Retail

Market Update: Organic and Plant-Based Food Sales

11.jpg

Originally Appeared in Presence Marketing News, August 2019
By Steven Hoffman

Rabobank: Organic Food Sales Growth Slows; Market to Hit $60 Billion by 2022

Between 2010 and 2016, organic food retail sales grew by an average of 10% per year, however, that growth has slowed to 5.9% for the past two years, says Rabobank. The international bank, known for its focus on food, predicts that organic food sales will reach $60 billion by 2022. While fruits and vegetables remain the top organic food category, representing 36% of all organic food purchases in 2018, even that category is showing signs of slowed growth, noted Rabobank Senior Analyst Roland Fumasi in a report by Food Navigator USA. “Organic produce availability has now become mainstream which means that the organic produce market will continue to more closely resemble the traditionally grown produce market,” Fumasi told Food Navigator USA. “Just a few short years ago, both organic produce prices and organic produce volumes were rising, indicating that demand expansion was occurring more rapidly than supply growth. However, there are indications that continued growth in the organic movement has partially been driven by lower prices for some of the top-selling organic product items.” Fumasi predicts that in a few years, demand for organic produce will see an increase in sales as millennials grow their income and start their own families.

Plant-based Food Sales Growing 5X Faster than Overall Food Sales

Plant-based food sales are growing like a weed, according to new research from the Plant Based Foods Association and the Good Food Institute. According to the research published in July 2019, U.S. retail sales of plant-based foods have grown 11% in the past year, bringing the total plant-based market value to $4.5 billion. Since April 2017, total plant-based food sales increased 31% according to the study. Additionally, plant-based foods unit sales are up 8.5%, compared to total U.S. food sales, which are flat, showing the overall health and momentum of the plant-based foods category. The data covers the total U.S. grocery marketplace and was commissioned from SPINS, a wellness-focused data technology company and retail analytics provider, says the Plant Based Foods Association (PBFA). According to PBFA, sales of the plant-based meat category alone is worth more than $800 million, with sales growth of 10% in the past year. Refrigerated plant-based meat is driving category growth with a 37% sales increase. Sales of plant-based milks, which grew 6% over the past year, now comprise 13% of the entire milk category, while cow’s milk sales have declined 3% over the same period. In addition, in the past year, plant-based yogurt has grown 39%, while conventional yogurt declined 3%; plant-based cheese has grown 19%, while conventional cheese is flat; and plant-based ice cream and frozen novelty has grown 27%, while conventional ice cream and frozen novelty has grown just 1%, according to the PBFA study.

Good Food Insights: Natural Continues to Set the Pace

Here’s some good news for natural products marketers, writes New Hope Network’s Bob Benenson: Natural product sales are growing five times faster than conventional product sales nationally—in the Multi-Outlet (MULO) channel, a.k.a. traditional grocery chains. Here’s the even better news: Natural product growth in this channel, where the vast majority of Americans get their groceries, outstrips conventional growth in all seven regions of the U.S., as defined by SPINS, the leading data market research firm for the natural, organic and specialty products industry. Along with FamilyFarmed’s Good Food Accelerator, Naturally Chicago and Esca Bona, SPINS is a collaborator in the Good Food Insights series. Based on the annual State of Good Food Report, derived from SPINS’ analysis of MULO market data for the 52 weeks ending May 19, 2019, while natural products comprise 9% of total sales in the MULO channel, sales in this category grew 5% over the study period, compared to 1% growth for conventional products. “Conventional retailers are recognizing that the rise of natural is an ongoing historic and generational shift, not a fad. And as they address consumer demand by adding more natural products to their shelves, they are jump-starting further growth in the sector,” writes Benenson. According to SPINS, California has the largest MULO market share of natural products at 14%, followed by the Northeast, with 12% MULO market share for natural products. The South-Central states recorded the lowest MULO market share, with only 6% of sales attributed to natural products. According to Andrew Henkel, SVP of Brand Growth Solutions at SPINS, the forerunner regions have the biggest consumer bases that are apt to adopt a “good food and natural products lifestyle.” “Parts of the country that have significant urban, progressive consumer bases are indicators of where the rest of the country is going to go,” Henkel told New Hope Network.

Hemp Harassment: Leading Online Retailer Thrive Market Forced to Cease Sales of All Hemp and CBD Products in Banking Backlash

Photo: Pexels

Photo: Pexels

Originally appeared in the Let’s Talk Hemp Blog & Newsletter
By Steven Hoffman

In a seeming backlash to the burgeoning hemp economy, hemp and CBD retailers, industry associations and other hemp-centric businesses are being denied or threatened with denial of banking, credit card processing and other key business services, including a national newswire service that announced this past month it will no longer accept press releases from hemp companies, and is, in fact, deleting all existing and previously issued press releases related to hemp and CBD from its online archives. It is a disturbing trend in an industry that was made legal across the U.S. as a result of the 2018 Farm Bill and is projected to grow to $26.6 billion by 2025.

It has forced such retailers as leading online natural products grocer Thrive Market to cease sales of all hemp and CBD products, a best-selling category over the past 18 months on its nationally recognized ecommerce site. The member-based online retailer boasts more than 500,000 members. “In early June, we received a notice from our merchant processor demanding that we cease the sale of all hemp and CBD products on Thrive Market. We unfortunately have no choice but to comply, and we’ll begin removing our assortment as early as Thursday, June 20,” wrote Thrive Market’s cofounder and CEO Nick Green in his blog on June 17. As of this writing, clicking on that assortment link takes you to a blank product page on Thrive Market’s website.

Meanwhile, the U.S. Hemp Authority, a not-for-profit trade group developing certification standards for the industry, lost payment processing services in June after being dropped by its vendor, Stripe, based in San Francisco, reported Hemp Today on June 20. According a report in CNN Business, Stripe said it dropped the U.S. Hemp Authority’s account because of liability concerns, despite the fact that the trade organization is not a seller of any hemp products. “We’re being told we’re high risk. We’re actually trying to minimize human risk,” Hemp Authority president Marielle Weintraub told CNN.

Abrupt Notice
Since a leading credit card processor, Elavon, a subsidiary of U.S. Bank, abruptly notified its hemp and CBD clients in March 2019 that it had recategorized hemp and CBD merchants as a “prohibited business type” and was backing out within 45 days of handling payment processing for such companies, a number of hemp businesses have been scrambling to establish secure and durable payment processing relationships. According to one estimate by Philippa Burgess, cofounder of MMJ FinSol, a Denver-based financial services solutions company for hemp, cannabis and other “high-risk” businesses, Elavon’s policy changes affected up to 40,000 CBD companies.

Another merchant processor, Fortress Payment Technologies, in May 2019 notified all its ecommerce customers selling CBD products that they would no longer be able to process Visa credit card payments through the bank. Some sellers received less than eight hours’ notice of these changes, reported Folium Biosciences, a vertically integrated hemp-derived phytocannabinoid producer based in Colorado Springs. The company recently launched a CBD/hemp friendly financial services platform for its customers to help remove the financial hurdles faced by the CBD industry, it said.

Kyle Rapoza, cofounder of Vermont-based Mansfield Provisions, which distributes CBD products online and through brick and mortar retail partnerships, lost credit card processing services for his company in late May 2019, when Elavon stopped doing business with the hemp industry. He explained to Ganjapreneur Magazine that, in the wake of Elavon’s action, many of the industry operators he knows and does business with are moving back to high risk (and high fee) accounts. Rapoza has since been able to access more traditional business accounts through a state credit union, Ganjapreneur reported.

Biggest Challenge Facing the Hemp Industry
It’s a “difficult time” for the industry as it related to financial services, which he called “the biggest challenge in the industry right now,” Jonathan Miller, general counsel for Kentucky-based industry association Hemp Roundtable, told Ganjapreneur. “The law, we believe, is clear that since the [2018 Farm Bill], hemp and CBD are no longer controlled substances. There should be no concern whatsoever that there would be violations of federal law to engage in commerce. …Unfortunately, there is a lot of misinformation – it’s banks, it’s credit card companies, it’s merchant services that have been refusing to do business with these hemp and CBD companies.”

Because banks have been so hesitant to serve hemp and CBD businesses despite the legalization of hemp in the Farm Bill, U.S. Senators Mitch McConnell (R-KY) and Ron Wyden (R-OR) – chief proponents of legalizing hemp – in April 2019 sent individualized letters to four federal banking and financial regulatory institutions, imploring them to prevent banking discrimination of the hemp industry, reported Cannalaw Blog.

In addition, when pressed by U.S. Senator Jon Tester (D-MT) at a hearing in June 2019, Marijuana Moment reported that Federal Reserve board member Michelle Bowman pledged to inform banks that they can service hemp businesses. When Tester asked specifically how the Fed is advising institutions when it comes to hemp, Bowman responded, “We have not told them that they cannot bank them.” Tester countered that while he and Bowman might be on the same page, it is possible that banks were hearing a different message—hence why hemp businesses have said that they’re still experiencing difficulties accessing credit. Tester said clarification is especially important at this stage because of fallout from trade wars with China and Mexico, as hemp represents a potentially lucrative crop for American farmers. “I would agree with you. We would not discourage banks from banking these types of customers,” Bowman said. “We’ll try to clarify that. Hemp is not an illegal crop.”

What, No Press Releases?
While certain merchant banks seek to stifle hemp industry growth through the denial of critical financial services, another service provider in the media newswire business seeks to silence its voice.

One leading hemp industry media and event production company, Colorado Hemp Company, based in Loveland, CO – producer of the NoCo Hemp Expo, Southern Hemp Expo, and the Let’s Talk Hemp weekly newsletter and podcast – was recently informed by its newswire service, ReleaseWire, that it will not post or distribute any new press releases that mention hemp, and in addition, it was deleting all existing and previous press releases mentioning hemp that Colorado Hemp Company had posted in the past. In a policy update issued on May 8, 2019, ReleaseWire, one of the nation’s leading online national newswire services, issued the following statement, after which it began informing hemp-centric businesses that not only were they not accepting new press releases for distribution, they were deleting all existing press releases and archives related to cannabis, hemp or CBD:

“ReleaseWire was recently contacted by our credit card processor and informed that they have a policy in place that restricts merchants, including ReleaseWire, from linking to, or providing information about, marijuana, cannabis, CBD, hemp and related products. As such, we have been instructed by our credit card processor that we must not only stop taking press release submissions on these topics, but we must remove any existing press releases and related content from our site. They have provided us with a small window of time to complete this process or risk losing the ability to process credit cards.”

Meanwhile, other newswire services including Cision, owner of PR Newswire and PRWeb, continue to accept and publish hemp, CBD and cannabis related press releases on behalf of clients.

Hemp Friendly Payment Processors
So which payment processors are willing to serve hemp and CBD companies? One such processor, Adept Payments, says on its website that it helps high risk businesses, including vape, CBD, adult, casinos and more.

While financial services group, Edward Jones, has no official policy about outreach to the hemp industry, a broker in Bend, OR, contacted Hemp Industry Daily to say he was offering a “full spectrum of banking, investment, insurance and financial planning services to hemp farmers.” Officially, Edward Jones is “looking at the provision in the Farm Bill that addresses hemp growing,” John Boul, manager of global media relations for the St. Louis-based Edward Jones told Hemp Industry Daily in April 2019.So which payment processors are willing to serve hemp and CBD companies? One such processor, Adept Payments, says on its website that it helps high risk businesses, including vape, CBD, adult, casinos and more.

Square, a leading online payment processor, recently soft-launched credit card processing for CBD companies, but the program is still in beta testing phase and is by invitation only. Former credit card processing professional and current blogger Phillip Parker, who describes his site, CardPaymentOptions.com, as a credit card processing watchdog group, posted a guide to the Best Merchant Accounts for Hemp Products in June 2019. Also, Merchant Maverick, a self-described comparison website that reviews and rates credit card processors, mobile payment services and other small business software, published a guide to the Best CBD Oil Merchant Account Providers in April 2019.

For CBD sellers on Shopify and other major ecommerce platforms, a recently launched processor, Organic Payment Gateways, advertises that its mission is to help people in the CBD business process payments online, and that its payment gateways work smoothly with Shopify, WooCommerce and others. Leap Payments, Instabill and other services promote that they are dedicated to ensuring CBD businesses “can accept debit and credit card payments just like any other business can.”

So, for now, you won’t find any hemp or CBD products at Thrive Market, however, the ecommerce retailer says it won’t give up without a fight. “We believe that ethical and sustainable hemp is another cause worth fighting for, so rest assured that we will be working behind the scenes in the coming weeks to get hemp products back on Thrive Market,” Nick Green wrote in his blog. “In fact, we’re already in conversations with a new processing partner to try to make that happen.”