Seeking High (Growth) From Hemp
From raw seeds, to milks, oils, and protein powders, hemp has been making its way onto store shelves and into consumers’ homes at higher rates than ever before. Hemp is increasingly praised for its numerous health benefits and is becoming one of the new ‘it’ products.
What is Hemp?
Let’s start off with what hemp is not—marijuana. Often confused with its shagadelic cousin, hemp is derived from the same plant family as marijuana, but has less than 0.3% of THC, the psychoactive chemical compound in marijuana.
Hemp is a dry fruit with a hard shell, similar to a sunflower seed. Its plant name is cannabis sativa and is an incredibly versatile and adaptable plant to grow. The plant requires little water or maintenance, needs less pesticides to guard from disease (helping farmers attain the more lucrative organic title), and has a negligible carbon footprint, all traits that make its cultivation an attractive prospect.
Why are Consumers Buying Hemp?
Hemp is trending among health-conscious consumers, and for good reason. This little seed boasts enormous health benefits as it contains all 20 amino acids, including the nine that our bodies cannot produce, has the highest botanical source of essential fatty acids, is a rich source of phytonutrients, fiber, and antioxidants, and is gluten free.
Moreover, hemp is gaining popularity in the protein supplement space as consumers increasingly adopt plant-based diets and look for an alternative to previously market-dominant whey protein, which causes bloat and digestive distress for many. Hemp boasts 11 grams of protein per 30 grams of hempseed, and is a complete protein source, which is a unique attribute among plant-based proteins.
With these excellent health benefits, it is no wonder that hemp-based foods and beverages have been growing strongly. In fact, in 2016, U.S. retail sales of hemp-based foods and beverages grew to $129 million, a surge of 44% from the previous year. The total hemp retail market, which includes food and beverage, personal care, textiles, supplements, and industrial applications, among others, reached $688 million in 2016 and is expected to grow at a robust 22% CAGR through 2021. Companies like Evo Hemp, selling everything from snack items to hemp hearts, and Hippie Butter, a self-proclaimed ‘online gourmet food grocer’ which sells items ranging from hemp seed butter to hemp seed shampoos are two examples of companies driving these trends. Although growing, hemp seed products have not hit the masses quite yet. With only 1% penetration in the U.S. and approximately 5% penetration in Canada, there is still immense room for expansion in our local markets.
Private Equity groups and larger strategic companies have noticed the growing demand for hemp products among consumers and are increasingly entering the market in search of healthy returns. Notable news includes the recent acquisition of Manitoba Harvest, a well-known hemp brand that can be found in the likes of Whole Foods, by Compass Diversified Holdings. Among strategic companies, M&A activity includes acquisitions of American Nutritional Products (a producer of hemp capsules, gummies, and serums) by INCC, Full Sun (producer of hemp seed oils) by Victory Hemp Foods, and CBD Pharmacy (manufacturer of consumable legal cannabis and hemp products) by Real Brands, just to name a few. With strong product attributes, and macro tailwinds, we expect hemp-based products to continue to “grow like a weed!”
Source: Food Business News