Dairy industry flexing to enter CBD despite regulatory uncertainty – Food Dive

SCOTTSDALE, Arizona — An “absolute insatiable (consumer) appetite for more CBD” products will spur companies in dairy to consider rolling out products even if the FDA hasn’t established a clear framework allowing their use in food and beverage products, the head of a group representing the nation’s dairy manufacturers, marketers and suppliers said on Monday.

“Industry is moving and saying ‘Look, we’re going to be careful with the claims we make, and yes we’re going to take some risk,'” Michael Dykes, president and CEO of the International Dairy Foods Association, told reporters at its annual conference in Arizona.

“They are going to find a way (to make CBD products). There is such a tremendous consumer demand for it, there is such a market for it that they are going to find some way to tap into that market rather than wait for the”  FDA to catch up, he said.

A Rabobank report found last May that CBD has entered food and beverage products — beer, coffee, cocktails, jelly beans and others — at an “astounding pace” and the market shows no sign of abating. 


“They are going to find a way (to make CBD products.) There is such a tremendous consumer demand for it, there is such a market for it that they are going to find some way to tap into that market rather than wait for the” FDA to catch up.

Michael Dykes

President and CEO, International Dairy Foods Association


Spending on all cannabinoids, which also includes marijuana and its psychoactive THC derivative, is projected to grow to $4.1 billion by 2022 from $1.5 billion in 2018, according to a report from BDS Analytics. A study from A.T. Kearney in 2018 found 40% of U.S. consumers said they would be willing to try a cannabis edible.

A conservative approach

For now, large food companies, including dairy, are taking a wait-and-see attitude until more regulatory clarity is provided. 

Mondelez, which makes Triscuits and Oreostold CNBC last May that CBD could be a part of its future snack innovations. Bolthouse Farms’ CEO told Food Dive last November it planned to introduce two ready-to-drink beverage lines that contain the ingredient — a low sugar, low calorie functional beverage and a coffee option. Coca-Cola also is reportedly monitoring the space, but the beverage giant has denied it has any plans to enter the segment anytime soon.

Jim Watson, a senior beverage analyst at Rabobank speaking on a CBD panel​, told the audience at the IDFA’s Dairy Forum that companies are looking at CBD use differently depending on their size. Startups value the first-mover advantage and the attraction of a fast-growing market; they’re less likely to be flustered if the FDA cracks down on them, he said. For large CPGs, the market is currently too small compared to the inherent risk they could face if they enter the space and upset the government.

Martin Hahn, a partner at Hogan Lovells US, agreed. “The market is there and the market it is continuing to grow,” he told the audience during the same panel. Businesses entering the segment are not the Fortune 500-size companies because “they tend to be more conservative, appropriately so, … they have much more to lose if the FDA seizes their products.”

Tinnakorn Jorruang/Getty Images

Dairy products such as milk, shakes and ice cream laced with CBD so far appear to be mostly relegated to smaller players. In November, hemp-based food and drink maker Food Hemp launched the first CBD plant-based milk in the U.K. Ice cream maker Ben & Jerry’s announced in 2019 that the Unilever-owned brand will create CBD-infused frozen treats in the U.S., but only once there are regulations in place from the FDA.​

Dykes told reporters that larger dairy companies entering the space would most likely not put their name brands on it. Instead, they could introduce new brands focused on CBD or look outside the company by licensing another product or entering into a joint venture.  

In the dairy space, Watson said ice cream makes the most sense for using CBD because of the frozen treat’s association as a snack to indulge and relax with at the end of the day. Coffee creamers and post-recovery drinks consumed following exercise also could be potential vehicles for CBD. One area unlikely to see the ingredient is milk, which Watson said is closely associated with kids while CBD is tied to marijuana.

“You wouldn’t go anywhere near that,” Watson said. 

Even as more consumers look to CBD-infused products, regulatory hurdles are in place that are slowing the debut of these products on a wider scale. CBD is regulated on a state level, with the substance remaining illegal in foods and beverages on a national level. 

If an ingredient has been approved for medical use through the FDA’s drug review process, it cannot be added to food or beverages under current law. The agency could create an exception, but has never issued a regulation like that for any substance before. Still, several companies are already infusing food and beverage products with CBD despite murky federal restrictions in place. 

There also is uncertainty over health claims associated with CBD, which include its ability to lessen pain, lower blood pressure and reduce anxiety. The FDA recently cracked down on unfounded claims from a handful of companies making CBD-infused products.  

‘Significant safety concerns’ 

Speakers on the IDFA panel discussing CBD were in agreement that its use in dairy and other food and beverage products would benefit from federal guidelines from the FDA, specifically one that established a safe threshold for the amount that can go into products. Without it, Hahn said CBD risks becoming similar to marijuana on the state level where regulations can vary widely.

“That would the death knell for any (International Dairy Foods Association) member companies because you just don’t function at the state level,” he said.

Hahn expressed doubt that the FDA would act anytime soon. The agency has expressed “significant safety concerns” with hemp extracts and CBD, citing potential impacts on liver toxicity and adverse affects with other drugs, among more than a dozen other additional issues it has raised. 

To quell these concerns, he said the food industry could conduct toxicology tests, but it’s likely to take several years to gather and analyze all the information needed to satisfy the FDA.

“If you are the dairy industry and you want to be first-in-class and take that aggressive stance and you’re going to go out and commercialize a dairy product that contains hemp extracts, you have to have the legal basis to add it,” he said. “Before you start going making claims in the dairy industry, you need to make sure you have the support, which is going to require some type of clinical study.” 

Kelly Shea, senior vice president of government affairs and corporate communications with Charlotte’s Web, underscored the need for consistent standards. Charlotte’s Web currently doesn’t sell food with CBD. Instead, it uses the ingredient in oils, capsules, topicals and pet products.

“We want this to be regulated,” she told the audience of dairy farmers, food manufacturers and analysts. “We would love to be selling to people like you.”

Shea, who worked at Danone and WhiteWave before coming to Charlotte’s Web, warned that when CBD is used in food and other products it needs to be consistent — an area where the industry needs to improve. It must lack harmful heavy metals or pesticides, and needs to follow through on its promised efficacy from batch to batch or it could ultimately discourage companies or consumers from using it if it’s unreliable.​

With clarity not expected from the FDA, Hahn said there is little to stop food and beverage companies from using the ingredients in their products. “What we have now is the wild, Wild West,” he said. 

Source: https://www.fooddive.com/news/dairy-industry-flexing-to-enter-cbd-despite-regulatory-uncertainty/570952/


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