How Small CBD Brands Can Compete Against Martha Stewart for Market Equity

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The CBD market grows every day, and it just got bigger with Martha Stewart’s new CBD gummies, soft gels, oils, and pet products. Made by the Canadian cannabis company Canopy Growth, Stewart’s products will range from $34.99 to $49.99, a price that beats most of her small competitors.

Canopy’s CEO David Klein told CNN Business he expects Martha’s brand to do well despite the CBD marketplace’s density because she has a trusted voice and a long history of producing branded quality products. Canopy is also expected to do very well in the US, considering they can leverage the distribution and retail relationships of their multi-billion-dollar backer, US alcohol giant Constellation Brands.

What do Martha Stewart and other celebrities entering the market mean for the thousands of small CBD companies across the country? This article will look at how brands like Martha Stewart affect market equity and how small brands can compete.

How Companies Get Market Equity

Not everyone wants to become an international name. Most brands compete for regional success, leaving plenty of room for different companies, big and small. But with the growing importance of e-commerce and the current saturated state of the industry, market equity is sparse. In 2019, 97% of the industry earnings were less than $1 million in annual revenue.

Market equity isn’t about which product is best. It’s about which product of the 65 billion in the market gets seen the most. For this to happen on a large scale, a company needs to weather high marketing and promotion costs. Only once the products are in front of customers can they decide which they think is best.

Fewer resources make the difference between big and small, especially in such a dense market. A company that can afford a $15,000 marketing budget will acquire more visibility than a lower-income company without the same opportunity. Even well-established brands like Charlotte’s Web only had a 1.6% market share from the first quarter of 2020.

However, as the industry grows, more companies will inevitably fail, and eventually, the market shares per existing company will go up. The pandemic has jumpstarted this CBD extinction event. So, how can small brands survive and get on the right path for more market shares?

How Small Brands Become Successful — the Importance of Differentiation

Charlotte’s Web had a head start, founded in 2011, which gave them the advantage to establish themselves as a medicinal cannabis and CBD figure. Furthermore, they had a powerful marketing technique with the story of Charlotte Figi, and an audience they could connect with emotionally.

For new companies that don’t have extensive resources, the most crucial factors for them to rely on is brand differentiation and certified good manufacturing practices. What personal story do the founders have that makes them unique and relatable?

Nam Nguyen of Brain Drops, the CBD brand from New York, decided to make Brain Drops the “Newman-O’s” the industry. After joining the industry and becoming uncomfortable about how companies with deep pockets could pre-determine who would win and who would lose, Nguyen created several initiatives he hopes will raise the industry standard by establishing new core values.

Before covid, Nguyen launched limited-run labels featuring art from different designers and gave them 50% of each sale. When the pandemic hit New York, he donated his funds to African-American organizations like Afro Tectopia. Brain Drops has the two essential brand differentiation elements — visually appealing content and a unique angle achieved by his social activist business model.

CBD in the Pandemic

Knowing target audiences and a unique attribute will make content marketing much more straightforward and is undeniably the best way to gain attention without extensive resources. Having an online platform with a consistent stream of content complete with SEO and intriguing photos is the competitive edge to getting more market equity and surviving as a brand.

An E-commerce website is also incredibly important. Since the pandemic, online sales have increased 61% from Q1 to Q2 of 2020, with 39% of CBD users indicating they’re using CBD more frequently because of the pandemic. Unsurprisingly, brands that created new products with immune-boosting supplements like echinacea, elderberry, or vitamin c were more successful in turning a bad situation around than those who did not.

Keeping Quality Consistent

Will Martha Stewart place smaller brands at a disadvantage? Probably. But can brands who also market to an older demographic of women compete with Martha Stewart? Absolutely. But with Amazon, e-bay, and the growing opportunities of e-commerce combined with consistent, strategic content marketing, the market will reward such initiatives.

Of course, having a product that creates consistent experiences is the backbone of success as cannabis and hemp industries are under scrutiny to meet the same level of safety and quality compliance as food companies.

At Trace Trust, we have combined our 25 years of experience in food and beverage into training services to help you meet these standards and processes. We also offer consulting for regulatory requirements and have established the first independent certification programs for dose accuracy and transparency to bring your product to the next level. Contact us to learn more.

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