“Let me be clear. We will never make claims [about CBD], which is what is really raising FDA’s blood pressure. We don’t feel we need to,” he told FoodNavigator-USA. “All we’re saying is 25mg broad spectrum pharma grade, fast acting and absorbing. Companies that make claims they can’t substantiate I believe will get into a lot of trouble.”
New Age – which has been testing consumer reactions to hemp extracts via a line of waters, teas, and shots in Colorado since October, but says it is now focusing attention on the Marley brand - has received commitments for the Marley Mellow+CBD range from “two of the largest US retailers in the convenience and grocery channels” and has confirmations from distributors reaching 125,000+ outlets globally.
The source of the CBD (cannabidiol) is a broad spectrum hemp extract with less than 0.3% THC that had proved more effective than CBD isolates at delivering “that don’t worry be happy feeling” during consumer testing in Colorado, said Willis, a CPG industry veteran who has held leadership roles at Coca-Cola, Cott Beverages, Anheuser Busch, and Kraft Heinz.
'The rules and regulations on interstate distribution and commerce are a little unclear'
The FDA recently reiterated that adding CBD to foods or supplements is illegal as it was first investigated as a drug. However, boosted by the passage of the Farm Bill (which removed hemp from Schedule I of the Controlled Substances Act), many food and beverage brands are navigating their way through the regulatory minefield by utilizing ‘broad spectrum hemp extracts’ in which CBD is a component but has not been isolated or modified, said Willis.
“In the US, we’re initially focused on four states – Colorado, Washington, Oregon, and Michigan [where recreational cannabis is legal for adult consumption] – because the rules and regulations on interstate distribution and commerce are a little unclear, although that is not stopping every single retailer on the planet from saying I want it, and I want it now, right?”
"Every single grocery retailer that we met with at the [Winter Fancy Food] show [where New Age debuted the product line] placed an order, every single one, 100% which is unprecedented and the demand is not just traditional retail. The approaches from major QSR operators were huge with a number of commitments and preorders as the markets open up there. And the demand is not just in the US, we've previously mentioned that we believe the opportunity for CBD infused beverages in Asia could be 100x that of North America."
Jay Barrow, head of marketing, New Age Beverages
‘This is a long term play for us’
Willis, who was speaking to us after signing an agreement to develop and distribute the beverages in partnership with Docklight Brands, added: “This is a long term play for us.
“We want to be the first to roll out a major national brand, but we also want to be very methodical and measured and be in full compliance, because we want to lead, not just with the Marley brand, but want to lead from an industry standards standpoint, from a responsibility and communications standpoint.
“This is why we are also one of the founding members of the CBD Association that we are inviting everyone to be part of so we can establish standards and engage with the FDA in a constructive way and bring discipline to this fantastic newly emerging growth segment.
“The major retailers are all having conversations with us behind the scenes as they see this as a big growth opportunity and we’re really fortunate because the Marley brand and cannabis-infused beverages is a match made in heaven,” added Willis.
“The rules and regulations on interstate distribution and commerce are a little unclear, although that is not stopping every single retailer on the planet from saying I want it [CBD], and I want it now…”
Brent Willis, CEO, New Age Beverages
The ‘entourage’ effect
Asked about the formulation of the new beverage line, he said: “We’re using 25mg of broad spectrum hemp extract CBD.
“We’ve tested isolates, and we’ve tested all kinds of different dosages of isolates and extracts, but the consumer feedback we’ve gotten as we’ve been testing in Colorado over the past 12 months is that they kind of don’t feel anything with the isolates, they don’t get the relaxation, or the entourage effect [fans claim benefits from the synergistic interaction of the cannabinoids, flavonoids, terpenes, and fatty acids in a broad spectrum extract as opposed to CBD (cannabidiol) alone].
“We feel that the best way to effectuate that ‘don’t worry be happy feeling’ in practice is with 25mg of broad spectrum CBD from hemp extracts, but Mellow Mood is not only about CBD. It’s part of a unique relaxation blend that includes chamomile, passion flower, valerian root and other things.”
Methodical and measured
As for hemp ingredient sourcing, he said: “We’re being very methodical and measured in our approach, which is why we did a partnership with the Privateer guys at Docklight Brands [a cannabis brand holding company with brands including Marley Naturals, The Goodship, Irisa, Dutchy and Headlight; Docklight is backed by Seattle-based private equity firm Privateer Holdings, which is investing exclusively in the legal cannabis industry].
“They have more expertise than anyone on the regulatory and scientific side, while we have a presence in 60 countries and access to hundreds of thousands of points of distribution to get these products out to consumers," said Willis, who said New Age would be implementing a brand awareness and in-store marketing plan beginning in the 2nd quarter with “significant social, digital, and community building campaigns supporting the launch at retail.”
Retailers and foodservice operators are going to be on the front line of communicating what CBD is to consumers
New Age will also utilize cannabis info portal Leafly.com to gain consumer insights and analytics to help it target marketing and brand awareness activities most effectively, he said.
“It’s not just consumers that need education, it’s retailers and foodservice operators that are going to be on the front line of communicating what CBD is to consumers, which is why we feel that this new industry association will also be really important.”
What does CBD actually do for you?
But what exactly is the message (why are consumers actually buying CBD products?), and how will this be communicated if brands reference CBD on pack, but don’t make any claims about what it might do, either because the science isn’t there yet, or because they don't want to draw the ire of regulators?
“People around the country are learning about CBD” online, rather than via food labels, said Willis, who acknowledged that the market had got ahead of the science when it comes to CBD, although he claimed the two would "converge" in future, and noted that small-scale human double-blinded studies suggested some benefits in reducing anxiety.
“When pushed, these companies don’t have the human clinical trials to support their claims, which is why we’re staying away from it [making health claims].”
But he added: “Purchase decisions are not just driven by the functional benefits of ingredients, but also the emotional side of things, which is why Marley, an iconic brand with 75 million facebook followers and that notion of ‘Don’t worry, be happy’ is an equal driver of purchase intent vs any knowledge of CBD.”
A 'biotech company in disguise?'
Colorado-based New Age Beverages – best known for brands such as Búcha Live Kombucha, XingTea, Coco-Libre, and Marley – recently merged with Utah-based Morinda Holdings, which has operations in 60+ countries, creating a healthy beverages business with $300m in net revenue.
It has also created a health sciences division that owns IP around functional food ingredients with a variety of potential applications surrounding cognitive, cardiovascular, and digestive health, hydration, and protection from radiation.
"In my view New Age is a biotech company in disguise," claimed Willis. "We bought all of these patents from the US government [covering functional food ingredients] that were developed for the US military in theater over the past 10 years, but there are also co-operative research studies to support these conducted with some of the pre-eminent institutions, and human trials, which means we can make validated claims."
“From the moment the CBD movement began, I've been receiving calls nonstop asking when we'd be going to market with a Marley+CBD product. Retailers and distributors realize that it will be a long road for smaller CBD brands to gain traction and brand equity. Under the Marley brand platform, we are able to leverage a massive global brand with ties to healthy cannabis use, to ultimately grow a beverage brand beyond anything we have seen to-date."
Michael Cunningham, SVP Sales, New Age Beverages