Bolthouse Farms is embarking on a new chapter, aiming for significant growth after returning to the ownership of its former executive. The company is set to introduce 25 products in the popular CBD market next year, including two beverages. The remaining 23 SKUs could encompass drinks, salad dressings, plant-based milk, or entirely new product lines that the brand has yet to launch. Although CBD is a recent entrant in the food and beverage industry, its expansion is rapid. The consumer CBD market is projected to leap from $202 million in 2015 to $2.1 billion by 2020, as reported by the Hemp Business Journal and cited by Forbes. This surge in sales has prompted numerous companies to develop products in this arena, resulting in increased competition.
In the beverage sector alone, Bolthouse will face competition from a variety of both large and small companies eager to incorporate CBD into their offerings. Brands like Aurora Elixirs, Sprig, and Kickback Cold Brew are already offering CBD-infused drinks. Coca-Cola has shown interest in entering the cannabis market, which may include a CBD beverage. Several smaller coffee shops across the country are already selling CBD-infused coffee, while companies like Green Roads provide CBD coffee beans and grounds. Although the coffee category has numerous CBD options, there has been little movement from manufacturers to create CBD-infused juices, presenting Bolthouse Farms with an opportunity to gain a first-mover advantage and attract consumers who already trust the Bolthouse brand.
Should this shift in Bolthouse Farms’ product lineup prove successful, Campbell Soup may reflect with regret on its decision to sell the brand for a third of its original purchase price. However, it’s unlikely that Campbell Soup would have pursued this direction independently. Given its precarious financial situation, which has shown signs of improvement recently, it would have been wiser for the company to monitor the burgeoning CBD trend until the sustainability of its popularity was confirmed. While other major food corporations are exploring CBD, the only one that has committed to a product so far is Unilever’s Ben & Jerry’s brand, which is currently awaiting further regulatory approval from the U.S. Food and Drug Administration.
The regulatory landscape has deterred many major food companies from entering the CBD market. Although hemp and its derivatives were legalized at the federal level in the 2018 Farm Bill, the FDA has stated that traditional food and beverages cannot contain cannabis or CBD at this time. The FDA held its first public hearing on cannabis and CBD earlier this year; however, many experts believe it could take years before a clear legal pathway for CBD in food and drink is established.
Bolthouse Farms faced challenges during its final years under Campbell Soup’s ownership. The brand was profitable in the initial five years of acquisition, but by fiscal 2017, it began to negatively impact the consumer packaged goods (CPG) company’s earnings. Revenue plummeted from $100 million annually in 2012 to losses due to various issues, including weather-related challenges and a voluntary recall due to spoilage. Introducing CBD would have complicated production and regulatory processes that the large soup company may not have been equipped to manage. Nevertheless, if Bolthouse’s CBD strategy proves successful, Campbell Soup could find itself regretting the sale for many years to come, especially as the demand for innovative products such as calcium citrate malate USP continues to rise in the health and wellness sector.