“When people find a brand they trust [in the nutritional supplements category], they almost never switch,” said Jeremiah McElwee, SVP merchandising and product development at Thrive Market, which stocks 116 SKUs from 16 brands including its private label.
“Our members trust our brand because they know we do our homework,” he told FoodNavigator-USA. “You see that in all the categories in which we have private brands. And what’s really exciting is that we see less cannibalization of brands and more new people coming into categories where we launch [private label] products.”
‘We moved quickly into private label’
One of the first retailers to stock hemp-derived CBD products, Thrive Market was alerted to the opportunity some years ago via ‘search not found’ data generated by its online platform (ie. shoppers were seeking, but not finding, products containing CBD), said McElwee.
“We also have a lot of direct communication with our members, so when CBD started to become virally popular we immediately got questions from our members asking when can we buy it [on Thrive Market].
“So we partnered closely with our legal team, but also sought outside counsel to try to figure out the onerous regulatory environment, and we decided to focus on nutritional supplements and topical products [but not foods and beverages] and ensuring there were no erroneous or illegal health claims [on products sold by Thrive Market]. We also focused on [brands selling] full spectrum hemp [extracts] rather than [brands] making CBD claims.
“The first brand we stocked – around three years ago - was Charlotte’s Web, which was not making any egregious claims, and along the way we found a really high-quality source of the full spectrum oil, so we moved quickly into private label.”
‘It’s definitely been a basket driver for us’
Since then Thrive has developed multiple private label products including tinctures, soft gels and balms, all referencing ‘full spectrum hemp extract’ with varying amounts of ‘phytocannabinoid complex’ per serving/capsule/bottle, without using the term ‘CBD.’
Most of the other brands it stocks refer to ‘full’ or ‘broad’ spectrum hemp extract, ‘whole hemp’ or simply ‘hemp,’ although some reference CBD or ‘cannabinoids’ on the front of pack.
“It’s definitely been a basket driver for us,” noted McElwee, who said liquid tinctures were outperforming soft gels and capsules, something he hadn’t anticipated given that the latter format might seem more convenient.
“We focus on pantry staples, so beans and rice and pasta sauce; these are not high-ticket items, so if somebody throws a $50, $60 bottle of full spectrum hemp in their cart, that definitely drives up average basket size, and so it’s definitely had a meaningful impact.
“But this is not a cash grab. We know it’s what our members want and we feel very good about the brands that we offer and the level of quality.”
Stocking hemp extracts has also brought new customers to Thrive Market, he added. “For sure we’re gotten a lot of new customers through this.”
‘Our payment processor decided that a retailer selling full spectrum hemp was too risky’
That said, it’s not all been plain sailing for Thrive Market, which pulled its hemp CBD products from its site for several months last year after its merchant processor demanded it cease selling them amid uncertainty over their legal status.
“Our payment processor decided that a retailer selling full spectrum hemp was too risky and pulled the plug on our relationship, which was rather shocking given how conservative we were being in terms of ensuring we worked with high quality reputable suppliers, had all the testing to verify the THC content was below the legal limit and so on,” said McElwee.
"We ask all of our suppliers about supply chain transparency, purity, plus deeper questions about supply chain transparency and agricultural practices. We also require evidence of testing, and with our private label, we test every batch."
“Once we found a new payment processor, we were quick to re-onboard hemp.”
Pain, relaxation, sleep, mood
As for dosages, people often start with lower doses and then “work their way up” to higher potency products, but some stick with the lower doses and keep coming back for more, said McElwee, who acknowledged that the marketing had gotten ahead of the science for CBD, but said people appeared to be making repeat purchases for a reason.
“Anecdotally people really talk about results with this product in ways I’ve never heard with other supplements. They tell us they are taking it for pain, for relaxation, sleep and mood.”
Asked why Thrive Market felt comfortable selling dietary supplements, but not foods and beverages, given that the FDA has repeatedly stated that CBD is not a legal ingredient in foods OR supplements, he said:
“Our legal team and the outside counsel we talked to stressed that the line in the sand is between food and consumables vs nutritional supplements [although the FDA has sent warning letters to firms in both categories stating that CBD is not a legal ingredient].
"We don't do a lot of ready to drink beverages anyway," noted McElwee, "but we've talked to brands selling bars and snacks [containing hemp-derived CBD] and said, 'Hey we think your products are interesting, so if things change [on the regulatory front], you'll be the first to know...'"