RE: Nick the realist20 Jan 2020 16:53
'As shown with Charlotte’s Web, one of the largest CBD product manufacturers need only an estimated 500 acres or 800 kg of distillate to reach $95 million in revenue. In our second scenario using Brightfield’s $4 billion of 2019 CBD sales, we project that the market would be satisfied with 32,600 kg of distillate. Taking the longer view, the same report has projected sales of CBD products to exceed $24 billion in 2025. If the same math was used, the 2025 market would be supplied on just shy of 200,000 kg of distillate, which would still be covered by the 2018 harvest. Note that these numbers do not account for smokable hemp or any non-CBD industrial purposes.
Yet it’s no wonder so many ventures are launching in the CBD space. One consumer taking 30 mg per day would spend over $600/year if the CBD cost is $0.05 mg and spend over $1,500/yr if the cost were $0.1439 mg (see section 1). Therein lies the hidden discrepancy of today’s market. If the average CBD consumer packaged goods (CPG) has 500mg of CBD , that same 85% distillate kilogram will yield 1,700 units.
As part of normal market maturation, input prices and retail prices will continue to drop, and volume will increase. Of course, a positive FDA ruling, including a statement that cannabinoids will be recognized as Generally Regarded as Safe (GRAS), will help boost demand. Over time, even though the CBD sales will continue to grow, it is only one sector when looking at the potential uses of the hemp plant. Falling prices due to oversupply are not only normal in market maturation but necessary. Seed costs have fallen 66% to approximately $1.00/seed ($3.00/seed one year ago). This decline in input prices, coupled with improvements in harvesting and processing, will drive production costs down, which will keep the CBD consumer packaged goods market afloat as retail prices continue to drop due to competition'
Now that IS an interesting article!!! In a nutshell, we have moved away from just growing hemp becuase too many do this so prices fall due to too much supply. But also there is lots of poor quality plant biomass, so having really really good seeds that grow plants with the right chemical constituents is of vital importance to the grower!!
Competition for retail goods will bring prices lower but not how little CBD isolate Charlotte's Web actually need for their $95 million..... Producing our own modest outdoor organic crop is still a massive boost for high end product manufacture.
The beginning and end of the CBD chain are where the margin's are.