Inflation is constantly in the news. The cause: rising gas prices, the war in Ukraine and the pandemic that continues to affect the supply chain.
One business sector seems to have been spared this price hike: CBD, whose price continues to fall.
While the cost of the materials needed to grow hemp has risen considerably, fierce competition means that consumers benefit from lower prices every day.
At the very start of the pandemic, there was more demand than supply, and not enough CBD to satisfy consumers' appetites. Today, however, just the opposite is true, with supply now far exceeding demand.
Too much CBD on the market
Competition between CBD shops has never been tougher. The reason: an abundance of CBD on the market.
Any business wishing to raise the price of its CBD today is doomed to certain death. CBD consumers are in a strong position today, as they have many options, and raising prices is a dangerous game. That's why the price of CBD keeps falling.
Producers feel the pressure
As the price of materials for growing hemp rises, the returns to growers for their crops continue to fall. Here again, the abundance of CBD on the market creates fierce competition between growers, who are forced to lower their prices while incurring additional costs.
The war in Ukraine is also affecting the CBD industry, as Ukraine and Russia export 28% of the world's fertilizers (those containing nitrogen, phosphorus and potassium). Trade disruptions and economic sanctions linked to the war have considerably reduced these exports, and fertilizer prices have doubled.
What's next for the CBD market?
While retail prices in CBD stores seem to be stabilizing at around 6-7 euros a gram for the time being, consumers' purchasing power is declining as more of their budget is swallowed up by gas, food and other goods whose cost has risen due to inflation.
Unless producers collectively manage to raise their prices, some risk being driven out of business by others who can still afford to sell wholesale at low prices.