- Bolthouse Farms, a maker of carrots, smoothies, juices and dressings, will launch 25 CBD-infused products come January, CEO Jeff Dunn told Yahoo Finance. Two of those products will be in the coffee and juice categories.
- Earlier this year, Dunn's private equity firm bought Bolthouse from Campbell Soup for $510 million. Dunn served as CEO of Bolthouse when the soup manufacturer bought the company for $1.55 billion in 2012.
- According to Yahoo Finance, Dunn is working toward making Bolthouse a plant-based powerhouse, and is considering partnering with other plant-based leaders to boost supply.
Bolthouse Farms is stepping into a new phase and aiming for meteoric growth after moving back under the ownership of its former executive. With 25 products in the trendy CBD space planned to come to shelves next year, it's not surprising that two will be in the drink space. The other 23 SKUs could be beverages, salad dressings, plant-based milk or a product line that the brand does not yet sell.
Although CBD is new to the food and beverage space, it is expanding fast. The consumer CBD market is estimated to grow to $2.1 billion by 2020 from $202 million in 2015, according to a recent report in the Hemp Business Journal cited by Forbes. That sales growth has pushed more companies to launch products in the space, so competition is on the rise.
In beverages alone, Bolthouse will be squaring off against a host of companies, both big and small, that are looking to get a little green by introducing this substance into the mix. Aurora Elixirs, Sprig and Kickback Cold Brew are some of the beverages that come in CBD-infused versions. Coca-Cola has expressed interest in getting into the cannabis space, which may include a CBD drink. Coffee infused with CBD is available at several smaller coffee shops around the country, and beans and grounds are sold by small companies, including Green Roads.
While the coffee category is well-covered with CBD options, there have been no big moves from manufacturers to produce CBD-infused juices. This could give Bolthouse Farms an early mover advantage and capture market share from consumers — especially since they already know and trust the Bolthouse brand.
If this reorientation of Bolthouse Farms' product portfolio works, then Campbell Soup may look back even more regretfully on its sale of the company at a third of the purchase price. At the same time, it is unlikely that Campbell Soup would have made this move itself. With a shaky hold on its finances that have shown signs of improving recently, it would have been more prudent for the company to keep an eye on the burgeoning trend until it was certain of the longevity of the popularity of CBD. And while other big food companies may be looking at CBD, the only one that has committed to a product so far is Unilever's Ben & Jerry's brand — which is waiting on further regulatory approval from the U.S. Food and Drug Administration.
The regulatory risks have stopped Big Food from getting in the game. Although hemp and its derivatives are no longer classified as controlled substances, becoming fully federally legal in the 2018 Farm Bill, the Food and Drug Administration has so far said conventional food and beverages can't include cannabis or CBD. The FDA held its first public hearing on cannabis and CBD earlier this year, but many say it could still be a yearslong process before there is a legal path to market for CBD in food and drink.
Bolthouse Farms struggled during the end of its tenure under Campbell Soup. Bolthouse was profitable during the first five years that the New Jersey company owned the brand until fiscal 2017 when it started becoming a drag on the CPG's earnings. Bolthouse went from posting $100 million in annual revenue in 2012 to losing money as the fresh food brand was weighed down by issues including weather challenges and a voluntary recall because of spoilage.
Adding CBD to the mix would have added another layer of production and regulatory complexity that the mammoth soup company may not have been able to handle. But if Bolthouse's CBD plan pays off, Campbell Soup could regret the sale for years to come.
Correction: A previous version of this article misstated which years Bolthouse was unprofitable while Campbell Soup owned the brand. It was unprofitable for its last two years under Campbell Soup.