CBD use is on the rise across demographics – but Gen Z in particular presents a huge opportunity. Backed by our extensive insights and knowledge about this generation, we explore that potential and how to harness it.
Generation Z is entering adulthood at a time when cannabis is being legalised, decriminalised, or debated in more countries than ever before. Gen Z also happens to be the world’s largest consumer cohort. It’s why we wrote a book about them – a vast piece of research covering how Gen Z engages with money, education, food, technology, family and their aspirations for the future. That work is more important than ever today, when everything from the way young people consume news to what they spend their free time doing informs how new products are branded, packaged, delivered and sold to the first generation of true digital natives.
Their every move, will also inform a future legal cannabis market.
In the US, legal sales of cannabis topped $10 billion in 2018 and Gen Z is twice as likely to use cannabis than the national average. Widespread legality is still a way off, but in the interim brands have been experimenting with legal cannabis compound CBD. Derived from hemp, but lacking the psychoactive properties of cannabis (found in THC), CBD is considered a safe bet for experimentation. It has been embraced by the health and wellbeing industries, which espouse its ability to improve cognitive function and reduce anxiety and inflammation. There are no definitive studies indicating how much needs to be consumed to achieve a desired impact, however, so it’s common for consumers to be confused about what to expect from a CBD product.
It’s clear more needs to be done to educate the public if CBD – and one day cannabis – is to be commercially successful in the long term. That awareness is already growing, though. According to the Cannabis Trades Association in the UK, CBD users doubled in 2019 from 125,000 to 250,000, and in the US 20% of adults younger than 30 say they use CBD.
So, what do companies need to know before heading down the CBD rabbit hole? Our team has extensive experience with the cohort, and has gathered the top 5 insights you need to know ahead of any CBD launch:
CBD is a brand new world – introduce it
Not enough people know and understand what CBD is. It is the responsibility of brands to educate Gen Z on the correct definitions, to both instill trust and raise awareness about its functionality. Young people are concerned it could impact their concentration or prevent them from going about normal, daily activities. They have no idea what effect different concentrations or quantities will have. And in markets where CBD and THC are both legal, there remains great confusion around the different impacts of each compound. CBD needs to be completely differentiated and distanced from cannabis – which is valued for a very different kind of function. While a seltzer-drinking Gen Z is not keen on mixing alcohol with cannabis, CBD and low-alcohol beverages have potential – if the difference is made clear.
When big brands promote CBD, Gen Z will follow
Many global brands are waiting for someone else to enter the sector and remove barriers. But it’s not until more big brands enter the space that awareness, and then trust, will follow. When a trusted brand attaches its name and reputation to CBD, awareness and trust in CBD’s safety grows. Pukka’s hemp tea, for instance, clearly markets the natural benefits of CBD in a way that fits with its known, trusted brand story. A big brand or influencer instantly provides greater awareness, education and trust. We have already seen how celebrity opinions can wipe millions off a company’s valuation. Famously, Snapchat’s stock lost £1 billion when Kylie Jenner tweeted she wasn’t a fan anymore, and when Kim Kardashian held a CBD-themed baby shower in 2019 investors were closely watching stocks including Aurora Cannabis.
Emphasise CBD’s safety credentials
We know from our own research that Gen Z is cautious, and demands a sense of security from brands. This is more important than ever when it comes to a relatively new substance like CBD. A large proportion of Gen Z still see CBD as simply coming from an illegal substance that gets you high. They question its impact, and worry it will make them feel out of control. We have already seen this behavioural trend lead to the growth of low-alcohol or alcohol free alternatives – the products provide excitement and flavour, while keeping young people engaged in the world around them and fully in control. CBD brands need to put Gen Z’s mind at ease.
Make CBD a hero ingredient
CBD’s value lies entirely in its natural function, not its flavour. This is a novel attribute for a new ingredient, and it’s imperative brands highlight that correctly. We have already seen this in the snacking industry, where hero ingredients such as chicory root and chia seeds are brandished front-of-pack for their functional nutritional content, not their flavour. At the same time, health – and in particular mental health – is a huge priority for Gen Z. CBD’s functionality taps into that need to de-stress and relax, and the value Gen Z places in healthy ingredients that directly improve their wellbeing. According to a Gallup poll, 40% of CBD users utilise the substance for pain, 20% for anxiety and 11% for sleep. There is a huge potential to win here, if brands provide clarity.
The power of nature
In a world of more conscious consumerism, the fewer chemicals brands use, the better. This is of course, great news for CBD. The beauty industry is already reaping the benefits of going natural, and Gen Z has been driving the success of brands that focus on both functionality and natural ingredients (Glossier, Drunken Elephant) by highlighting hero ingredients such as vitamin C and charcoal. This is the sweet spot where CBD can make its mark. The Body Shop has been successfully selling hemp-infused beauty products for years – a prime example of a trusted brand known for its natural ingredients succeeding in the CBD space.