CBD: The ultimate celebrity side hustle
The CBD industry is one of the fastest-growing industries in the US, valued at $5.18 billion in 2021. It’s expected to expand at a compound annual growth rate (CAGR) of 16.8% from 2022 to 2030, so it’s no wonder celebrities and athletes want a piece of the CBD pie.
According to Steven Hoffman, Managing Director of Compass Natural, professional athletes and entertainers at the highest level are some of the biggest fans of CBD. “Many have become users of CBD products and outspoken advocates, touting the hemp extract’s reported benefits related to recovery, the stresses of travel, and other unique physical and mental demands of performing at the top of their game.”
With CBD partnerships like Alex Morgan, Carli Lloyd and Rob Gronkowski with CBDMEDIC, Martha Stewart with Canopy Growth, Megan Rapinoe with Mendi, Nicole Kidman with SeraLabs, celebrities are seizing the opportunity.
“The increase in parasocial relationships caused by social media giving everyone more access is a Catch 22 for celebrities. It’s this love and trust for famous people, combined with the ease in launching and marketing supplements that has created a surplus of celebrity-backed CBD brands,” explained Joshua Schall, CPG industry strategist at J. Schall Consulting. “That doesn't guarantee success though in the CBD market, as the ability to readily articulate and aestheticize one’s defining personality traits is a skill that will become increasingly important by the day. That being said, I truly believe that the right celebrity, used in the right way to promote the right product, can be a truly powerful brand asset in today’s CPG market.”
One example of a celebrity-backed CBD brand is Kadenwood, a company aimed at shaping CBD into a trusted and safe mainstream wellness category. Kadenwood developed a product line featuring current and former professional athletes called LEVEL SELECT. The line was designed in partnership with professional athletes and developed by doctors.
Erick Dickens, Co-Founder & CEO of Kadenwood, said consumers’ top concerns are quality, efficacious products and price. “We have one of the most comprehensive Quality Assurance departments in the industry with many certifications demonstrating our high standards. Also, we are on the very forefront of innovation and that is why we can produce and supply CBD more efficiently and more economically. We save on cost and manufacture a product that is higher in potency than other brands. We bring those savings directly to the customer by lowering our prices on the shelf. In other words, we offer the most potent CBD products at the lowest price to the consumer and that is what they care about most, even more than the integration with an athlete.”
“The leading CBD brand by market share, Charlotte’s Web, is very proactive in supporting research into CBD and human health. Only in recent years, since hemp was legalized in the 2018 Farm Bill, have we seen research emerge about the benefits of cannabidiol (CBD) and the many other cannabinoid compounds found in the cannabis plant,” said Hoffman. “I believe the industry would benefit from additional research focused on athletic recovery, performance anxiety, etc., but we are still in the early stages of market acceptance of a plant that suffered 80-plus years of prohibition.
“Consumers absolutely care about the science behind the products they are taking,” noted Kevin Yan, MSc, Director, Certifications and Analytics, Nutrasource. “Consumers want products that are manufactured and handled in the highest quality way possible to ensure the products they consume contain only what is listed on the label and that contaminants such as pesticides and heavy metals are eliminated.”
Does a big name = sales?
One of the most cited studies looking into the economic value of celebrity endorsements is a study from 2012 where Elberse et al found about 20% of all advertisements feature a celebrity and that endorsements increase trust. But what about the bottom line? The Harvard researchers concluded that brands can experience a 20-40% increase in revenue by using a celebrity endorsement.
“Celebrity, and in particular athlete endorsements are big business,” Elberse wrote. “In this study of athlete endorsements, we find there is a positive pay-off to a firm’s decision to sign an endorser, and that endorsements are associated with increasing sales in an absolute sense and relative to competing brands.”