In today’s consumer products marketplace, quality and transparency reign supreme. Now more than ever, consumers are choosing brands that deliver top-tier products and are open and honest about their processes from seed to shelf. Such emerging demands make it no surprise that the three 2018 NBJ Award winners for growth demonstrate a steadfast commitment to both of these characteristics.
Pioneering hemp CBD company Charlotte’s Web takes home the Large Company Growth Award, having notched 74 percent revenue growth in 2018 to hit $70 million. On August 29 of last year, the company went public, completing a $115 million IPO on the Canadian exchange.
The Medium Company Growth Award goes to Ritual, the category-disrupting,
Instagrammable multivitamin brand that has raised over $40 million from venture capital and sold more than 1 million bottles since its October 2016 launch.
Finally, M2 Ingredients, more well known by its finished-products brand Om Mushroom Superfoods, earns the Small Company Growth Award, reserved for companies under $10 million in revenue, after a stellar year of new product launches and expanded distribution.
These three companies’ high-quality products and transparent practices have earned them consumers’ trust and dollars, translating to incredible sales growth and exemplifying all that our industry stands for.
Large Company Growth: Charlotte’s Web
Though the Boulder, Colorado-based company officially launched in December 2013, the seven brothers behind Charlotte’s Web had been growing cannabis for medicinal purposes since 2008. Firmly believing in the therapeutic value of nonintoxicating cannabidiol (CBD), the Stanleys bred hemp specifically for low-THC, high-CBD content, although they didn’t have a market for it at the time.
Then in 2012, the brothers met Paige Figi, who desperately wanted CBD to help control her daughter Charlotte’s seizures. The Stanleys gave their oil to Paige, who added it to Charlotte’s food, and before long, the 5-year-old’s seizures had subsided significantly. This stunning story caught the attention of CNN Chief Medical Correspondent Sanjay Gupta, M.D., who broadcasted it to the nation in August 2013, officially giving medicinal cannabis his stamp of approval. Soon Charlotte’s Web had a waiting list of thousands looking to access its CBD oil for their health needs.
“We’d been operating under the medical marijuana framework, which made scaling to meet demand impossible, so it was fortuitous that the hemp pilot program opened in February 2014,” says Joel Stanley, company chairman. “We went from small greenhouses to having the first hemp planted and grown how it should be, more like corn or wheat. Our first harvest in fall 2014 ended our huge waiting list.”
However, the federal regulatory environment surrounding hemp and CBD remained murky, making it a “scary time” to do business, says Stanley. The brothers persisted, selling their CBD oil direct to consumers online. “In the early days, the only retailers open to this were boutiques. It was difficult to get even small chains to buy-in, based on the regulatory uncertainty,” Stanley says. “This changed dramatically with the passage of the Farm Bill in December 2018.”
Now, Charlotte’s Web products are found in 6,000 retail outlets nationwide, and it is the number-one brand by market share. Ecommerce sales have also continued to thrive, jumping 57 percent in 2018. The company was able to fill all these orders by boosting its hemp production from 63,000 pounds in 2017 to 675,000 pounds in 2018, enabled by a shifting federal stance that allowed for expanded hemp production in the Farm Bill.
“For our company and the entire industry, we are grateful for the way things evolved,” Stanley says. “We had to invent new wheels on how to plant and harvest in ways to maximize quality, which took a lot of time and hard work. Truth is, if we were accepted right off the bat, it would’ve taken a long time for us to meet demand. It was painful to live in a grey regulatory environment, but it protected our scalability, and that of other companies, and allowed the industry to get its feet under itself.”
Now that CBD’s popularity has exploded, Charlotte’s Web is facing ever more competition, as new brands enter this market in rapid fire. This is where the company’s high-quality products, vertically integrated model, commitment to sustainable agricultural processes and transparency stand out.
“In a couple of words, our differentiators are quality and consistency,” Stanley says. “We use the same genetics every time, meaning we get the exact same phytochemical signature in every batch. Many people don’t understand the importance of this, but it means that when our product works for you, you can come back to it three years later and have the same experience. We hope to see this level of standardization come to the hemp industry.”
Charlotte’s Web also goes to great lengths to test its products to ensure safety, purity and consistency. “We’re not the only CBD company with good quality control, but anytime an industry grows this fast, there will be some real fly-by-night operations,” Stanley says.
To support its continued growth—2019 sales are projected to hit between $120 million and $170 million, up from $70 million in 2018—Charlotte’s Web has made several recent key hires. In April, Deanie Elsner, former president of Kellogg Co.’s U.S. snacks division and a 20-year Kraft Foods veteran, came on board as CEO. Before that, pharma industry vet Stephen Lermer became chief operating officer, and Eugenio Mendez, formerly of the Coca-Cola Co., was named chief growth officer.
The plan, says Stanley, is to take the brand global, but there is still immense growth potential in the U.S. market. Charlotte’s Web recently launched a pet line and will continue to develop edibles and expand existing lines. “Another thing that differentiates us is we are not set on having 50 different SKUs,” Stanley says. “We focus on creating the very best product for a category, and until we get it just right, we don’t release it.”
Medium Company Growth: Ritual
The stodgy multivitamin was in dire need of a makeover. Venture capitalist Katerina Schneider discovered this a few years back when she couldn’t find a prenatal multi that suited her needs.
“I have always been obsessed with health, but my obsession became heightened when I got pregnant,” Schneider says. “I began questioning whatever I put in and on my body and realized there were no good prenatal vitamins out there that were backed by science and also clean. Also, at that time, there was a wave around traceability in the food industry, but when I tried to dig deeper into the supplements industry, I couldn’t find any information. So, I decided to build the product and company that I wanted to see in the world.”
That company is Ritual, the fast-rising direct-to-consumer brand that has shaken up the multivitamin category with its subscription-based model, social media savvy, unique product offerings and high level of transparency and traceability. To build her brand, Schneider hired a team of top scientists and leveraged her connections in the investment world to raise the $40 million-plus.
Ritual’s two products—Essential for Women and Essential Prenatal—differ from conventional multis in several ways. For one, they contain only nine and 12 active ingredients, respectively. “Most multivitamins have 20 to 40 ingredients, many of which we already get from diet,” Schneider says. “People think more is more when it comes to nutrition, but we believe in less is more—and only what is evidence based. We’d rather give women fewer ingredients and give them higher-quality forms of those ingredients than just throw in a bunch of generic nutrients that may be overkill.” For example, rather than folic acid, which many women are unable to metabolize, Ritual uses a more readily usable methylated folate from Italy.
Another unique offering, Ritual’s website details where every single ingredient comes from. It also features interviews with suppliers and scientists and highlights the research supporting each nutrient—a level of transparency not commonly seen. These multis look different as well. The capsules are clear and filled with tiny nutrient-containing beadlets, a sleek design that serves as a tangible symbol of transparency. That look helped the brand go viral. “Our customers have become our greatest marketers,” Schneider says. “Our product is so visually appealing that they are sharing it on Instagram.”
The subscription model, too, is novel. Along with ensuring repeat business by reinforcing healthy habits, it enables Ritual to source high-quality ingredients that might be cost-prohibitive for retail brands. “By not being in retail, by shipping directly to consumers and by not holding onto too much inventory, our bottles cost $30 a month,” Schneider says. “If you were to cobble together all of the ingredients, it would cost $200.”
Taking the retailer out of the equation also allows Ritual to “meet consumers where they are,” says Schneider. “It is tough to have those deeper connections with customers through retail, but since a lot of our customers are on social media, we can have back-and-forth conversations with them there. And by having our scientific team next to our design team next to our customer experience team, we can respond thoughtfully to every single comment that comes our way.”
Next up, Ritual will expand its product line to attract even more consumers. “We’ve put a stake in the ground in women’s health,” Schneider says. “Our vision is simplifying things for her. We know her needs change as she goes through different life stages, so we are building a single evidence-based multivitamin for her for every stage. In the future, we will focus on postnatal and post-menopause to complete the circle.”
Small Company Growth: M2 Ingredients & Om Mushroom Superfoods
Until recently, very few consumers realized mushrooms had any value beyond the culinary or hallucinogenic. Although medicinal species such as cordyceps, chaga, reishi and turkey tail were staples of traditional Chinese medicine, they remained extremely niche in the U.S.
“Eight years ago, if you went into a natural products store, not everyone working was familiar with individual species,” says Sandra Carter, Ph.D., founder and chief science innovation officer of M2 Ingredients and Om Mushroom Superfoods. “Now I’ll be in an Uber, and the driver will say, ‘Oh, lion’s mane! I take it every day, and so does my grandma.’”
This heightened awareness stems from a massive education push driven by the Om team, along with renowned mycologist Paul Stamets. “Very similar to what we’re seeing with hemp, consumers are now discovering that there are functional benefits to mushrooms,” says Mike Fata, founder of Manitoba Harvest Hemp Foods and chairman of Om’s board of directors. “Om has done a great job of educating consumers and making it easier for them to enjoy the benefits of mushrooms with its capsules, drink sticks and powders.”
Bringing mushrooms to the masses has been Om’s goal since the beginning. About a decade ago, Carter, who had a background in preventative medicine, met another esteemed mycologist, Steve Farrar, at an integrative medicine conference. “When I met Steve, I became fascinated with mushrooms and how individual species had applications for so many areas, from cognitive health to sports performance to immune health,” Carter says. “We saw an immense market opportunity for mushrooms.”
In 2010, Carter and Farrar teamed up to launch their company, originally named Mushroom Matrix. From the get-go, they were vertically integrated, growing their own mushrooms organically in Carlsbad, California, whereas many competitors source their mushrooms from not-always-transparent producers in China. Further differentiating Om, Carter and Farrar knew that the greatest medicinal value came from the mushroom’s mycelium, the long, stringy part that’s embedded into the log or grass and therefore remains unseen.
“The mycelium must have a robust immune system to last for a long time and a robust enzymatic system to digest nutrients from the environment—and not much of this is present in the fruit body stage,” Farrar explains. “Only recently, with the advent of tissue culturing, can we plant mushrooms into a nutritional substrate that can really capture the mycelium stages.”
By 2012, Om was offering a range of mushroom superfood powders and drink sticks and also selling its raw ingredients to other finished-product companies. But Carter says the business really took off in 2013 and 2014, leading the company to build a second facility and court private-equity investment to expand the management team.
In February 2018, CPG veteran Jan Hall joined as CEO, and last year Om launched several new blends targeting specific health needs. In May 2019, Om announced a partnership with For the Biome, the new wellness company of New Chapter founder Paul Schulick, to launch two topical skincare products made with Om Mushroom Superfood.
“A number of things attracted me to Om, including their quality standards and the fact that they are vertically integrated and do all their own manufacturing,” Fata says. “Being able to tell the whole story of the mushrooms and deliver the highest quality products because they control the supply chain is unique. Now Jan has a clear focus on growth through expanding distribution, educating consumers, helping retail partners increase turns on shelf and creating more innovative products to make it easier for consumers to add mushrooms to their daily routine.”