Where next for Bolthouse Farms? CEO gears up for CBD launch: 'We'll use California as a test zone...'

By Elaine Watson

- Last updated on GMT

Jeff Dunn: "Caffeine and CBD seems to be a combination that works for people, kind of like energy without the jitters..."
Jeff Dunn: "Caffeine and CBD seems to be a combination that works for people, kind of like energy without the jitters..."

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In 2012, Campbell Soup parted with $1.55bn to get a foothold in the chilled store perimeter via the acquisition of Bolthouse Farms. This summer, its former boss paid $510m – supplied by Butterfly Private Equity – to buy it back. So what went wrong, and what does the future hold?

According to Jeff Dunn, who remained at the helm of Bolthouse Farms​ post the acquisition and then headed up Campbell’s C-Fresh division from the fall of 2014 to October 2016 (when he left to head up the ill-fated Juicero business), “Most of the decline in value happened in the last three years.”

However, he acknowledges that Bolthouse experienced well-publicized challenges while he was still at the helm, recalling 3.8m bottles of its Protein PLUS meal replacement beverages in June of 2016 owing to spoilage issues and losing customers in its carrot operation owing to quality issues compounded by volatile weather.

After he left, claimed Dunn, "There was a kind of fruit basket turnover of management because of a change in philosophy, where Campbell’s put its own executive in and he brought his own team in, who were shelf-stable executives for the most part, and over the next few months most of the senior talent left, including the head of farming, who is now back with us."

‘They executed a shelf-stable playbook and applied it to a fresh business. It didn’t work’

He added: “They basically executed a shelf-stable playbook and applied it to a fresh business ​[Bolthouse manufactures and markets fresh carrots, refrigerated premium beverages and salad dressings, and has bases in Bakersfield and Santa Monica, CA]. It didn’t work.

“They got rid of the direct sales team, integrated functions to corporate, which took a very fast-paced entrepreneurial business and slowed down its decision-making. They lost control of the operating system, but they also stopped innovating and the innovation they did was ill-conceived.”

We’ve brought back about 70 people that worked at Bolthouse before

When Dunn and Butterfly Private Equity took over around four months ago, the business was declining, “both top and bottom line,” ​claimed Dunn.

But we’re now stabilizing things, carving it out from Campbell’s. We’ve brought back about 70 people that worked at Bolthouse before, restored those operating processes we used to have in place, plus we’ve developed 25 new products in the carrot and beverage space that we announced at the PMA summit.”

Campbell Soup declined to get into the weeds on Dunn's claims, but told us: “Bolthouse is a good brand with talented people and we wish them all the best. Our strategy is to focus on our core North American businesses – Meals & Beverages and Snacks, where we have leading brands and the right to win.”

The new ultra-low sugar Protein Keto line features whey protein and MCTs

‘The move to a plant-based food economy is going to be the single biggest trend in food in the next 10 years’

So what's next for Bolthouse Farms on the innovation front?

New products in the pipeline include a line of Protein Keto beverages with whey protein and MCTs featuring 1g sugar and 3g net carbs launching in February 2020 that will be followed by a plant-based variant; functional shots featuring meaningful amounts of on-trend ingredients from probiotics to turmeric under the new BOLTS brand; and new carrot-based products from carrot rice and fettucine to waffle cut carrot fries, said Dunn.

“We think the move to a plant-based food economy on a global basis is going to be the single biggest trend in food in the next 10 years, it’s much bigger than just Impossible Foods and Beyond Meat.”

Moving forward, Bolthouse Farms products will increasingly take on a more functional wellness slant, added Dunn. “The categories we’re in some are growing in the single digits, but functional beverages are more in the double digits.”

bolts by bolthouse farms
Bolts, a new line of functional shots from Bolthouse Farms

CBD beverages: ‘We’ll use California as a test zone’

Dunn is also moving into the CBD category with two ready to drink beverage lines (low-sugar and low calorie refreshing functional infusions in 12oz bottles, and CBD-infused coffee beverages) featuring 25mg of CBD that will be marketed under a new brand name.

The plan is to launch in California early next year, assuming the state passes Assembly Bill 228​​​​, which would permit retail sales of hemp-derived CBD-infused food, beverages and supplements. (Right now, the state defers to the FDA, which says CBD is not a legal dietary ingredient, although it is under pressure to come up with an interim fix ahead of a formal rule and comment process.)

 “If we get clearance from California, we’re alright as long as we don’t cross state lines, regardless of what the FDA does, and California is a big market. We’re already in conversations with large retailers there and we aim to go big here with a couple of partners and then we’ll use California as a test zone,” ​added Dunn, who said the CBD brand is still under development.

‘Caffeine and CBD seems to be a combination that works for people, kind of like energy without the jitters’

He added: “We’restill refining the creatives and the brand proposition as we speak, but I see potential in two areas, the calming and the impact on anxiety and also turning down the volume on pain, although you’ve got to be careful how you market that ​[to avoid making illegal therapeutic claims on a food/beverage product].

“It’s about active balance, helping you to stay in your best state and be mentally prepared, present in your own life. The refresher product line will have three flavors, each with a slightly different take, so we’re looking at chamomile, tart cherry ginger, and we’re also playing with carbonation, but it’s a little more chill; whereas the coffee line is about a more heightened you, more focused energy.”

While it may sound counterintuitive to combine a stimulant such as caffeine with something claimed to calm you down (CBD), he said, “It seems to be a combination that works for people, kind of like energy without the jitters.”

Plant-based hydration, plant-based milk

Asked about the performance of premium organic cold-pressed juice brand 1915​,​ he said: “The core juice, smoothies and protein lines have stabilized, although we need to get back to sharper price points over the next six months, but 1915 has been in decline. It did OK in its day, but it never took off. Suja’s about the only brand left that’s still performing well ​[in premium cold pressed juice].”

He added: “I’d say the next big wave in beverages is CBD. Cold pressed juice has kind of had its day but the piece that’s continuing to grow is what I’d call plant-based hydration, aloe, things like that, and we’re thinking about sparkling too in this functional beverage space, and also dairy replacement.”

Pea milk proposition needs refining

Bolthouse plant-milk expowest 2017
While Bolthouse Farms launched a pea-based milk​ in 2017, which is currently in around 500 stores, the proposition needs refining, claimed Dunn.

“We really need to rethink this. Calling it plant milk was a bit weird, I think having a brand name like Ripple ​[the first to enter the pea-milk category] was smarter. But I also think we didn’t need to have that much protein. For milks ​[as opposed to ready to drink single serve beverages] people are more interested in functionality, will it go with coffee, or cereal and so on and the Bolthouse product is thicker and doesn’t really function like milk, and it’s at a high price point.”

Longer term, Dunn said he was also excited by recent developments in CRISPR and gene-editing technology, and the application of synthetic biology to program microorganisms such as yeast, bacteria and fungi to produce proteins and other functional ingredients more efficiently.

The legal status of CBD

While the US Food and Drug Administration (FDA) has consistently stated that it does not consider CBD to be a lawful dietary ingredient as it was first investigated as a drug, its enforcement activity has thus far been focused on companies making egregious claims, prompting many players to wade into the market at their own risk.

Some states, meanwhile, have cracked down on firms selling hemp-derived CBD, and most larger companies are waiting for clarity from the FDA before introducing products into interstate commerce.

However, several states have explicitly authorized the general sale of hemp-derived CBD products including Alabama, Kentucky, Colorado, Alaska (in licensed adult-use dispensaries and retail stores), Florida, Indiana, Illinois, Kansas, Maine, Maryland, Minnesota, Nevada, Oregon, Texas, Vermont, and Washington (at licensed cannabis retail stores and dispensaries).

(Several other states only permit its sale from licensed medical cannabis dispensaries for patients with a qualifying medical condition.)

Right now, California defers to the FDA regarding CBD as a dietary ingredient. Assembly Bill 228​​​​, which would permit retail sales of hemp-derived CBD-infused food, beverages and supplements, was recently set aside by the Senate Appropriations Committee, meaning it is effectively on hold until at least 2020.

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