Strategic partnerships and acquisitions heat up CBD space

24 Mar 2020 --- In the midst of a hazy regulatory environment surrounding cannabidiol (CBD) and its uses, many industry players are recognizing the ingredient’s potential and are seeking to boost their reach. US-based Applied Foods Sciences (AFS) has entered into a partnership with Victory Hemp Foods to significantly expand the latter’s range of hemp products. Within the same arena, CBD wellness products company Charlotte’s Web Holdings is to acquire Abacus Health Products – a producer of over-the-counter products that combine pharmaceutical ingredients with hemp extract. The move seeks to create the world’s largest vertically integrated hemp-derived CBD company.

The CBD genre continues to grow and this is reflected by Innova Market Insights data, which show that there are five times more global food and beverage launches tracked with “CBD” in the ingredient list when comparing 2019 launches and 2018 launches. Additionally, only 16 percent of global consumers have never heard of cannabis or CBD, with 40 percent saying that they are familiar or very familiar with it, the market researcher notes.

Partners in hemp
According to the businesses, the collaboration between Victory Hemp Foods with AFS seeks to further both companies’ dedication to dramatically expanding the range of products in which hemp grain can be used as an ingredient.

The strategic partnership is also expected to elevate sales and marketing for Victory Hemp Foods food and beverage ingredients, including its two proprietary ingredients, V-70 Hemp Heart Protein and V-ONE Hemp Heart Oil, which is set to launch at the Institute of Food Technologists (IFT) Conference in July 2020.

Innova Market Insights data shows there are five times more global F&B launches tracked with “CBD” in the ingredient list when comparing 2019 launches and 2018 launches.These two new ingredients deliver the nutritional benefits of hemp while providing neutral flavor and color and unique formulation characteristics that solve challenges for formulators across a broad range of product applications. AFS will provide marketing and sales presence as well as technical support, including formulation expertise and customer service.

“AFS has a reputation as a leading player in the food ingredient space for the development of functional ingredients and working closely with their supply chains to scale them sustainably for all stakeholders,” says Victory Hemp Founder and CEO, Chad Rosen. “This partnership will allow us to apply all of our focus and resources on developing processing infrastructure and building a healthy supply chain as we work together to bring hemp back to the front row in American agriculture.”

“As hemp continues to earn a more significant role in US agriculture, and the demand for plant-based proteins continues to rise, we recognize the opportunity to develop new ingredients that can fully utilize the industrial hemp plant to deliver novel high protein ingredients,” underscores Loretta Zapp, CEO of Applied Food Sciences.

Charlotte’s Web acquires Abacus
For Charlotte’s Web, its acquisition will prove beneficial due to the current US regulatory environment that favors topical CBD products within the food, drug and mass channel. Moreover, Abacus’ acquisition provides the advantages of joining an established and industry leading platform and benefiting from consumer packaged goods management and brand equity with a low-cost vertical supply chain producing a good quality hemp extract. The combined entity is anticipated to represent approximately 34 percent of US CBD sales within the food, drug and mass channel, Charlotte’s Web states.

Charlotte’s Web hemp extract liquid capsules.“By joining with Charlotte’s Web, we have the opportunity to maximize our growth by leveraging the company’s leading brand, vertical integration, infrastructure, expertise, financial position and capital markets presence, and position the combined company to deliver benefits for our stakeholders over the long-term,” says Perry Antelman, Chief Executive Officer of Abacus.

Abacus was founded in 2014 and has since focused on becoming the leading practitioner and consumer choice for topical medications with active pharmaceutical and natural ingredients, including a cannabinoid-rich hemp extract containing CBD. Abacus currently distributes over 50 stock-keeping units (SKUs) through approximately 16,500 health-care practitioners. The transaction will reinforce Charlotte’s Web’s position in the CBD market and substantially expand its existing topical offerings and presence in the space, the companies jointly state.

“The complementary strengths of our relative market positions made this merger a logical strategic move,” notes Deanie Elsner, Chief Executive Officer of Charlotte’s Web.

“With this acquisition we strengthen the business to reflect the evolution of the category. Because most of Abacus’s products are positioned in adjacent categories, our combined distribution reach has limited shelf overlap. Together we are the most developed CBD company across every channel and segment and positioned to accelerate our growth and extend our market share. Furthermore, it enables us to drive more scale production through our vertically integrated infrastructure,” she concludes.

By Kristiana Lalou

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