CBD in Latin America: What can we expect?
A number of international companies such as Khiron Life Sciences, Canopy Growth, Aurora Cannabis and Medical Marijuana are growing their CBD presence throughout Latin America.
Market intelligence provider, Euromonitor International found in its 2018 survey that the Latin American herbal/traditional topical analgesic and topical analgesic/anesthetic market is estimated at $380 million.
Khiron: A Case study
Khiron Life Sciences is the first hemp cannabidiol (CBD) brand to launch into Latin America as part of its joint venture with CBD-infused producer, Dixie Brands.
Khiron entered into the Colombian market in Q4 2019 via its Aceso skincare and wellness products, hemp-derived CBD Alfa Balm (heat) and Sigma Balm (cool). Expansion into Chile and Uruguay are anticipated for 2020.
Aceso’s entry follows the expected trajectory of many CBD international brands operating in Latin America, which sees brands focus on wider health-targeted products in the cosmeceutical and wellness spaces.
With the strong connection between health and nutrition, it is anticipated that brands will arrive via these health and beauty markets before potentially introducing nutrition and functional food-based CBD brands.
As the Latin America market shows a strong demand for CBD consumer products, companies such as the Aceso hemp brand, which have existing core operations in the region, are embarking on new sales operations in strong markets like Colombia.
Described as the “next generation in hemp”, Aceso pairs plant science with food science to appeal to the growing hemp-based consumer wellness market. The brand is expanding its hemp-derived supplements as it steers towards the preventative and optimal health consumer-led market.
The study, testing and understanding of phytonutrient ratios is a key area for Khiron. Phytonutrients are the natural chemicals or compounds found in plant-based foods such as vegetables, fruit, whole grain products and legumes.
As phytonutrients’ purpose is to maintain the health of a plant, brands such as Khiron analyze their properties to help create formulas that are active and effective in the human body.
Affordability, investment and the retail environment
Turning to the CBD space in LATAM, brands that focus on affordable and attractive price points and significant investment may see brand power and progression through the penetration of new markets.
For example, Alvaro Torres, CEO and Director of Khiron, stated: "Khiron is one of very few cannabis companies with the cash reserves to continue to aggressively expand its business operations. Our strong balance sheet and proven operational team position us to further take advantage of the tremendous market demand that we see for CBD consumer products in the LatAm region.”
Collaborations, wider networks and comprehensive retail strategies may also be high-level indicators of the success CBD brands can expect to achieve in Latin America. “The introduction of the Aceso brand, the first from our joint venture with Dixie Brands, positions us to build on the brands already wide adoption in the US and translate that through our established retail network to consumers in Latin America,” added Torres.
“This is the tip of the iceberg,” said Michael McMahon, Dixie's General Manager of Latin America, when discussing the growth possibilities for CBD products amid the regulatory landscape.
“As we continue to refine our products to meet the regulatory requirements in each country, we will be expanding into more countries and delving deeper into our product portfolio,” added McMahon.
Leading markets to watch
In February 2019, the National Supreme Court of Justice declared that the prohibition of marijuana consumption was unconstitutional. Consumers intending to cultivate or consume cannabis for personal use, either for medical or recreational purposes, can therefore seek legal protection.
As a result, commercial opportunities for CBD brands have opened up. As the retail market for products with less than 1% THC has now commenced, it has simultaneously launched possibilities for the CBD product retail sphere. Licenses for the commercialization of tinctures, capsules and topicals, for example, have therefore been granted in 2019.
However, it is not all rosy for Mexican CBD producers as there is “room for only a handful of players to enter the marketplace”, the Brightfield Group 2019 Report, entitled Entering the Fold: CBD and Cannabis in Latin America, revealed.
For those looking to move into the Mexican CBD market, homegrown options and illicit market access mean price considerations are key. The importance of building a relationship with the COFEPRIS (Federal Commission for the Protection against Sanitary Risk) and educating both patients and physicians on the placement and benefits of CBD is also crucial. 2
For almost five years, Brazil has witnessed a positive CBD landscape, following two key decisions. The first of these is the permissibility to import pharmaceutical products derived from cannabis on a patient-by-patient basis. The second is the Brazilian Health Regulatory Agency’s (ANVISA) approval of hemp oil imports following a doctor’s prescription and an approved ANVISA import permit.
“The market potential for CBD products in Brazil is huge,” the Brightfield Group 2019 report stated. With an estimated 6,000 registered medical CBD users in Brazil by the end of 2018, the report states that expectations for the market suggests “prescriptions for CBD will soon be allowed as a solution to more medical conditions, and eventually, the country’s regulators will treat the cannabinoid as a supplement”, as is the case in the US.
The Brazilian marketplace anticipates that approved high-THC products will be restricted to application in oils and sprays. Crucially, product availability is expected to remain limited, especially access to reasonably-priced products.
The Columbian CBD marketplace is experiencing both opportunities and hurdles at present. CBD products are legal in Colombia, with brands able to sell CBD-based products via government-approved and licensed retailers. Awareness, information and education are also higher in the country than in its Latin American counterparts, largely due to the media attention medical patients have gained through seeking access to CBD oil.
While the health benefits and medical uses of CBD are known in Colombia, its price remains a problem and restricts potential future development for the industry. However, local production and cultivation do offer a viable option for growth — and expectations for rapid growth in Colombia for the CBD sector remain high.
Popular CBD products: From health to nutrition?
Topicals, skincare and beauty items are expected to be “long-term leaders in Latin America”, the Brightfield Group reveals.
Entering the CBD marketplace through the health industry via tinctures, wellness, cosmeceutical and skincare industries first before looking at nutrition and functional foods appears to be a potential strategic move for brands.
“As retail markets continue to open, topicals and skincare and beauty products will appeal to a broader range of mass-market consumers looking for more general health and wellness and functional products,” the 2019 report added.
Nutrition brands in the functional claims space, for example, are already appearing in Europe. Market Intelligence provider, Euromonitor International, revealed in its recent Strategic Themes of Food and Nutrition report how German CBD-infused food brand, Hemptastic, is forging ahead.
“As a pioneer in the rapidly growing market for sustainable food, we recognized the potential of hemp early on and invested in the Hemptastic brand already two years ago,'' said Manon Littek, CEO, Hemptastic.