In a category filled with tremendous uncertainty, officials at Kadenwood are doing all they can to reassure retailers and consumers that by operating at a level equivalent to the best consumer products goods companies, they can build sales in the fledgling and confusing CBD market.
The Newport Beach, Calif.-based company is wooing and enticing both mass retailers and shoppers with a strategy that emphasizes quality, consistency and a go-to-market format that is designed to mimic the programs — and successes — of traditional CPG companies. The end result, company officials said they hope, will be the opportunity to stand out in a crowded market, and actually start to fulfill the promise of increased sales and profits from CBD products.
The fact that the CBD segment has not yet reached anywhere near its potential is bothersome to both retailers and suppliers in the field. As recently as just two years ago, many industry gurus said that CBD sales could reach more than $24 billion annually and, with high margins and price points, everyone in the industry would be reaping tremendous profits. Some even said that intense consumer demand would cause a shortage of products that would only be solved by a dramatic uptick in production.
Well, a few years later, the industry, including retailers, is still waiting for that explosion of sales. Some said a lack of professionalism in the category from some of the hundreds of suppliers, as well as a reluctance from the Food and Drug Administration to approve a broad array of merchandise across many food and nonfood categories, is not helping. They noted that without FDA approval and support, many retailers are reluctant to get involved with key segments of the CBD market, which, in turn, causes many suppliers to avoid getting involved in those areas.
All of this confusion in the marketplace actually is encouraging officials at Kadenwood, which has nearly 90 employees, to quickly move forward with their approach. In fact, with a bevy of experienced senior leadership, the company senses a void in the marketplace, as well as an opportunity to show that if you act like a seasoned pro you will be treated like a seasoned pro.
“The key is to show retailers that we are operating at the highest professional level,” said Erick Dickens, a co-founder and CEO of the private-held business. “Our entire reason for being and our strategy from our inception is to be the company that offers our retail customers a top-level experience from start to finish. From the beginning, the CBD category has not been built by CPG professionals, and we think that has hurt the industry. We are here to change that.”
Dickens and Doug Weekes, another co-founder and COO, are living proof of this strategy. Both spent considerable time and gained valuable experience with Kraft Foods. After a stint at LifeLock, Dickens eventually became chief marketing officer at King’s Hawaiian Brands while Weekes moved on to several beverage-focused companies, including Refreshment Beverages, before joining up with CPG-giant Henkel. Together, they came back to help form Kadenwood in 2019.
“We saw a niche here,” Weekes said. “We saw that there were no primetime suppliers in this category on par with what retailers would expect. We are bringing that high level of professionalism that is much needed in the CBD market.”
That strategy means building brands that could attract acquisition interest from other major CPG companies looking to get their start in the category while, at the same time, creating a successful enough company that can stand alone and, perhaps, eventually go public. The first part of this approach was to create products that are the best quality, yet still affordable.
Those brands are Level Select, a line of sports creams, oil drops and roll-ons; Purity Preferred, a line of pet health products; and Purity Organic, a line of CBD-infused hot teas that come in a variety of flavors with various purported benefits.
The company also has a bioscience division consisting of two brands: Kadenwood and Ecogen. Last November, the company acquired General Processing, a Colorado-based hemp processing and extraction company, which Dickens said would help to
further integrate the supply chain while servicing domestic and global markets.
The company also is addressing the growing concern in the marketplace that CBD products are too expensive for some consumers. Weekes said that Kadenwood is introducing 10 SKUs of trial-size products, priced between $9.99 and $14.99, to encourage more shoppers to experiment with CBD products. Its full-size products have price points that range up to about $50.
Both officials noted that distribution of Kadenwood products is growing across the country. They said they currently are selling in about 2,000 stores and expect that to triple to 6,000 units by the middle of this summer.
Developing the right products and brands is only the first step for Kadenwood. Dickens is quite clear that the company must help retailers connect with consumers and build sales in store. Therefore, the company is extremely involved in in-store merchandising and promotions, as well as a beefed-up advertising program that helps develop clear positioning for each of its products, so that both retailers and consumers know what they are purchasing.
“Again, this is all about our strategy about developing a company that is not only successful, but will help the entire CBD industry,” Weekes said. “This industry most definitely needs high-profile credibility. With all that we are doing, including starting our medical advisory panel led by [former U.S. surgeon general] Dr. Richard Carmona, we feel we are leading our industry ahead into the future.”
Telling consumers about these products is a big part of the plan too. Dickens said that in 2020, Kadenwood had about a 50% share of the advertising market in CBD products in the United States. This year, he projects that number to rise to an impressive 80% mark of all CBD advertising in the country. “Right now, we are very heavy on the Discovery Network, but in the summer will plan to kick up our advertising program even more and start advertising on other national and local channels,” Dickens said. “We are eager to show the world what we are about.”