Focus On: Charlotte’s Web is ready to lead the CBD marketplace
Talk to officials at Charlotte’s Web, and it is pretty easy to get the feeling that this is a company that is ready to break loose on the domestic mass retail marketplace.
With sales nearing $100 million annually and a position at the top of the heap in the emerging, yet still undefined, CBD/hemp category, Charlotte’s Web executives said that the sky is the limit for the company. They are especially confident since they have barely touched the mass retail industry, with about two-thirds of the Boulder, Colo.-based company’s sales coming through online activity.
Yet, becoming a player in the CBD world is not that easy these days. Competition for retail space is stiff, quality issues are growing and many merchants are still a bit gun shy when it comes to stocking the category.
Enter Deanie Elsner, the company CEO since spring 2019 and a 30-year veteran of the consumer packaged goods industry. Elsner, who was most recently the president of Kellogg’s snack business unit, intends to take Charlotte’s Web to new heights in the near future by positioning it as just another CPG brand looking to satisfy growing consumer demands in a super-hot category.
Her goals for the company are significant. She intends to build sales at the publicly-traded (Toronto Stock Exchange in Canada and the OTCQX in the United States) company to at least $1 billion annually over the next few years, apparently by combining acquisitions with product introductions and developing new retail partnerships. And, she intends to show retailers and consumers that products made by Charlotte’s Web are only the highest quality.
“This is a category that is ready to explode at retail,” said Elsner, who spent a great deal of her career moving up the corporate ladder at Kraft Foods. “So now is the time to be very strategic and go to market realizing that different consumers like the millennials and the baby boomers have different needs, and we have to be in the position to satisfy all these groups. That is the fun part of this business. Like all CPG companies, we need to meet the needs of all of our [retail] clients and our consumers.”
Let’s be clear, Elsner has a big hill to climb. CBD has been the talk of the mass retail industry for much of the last three years. Backed by strong consumer demand, explosive media coverage and a ton of money from private equity and other resources, the category was poised to have a breakout year in 2019. But, the Food and Drug Administration spoiled the fun by stating late last year that it is illegal to market CBD by adding it to a food or labeling it as a dietary supplement. The agency also stated that CBD is not “generally recognized as safe” for use in human or animal food.
Mass retailers hit the pause button with the entire category, with many worried that moving forward too quickly without government approval would put them at risk. Plus, as with many new and trendy categories, everyone wants a piece of the action.
Elsner, and many other industry officials, are convinced that Charlotte’s Web will come out of this on top. The talk on the street is that this 7-year-old company, founded by the seven Stanley brothers, is arguably the best-positioned CBD producer and distributor in the industry, utilizing a great history and story, strong financial backing, and consumer brand awareness.
The company now produces about 200 SKUs, including oils, gummies, topicals and capsules for human and pet care use. Earlier this year, it announced the acquisition of Abacus Health Products, another leading CBD company that had just acquired Harmony Hemp. When the deal was completed in June, Charlotte’s Web became North America’s largest vertically integrated hemp-derived CBD company.
“Our immediate intentions are to clean up our product assortment to make our brands stronger,” Elsner said. “Then we will springboard into new products. We have some terrific new products that we plan to introduce later this year and in 2021. We think they will help position us as the market leader.”
Going forward, Elsner said the intention is for products to be sold under the Charlotte’s Web brand, as well as the Harmony Hemp brand and Abacus’ CBD Medic and CBD Clinic lines. Combined, she said, the companies distribute to more than 21,000 unique retail locations with limited shelf overlap due to adjacent but complementary positions across the ingestible and topical CBD product categories. Recently, Charlotte’s Web added 1,100 new drug stores and more than 700 pet stores, and Abacus added more than 5,000 retail doors with the signing of a new retail partner.
“The addition of Abacus Health cemented a market-leading position in both topical and ingestible products in the CBD category, representing approximately 33% market share of the U.S. CBD food/drug/mass retail channel,” Elsner said. “We are now one dynamic team and mission-driven company.”
So now what? Elsner is quite aware that her team has some work to do. First, Charlotte’s Web officials, and many other executives in the CBD community, need to convince officials at the FDA that CBD belongs on retail shelves. Then, she has to win over skeptical retailers and confused consumers to her brands.
To that end, the company started CW Labs, an internal division for research and development, substantially expanding on the company’s efforts around the science of hemp-derived phytocannabinoids, terpenes and flavonoid compounds. Under the leadership of recently hired Tim Orr, senior vice president of innovation, CW Labs is working with the University of Buffalo — part of the State University of New York system — to provide a boost to the company’s product portfolio with science-based innovation, including studies on safety and effectiveness, while advancing clinical trials. CW Labs is currently engaged in double-blinded, placebo-controlled human clinical trials, addressing hemp-based solutions for several need states.
“The launch of CW Labs formalizes our reach into the science, efficacy and safety of hemp plant compounds,” Elsner said. “CW Labs demonstrates our commitment to innovation and our cutting-edge position with consumer wellness products derived from our proprietary hemp.”
With a market share lead in the category, Elsner said she understands that Charlotte’s Web has to take a leadership role as CBD emerges. “We are the market share leaders,” she said. “We are at the forefront of educating retailers and consumers about the benefits of these products, telling all of them what they should be looking for from these types of products.”
Elsner is clear about her team’s goals. “We put our money where our mouths are,” she said. “We are focused on bringing consumers and retailers, as well as the FDA, the information and data they need to validate this category. We want retailers to see us as a CPG company that they can trust.”