Updated January 7, 2021

The European CBD market is still in an early stage of its development but is quickly picking up steam as awareness grows, regulations surrounding CBD are clarified, and product portfolios and distribution throughout the continent expand. However, overall CBD markets struggled to some extent in 2020 in the wake of the COVID-19 crisis and with Novel Foods continuing to put a damper on ingestibles sales. In terms of projections, COVID hit sales primarily in 2020 due to the closure of retail outlets, budget priorities, and supply chain interruptions, though disruptions were relatively minimal and markets are expected to continue on a positive trajectory in the long term – fueled primarily by the thriving UK market.

Each country has taken its own approach to CBD regulation, which tends to vary by product format, resulting in vapes dominating in some markets, while tinctures or topicals lead the way in others. With its regulatory landscape finally taking shape and increased capacity for production stemming from the establishment of European cultivation centers, the region’s CBD market offers a variety of opportunities for investment and growth, though the barriers to entry are becoming significantly steeper than they were when this was a fledgling industry.

Market Size & Projections

• Europe’s CBD market will reach US $554 million in 2020 and is expected to grow to more than $2.3 billion by 2025, with a five-year CAGR of 33%.

• The largest CBD markets in Europe today are those of the United Kingdom and Germany, which will make up roughly a US $290 million and $90 million market in 2020, respectively. The UK is expected to remain a market leader over the medium-term, though Germany’s growth is expected to outpace that of the rest of Europe – especially as Novel Foods-authorized products enter circulation, driving it to become the second-largest European CBD market at $617 million by 2025.

Source: Brightfield Group 2020

Growth Factors

Drivers:

• • Clarified Novel Foods and local policy stances from most of the region, as well as a landmark CJEU ruling on the Kanavape legal case, which set a new standard for CBD regulations in Europe that will have positive implications regarding everything from distribution and commerce to scaling capacity to investor confidence

  • The broad opening of mainstream channels to CBD products, particularly grocery and natural food chains.

  • Overall health and wellness trends favoring plant-based food supplements (rather than pharmaceuticals or processed products) attracting European consumers to market.

Deterrents:

• • COVID-19: The pandemic in Europe has put downward pressure on the region's CBD markets due to retail outlet closures, supply chain challenges, and competing budgetary priorities. It is expected that markets will begin to truly bounce back in 2021, though the pandemic will have more drawn-out effects on CBD spending resulting from higher unemployment rates and decreased disposable income levels. Despite the pandemic, however, healthy growth will continue.

  • Onerous, slow, costly Novel Food application processing (and other regulatory uncertainty) will drive less well-capitalized players out of the market, and leave those participating in limbo while decisions are pending, generally driving costs up.

  • Competing black markets and medical markets, where applicable.