Will CBD beauty go global? - Glossy

This week, I gauge if international markets are just as crazed for CBD beauty as the U.S.

At the same time, Dr. Kerklaan Therapeutics, a line selling individual CBD skin, sleep and PMS products for $39.99 to $68, has experienced great demand from U.S. retailers, according to Dr. Andrew Kerklaan, founder and CEO. The brand debuted in fall 2017 and added 1,000-plus retail locations in 2018, including 38 Lord & Taylor stores and 87 Dillard’s stores. In step with its expanded distribution, Dr. Kerklaan Therapeutics is expecting to increase revenue by 600% in 2020.

While the popularity of CBD beauty and wellness products in the U.S. is well documented — according to BDS Analytics and Arcview Market Research, CBD sales are expected to top $20 billion in the states by 2024 — the draw in international markets is less clear. The U.S. market accounted for more than 78% of the global CBD market in 2018, with Europe following at just under 12%. Sales in other regions were negligible. This suggests that the current U.S. green rush just does not exist globally.

However, Dr. Kerklaan Therapeutics moved into the U.K. in November with Selfridge’s (two stores) and John Lewis (one location), and online through Feelunique and Look Fantastic’s SkinStore. The company also entered South Africa in July through Goodleaf. In 2020, Dr. Kerklaan Therapeutics will roll out to two more Selfridge’s stores via the retailer’s standalone beauty concepts and the entire John Lewis fleet of 51 shops. Kerklaan said he is also actively trying to bring the brand to South America and Asia next year.

“The eyes of the world have been on the U.S. for CBD consumer goods, but we see international markets as very much a part of our expansion,” he said.

Abroad, cannabis regulation is changing rapidly, but significant legal confusion still exists. South Africa, for its part, just loosened its laws in May, and in the U.K., CBD is legal; however all CBD products sold must come from European-derived hemp and contain less than 0.2% THC.

Dr. Kerklaan Therapeutics is included in a limited cannabis assortment at both Selfridge’s (which also includes Kiehl’s concentrate that contains cannabis sativa seed oil, not CBD) and Feelunique. Though British luxury retailer Space NK launched CBD beauty in the U.S. in August, that assortment is not sold in the U.K. due to legal limitations and lack of a customer groundswell, said Noah Rosenblatt, Space NK president, North America. Rosenblatt said it is something the company will continue to evaluate. Meanwhile, Lord Jones, which is often regarded as the CBD brand to watch is still only sold in the U.S.

For its European and South African distributors, Dr. Kerklaan Therapeutics had to ensure all of its products had less THC than its products selling in the U.S., per regional laws, as well as completed product and packaging reviews, safety data sheets and extensive registration requirements for its assortment.

“With our THC levels so low, it provided a level of comfort for retailers,” said Kerklaan. “It really comes down to paperwork and showing the proof of our products from COAs [Certificate of Analyses].”

Navigating each country’s specific set of laws is incredibly daunting, especially when CBD companies already have to adhere to municipal, state and federal laws within the U.S. With yet-to-be-established global customer interest, one would argue if it is a necessary and worthy cause for CBD brands at this point.

“There isn’t one set of laws here like there is within more mature industries. When you look at selling automobiles or food around the world, there is a level setting that occurs if one country creates a set of rules and regulations,” said Robert Rosenheck, Lord Jones CEO and co-founder. “Usually that country is the U.S., and for other countries to reciprocate, it starts here.”

However, Kayla Villena, senior beauty analyst at Euromonitor International, expects international demand to grow, particularly in Latin America.

“Domestic and international interest in CBD-derived products is on the rise in Latin America, a region which manufacturers are eyeing for cultivation, low-cost production and market entry,” said Villena. ” [Vertically integrated  cannabis company] Khiron received approval from Colombia’s health regulatory agency to be the first brand of CBD skin care through Kuida to sell in retail and online channels. It also became the first Colombian brand to introduce legal CBD products in the U.S.”

However, Lord Jones has yet to place any bets on international markets, like Dr. Kerklaan Therapeutics, and has no plans to pursue global distribution.

“It’s a fractious maze in the U.S., and globally, and it’s going to take time for all of these laws to get ironed out,” said Rosenheck. “Our job is to watch what is happening everywhere and react accordingly. We are assessing regulation daily, and are trying to remain nimble, pragmatic, manage risk and assess opportunities at all times.”

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Will CBD beauty go global? - Glossy
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