty and personal care is a lucrative market for cannabis-derived products, with North America at the centre of booming demand. Its central narrative of functional wellness makes it a long-lasting trend. However, significant challenges of regulations, marketing, safety, market entry timing, and consumer education are intertwined and may hinder growth. The segment will become more sophisticated as it gets transformed by hemp, an emerging body of research, and beauty-adjacent industries.

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Key Findings

Cannabis-derived beauty and personal care is growing fast, especially in North America

Beauty and personal care is a lucrative market for cannabis-derived products, with North America at the centre of a boom for cannabis beauty and personal care. Although there are some developed markets, cannabis-derived beauty is still new in much of Western and Eastern Europe, and Latin America while potential exists in Asia Pacific and Australasia.

Wellness is at the centre of cannabis beauty’s narrative

Cannabis-derived beauty has the potential to be a long-lasting trend. With health and wellness and naturals at the forefront of growth, brands are positioning products as a cure-all “super ingredient”, emphasising potency, high protein, medicinal value and functional wellness. Its ties to prevention/treatment of certain issues as the crux of its appeal.

Skin care leads opportunities out of other categories

The biggest opportunity is in skin care, followed by hair care and bath and shower, particularly among therapeutic and dermocosmetic spaces that respond well to current holistic and health-aligned beauty trends of repair, protection and therapy.

Challenges are intertwined and may hinder growth

The segment’s greatest challenges are regulations, marketing, safety, timing, and consumer education. If challenges are overcome, cannabis beauty can have broad consumer appeal for scientific, natural, clean beauty, mass, and premium segments.

Cannabis beauty and personal care will become more sophisticated

Cannabis beauty is in the early stages of disruption and will be transformed by hemp, other emerging cannabinoids, and influence from other CPG industries and beauty-adjacent spaces, such as spas. Its longevity hinges on two industry approaches, either using lack of/unclear regulation as a way to gain market share or contribute to solving the challenges that hinder growth of cannabis-derived beauty.

 

Introduction

Scope
Key findings
What is cannabis?
Hemp versus marijuana: what are the differences?
Industrial hemp: what is it used for?

State of Play

A wide variety of fmcg industries are incorporating cannabis
Beauty and personal care is lucrative for cannabis-derived products
Canada, US are the top two markets for cannabis opportunities…
…but prospects depend on regulations in North America
The cannabis beauty and personal market is witnessing fast growth
The cannabis beauty and personal care market is a highly fragmented
Several drivers contribute to growing global interest in cannabis beauty…
…but the medical community’s opinion will weigh heavily in perception
Despite its popularity, some players hesitate to enter cannabis beauty
Cannabis beauty has the potential to be a long-lasting trend
Its ties to prevention/treatment of certain issues is the crux of its appeal
Brands are positioning CBD as a cure-all “super ingredient”
“THC-free” is a growing claim, while “cannabis oil” is loosely used
Adaptogens elevate sophistication, efficacy in cannabis beauty
Neurocosmetics is an emerging arena for CBD beauty
Cannabis beauty still in the early stages to disrupt the overall industry

Opportunities and Challenges

Regional overview of cannabis-derived beauty hotspots
Positioning and regulations vary in Europe where CBD beauty is still new
Opportunities in Uruguay, but gains are small relative to its neighbours
Regulation changes halts CBD potential in Mexico, for now
A cannabis lobby emerges while foreign investment in LatAm rises
Australia is a wellness hotspot that sets the foundation for CBD demand
Asia Pacific market for CBD beauty has potential, especially in skin care
Size of prize is significant; investment occurring throughout supply chain
Unclear regulatory direction not a hindrance to US retailers, brands
The biggest opportunity for cannabis-derived beauty is in skin care
Out of top cannabis product categories, skin care price hike stands out
Cannabis beauty challenges are all intertwined
Challenges may hinder growth in largest cannabis beauty market, the US

Outlook

If challenges are overcome, CBD has broad consumer appeal
In the near-term future, hemp will take centre stage
Cannabis beauty’s emphasis on natural, locally sourced will resonate
Sophistication to take the form of ingredients and delivery format
Acquisitions, revenue streams from hotels and spas will influence beauty
The longevity of CBD beauty globally hinges on two approaches
Key takeaways

Appendix

Overview of Beauty Survey: product and brand coverage
Overview of Beauty Survey
About Via Pricing from Euromonitor International
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