Following a 30% reduction in employee headcount and amid declining revenue, CBD products marketer cbdMD is “cautiously optimistic” that it can increase sales in 2023.
The company remains heavily dependent on ecommerce and—as with other CBD brands—its path to increased retail distribution faces stiff headwinds in the absence of federal guidelines regarding the inclusion of CBD into beverages and food.
In Q4 ended Dec. 31, cbdMD sales fell 34% to $6.1 million—$4.9 million of which came from ecommerce.
Much of the company’s focus last year was on a “reset that was critical for us to get the business healthy and reestablish a foundation for what we feel best positions us for growth,” president Kevin MacDermott said on an earnings call this week.
The reset included trimming SKUs from more than 150 to approximately 40, launching pain-management remedy cbdMD MAX, and finding a replacement for CMO Matt Coapman, who left the company last fall after 15 months in the position.
Last month, cbdMD said that Shannon Charles—whose background includes stints at Naturade and Smart Family Nutrition—is its new CMO.
“Her digital and direct marketing experience and relationships will be a nice boost to our go-forward strategy—as well as our bottom line—for a proven track record in helping brands turn around messaging, packaging and position,” said MacDermott.
The company also has been pruning its roster of sponsorships.
“We made a lot of hard organizational decisions and we had to unwind from past initiatives and sponsorships that never delivered on the promise,” MacDermott said without citing specifics.
cbdMD CFO and COO Ronan Kennedy referenced a Q1 2023 expense of $884,000 to terminate an unspecified “sponsorship agreement.”
In response to a query from MarketingDaily, Kennedy said the terminated sponsorship was with pro golfer Bubba Watson.
Two years ago this month, the AMA banned CBD sponsorships at Monster Energy Supercross events after Australian racer Chad Reed wore a helmet bearing the cbdMD logo during a race in Minnesota.
The company has a new partnership with A360 Media—formerly American Media Inc.—the publisher of magazines like Us Weekly and such supermarket tabloids as The National Inquirer.
The deal “gains us access to a print and digital subscriber base through which we will share our proposition. That's a significant set of eyeballs and demographics that we haven't reached in the past,” MacDermott noted.
Addressing the U.S. Food and Drug Administration’s refusal to issue guidelines for CBD in beverages and food, he said the FDA is “delaying in their responsibilities.”
The company has gained distribution in Wegman’s outlets for cbdMD MAX, one of very few retailers thaat has embraced CBD in the absence of federal guidelines.
Meanwhile, “We are still seeing about 2,000 to 2,500 brands operating in a market of only about $5 billion,” Bethany Gomez, co-founder and managing director of market research firm Brightfield Group, said in a recent interview with Natural Products Insider.