It’s been a long time coming, says Mike Fata, CEO of Canadian firm Manitoba Harvest, which was instrumental in securing a change in the law such that it became legal to grow industrial hemp for commercial use in Canada in 1998, and now sells hemp food products in 8,000 stores in North America from Sprouts to Kroger and Costco.
But as evidenced by the rapid growth of chia, products that might once have languished in the natural channel for years before hitting the conventional channel are now making their way from niche to mainstream far more rapidly, said Fata, who is predicting revenues “approaching C$100m [US$77m]” in calendar year 2015 and has been notching up strong double-digit growth every year for the past five years.
“Look at cacao, goji berries, chia, which became global phenomenon. We’re now in every major food retailer in Canada except for c-stores and we’re rapidly expanding our presence in the US.”
In the US, household penetration of hemp foods is less than 1%
Indeed, the recent sharp growth of the Winnipeg-based firm, which grows its own hemp, has also attracted a lot of interest from investors, with the firm recently selling a majority (87%) stake to Connecticut-based private equity firm Compass Diversified Holdings in a deal that valued the whole company at C$132m.
The deal has enabled Manitoba Harvest to make a significant (C$10m) investment in upgrading its manufacturing facilities, and boosting its US sales team, said Fata, who along with other management team members, retains a stake in the business.
What excited Compass was the size of the prize, he added: “In Canada, household penetration [for hemp foods] is around 4% although awareness is probably two or three times that – which equates to one out of 10 Canadians.
“However in the US, household penetration is less than 1%, so if you double or triple that to estimate awareness levels, you’re still talking about only a very small percentage of population – maybe 1-2% - that really knows what hemp is all about. So we have a lot of work to do on education, but also see a huge amount of potential.”
Hemp: Nutritional dynamite?
Hemp seed – an oilseed typically planted in June and harvested in October – has strong nutritional credentials, containing 25-35% protein; fiber; the short chain omega-3 fatty acid ALA; plus a small amount of the lesser-known fatty acids gamma-linoleic acid (GLA), which has anti-inflammatory properties; and stearidonic acid (SDA), which the body converts into the heart-healthy longer chain fatty acid EPA more efficiently than it converts ALA.
And when it comes to sustainability, which is becoming more important in purchasing decisions as plant- and animal-based food ingredients are pitched against each other, hemp tends to come out well as its cultivation requires few pesticides.
It also tastes good, with many consumers preferring its nutty taste to that of flax, chia or soy, claims Manitoba Harvest CEO Mike Fata.
Spoiler alert: Industrial hemp won’t get you high
Retail buyers, meanwhile, are much more open to stocking products that might once have seemed too fringe, in part because that is where the growth is more generally (natural and organic products, plant-based protein, simpler healthier snacks), but also because Manitoba Harvest can come to meetings armed with the sales data to support its specific brand story, he added.
That said, a certain amount of time in every meeting will still be allocated to providing reassurances about the legal status of industrial hemp, which is not the same as marijuana, and won’t get you high, he said (hemp comes from Cannabis sativa, the same plant species as marijuana, but contains little to no THC, the psychoactive ingredient in marijuana that delivers the ‘high’).
The US is where Canada was 20 years ago
However, while it is legal to sell foods and beverages containing hemp in the US, the US is the only major industrialized country that largely outlaws domestic hemp production, so firms selling hemp products in the US must source their hemp from overseas (typically Canada, although more hemp from China and elsewhere is now hitting the market, he said).
“Changes to the Farm Bill [enabling production of hemp for R&D purposes in the US] have raised awareness, but I’d say that the US is where Canada was 20 years ago.”
As for product coming in from China, buyers should check it carefully, said Fata, who claims there is a “huge difference in quality between the different hemp seeds you can buy on the market right now.
“We’ve seen product that’s produced for animal feed and birdseed getting redirected into the human food supply; there is a lot of low quality product out there. How it is handled post-harvest is very important.”
To capitalize on demand for high-quality hemp ingredients, Manitoba Harvest – which achieved a coveted A+ rating in its latest BRC audit – is starting to look again at supplying hemp to other companies as well as for its own products [branded hemp snacks, de-hulled seeds, oils, and protein powders].
“We do get a lot of requests, a lot of people that want to buy from us, so in 2016, we’ll move more aggressively into the ingredients supply market.”
Most people eat a variety of different protein sources
As for its own branded products - the first of which was cold-pressed hemp seed oil, followed by Hemp Hearts de-hulled hemp seeds and protein powders – the more recent focus has been on ready-to each snacks, from bites to bars, which make hemp "more accessible and convenient", he said.
The powders are also gaining traction as more shoppers seek out plant-based protein options, he said, and while hardcore sports people might be laser focused on PDCAAS scores, “many people are more relaxed about amino acids than they used to be as most people eat a variety of different protein sources.”
Compared to other plant sources, meanwhile, hemp stacks up pretty well, he said (hemp protein is high in arginine, which sports enthusiasts like as it is a vaso-dilator, and while it is low in lysine, it works well in combination with other proteins such as pea, which are high in lysine).
People really understand now that food can be your medicine
Now in his 18th year in business, Fata says he's built a strong team capable of running day-to-day operations so he can spend more time thinking more strategically and “looking three-to-five years out at the opportunities out there”.
And while there is still a lot to do to educate consumers about the wonders of hemp, he’s not lying awake at night wondering if it will ever catch on anymore. Indeed, with such rapid growth, a more pressing concern is how to maintain the small-company culture at Manitoba Harvest as the company grows (it now has 130 staff).
North American consumers, he says, are ready for hemp: “People really understand now that food can be your medicine. I know myself what it is like to be sick and tired and overweight and how you can change things by taking control of your diet and lifestyle.”