Beyond Impossible

Victory Hemp Foods of Carrollton, Kentucky, processes hempseed into hemp hearts, oil and protein. Courtesy Photo

Necessity, they say, is the mother of invention. Just ask Carla Boyd, who first started cooking with hemp ingredients to manage food allergies and eventually launched a company built around her recipes.

A lot has changed since Boyd founded Evergreen, Colorado-based Hemp Way Foods in 2014. For starters, the 2018 Farm Bill legalized the regulated production of hemp, which previously had been treated as a quasi-controlled substance.

The new legal landscape, which has led to a surge in hemp production, and growing consumer demand for plant-based foods have given rise to a new crop of hemp-based food products ranging from gelato to protein bars. National grocer Whole Foods Market, for example, offers tea, protein powder, granola and milk made from hemp.

To some extent, firms such as Hemp Way Foods also are riding a wave created by the Impossible Burger, the plant-based faux meat patty that caused a media frenzy with its popularity.

“The Impossible Burger has definitely helped (my business) because it has brought more attention to plant-based foods,” said Boyd, who nonetheless shies away from tying her firm’s signature product, a handcrafted hemp burger, too closely to the Impossible Burger.

“My product,” she noted, “is a meat alternative, but it’s not created to have meat flavors. So, it’s very different from the Impossible Burger.”

For all the apparent potential of hemp-based foods, the market is still dominated by cottage-industry businesses, according to Boyd, who is among a group of entrepreneurs leading the way by breaking into new retail channels, forging relationships with suppliers and, in some cases, developing new business models. Marijuana Business Magazine spoke with leaders in the hemp-based food market about challenges they’ve faced and how they’ve overcome hurdles to expand their collective reach.

 

The Battle for Shelf Space

Breaking into grocery stores isn’t easy, especially for upstart manufacturers. Retailers tend to be highly selective about which new products they’re willing to carry; in many cases, manufacturers must pay “slotting fees” to get their products on store shelves. Slotting fees, a form of pay to play, help retailers compensate for the fact that many new products fail before catching on with consumers. But the fees can be hefty—sometimes costing $25,000 per item per chain—and, of course, difficult for small businesses to absorb.

“Shelf space has been a challenge,” Boyd conceded. “For a company like mine, (slotting fees) are next to impossible to afford.”

She has managed to convince grocery stores to eliminate slotting fees for her products by appealing to their desire to buy local. The local-food movement has become big business, and supermarkets, including massive chains such as Walmart, are expanding and marketing their locally grown and produced offerings. The U.S. Department of Agriculture offers grants to promote local foods, and many states fund programs that market food and agricultural products grown, raised or processed locally.

 

Flexibility Is Key

Getting your products on store shelves is only half the battle. To succeed in what’s likely to become a more crowded market, hemp-based food manufacturers must be nimble and willing to adjust when things don’t go according to plan, said Chad Oliphant, co-founder of the Hemp Food Co., whose signature product, Hempé, is sold in about 400 stores nationwide (including Wegmans, Fairway Market and Whole Foods locations) and online via Amazon and LuckyVitamin.

Oliphant speaks from experience. He and his wife/business partner, Sarah Yancey, got their start in the food business producing tempeh, a traditional Indonesian product made from fermented soybeans. Their original tempeh product was unpasteurized and had to be frozen for shelf life. But customers don’t tend to look for tempeh in the freezer aisle. Oliphant and Yancey also found that many shoppers who purchased the product would bring it home, stick it in the freezer and forget about it, which put a crimp in their repeat business.

They eventually opted for pasteurization, which meant the product could share shelf space next to tofu and other tempeh brands that don’t require refrigeration. Oliphant said sales took off as a result of the change.

“When I got started, I was a purist with regards to tempeh. I wanted to provide the most authentic tempeh product I could, but that wasn’t necessarily what the market was looking for,” explained Oliphant, who encourages fellow entrepreneurs to “live from your vision but listen to the market.”

 

Ingredients Matter

Hemp farming has taken off since the passage of the 2018 Farm Bill, but food manufacturers still face certain limitations when it comes to sourcing ingredients.

Boyd, for instance, figures her firm could save money by buying hempseeds directly from farmers and dehulling them—with the proper equipment, of course. But she prefers the ease and peace of mind that comes with buying hemp hearts (shelled hempseeds) from Colorado Cultivars.

The Boulder, Colorado-based firm grows and sells hemp and offers a wide range of wholesale hemp products, including hearts, protein and seed oil. It uses organic farming practices and regularly tests its products for purity and potency. The company also tests its food products to ensure they don’t contain cannabinoids, which have yet to be approved by the U.S. Food and Drug Administration for use in food products.

“I’d probably never go to an independent farmer without going over very strict prequalification work,” said Boyd, whose hemp burger is sold in 10 stores and 10 restaurants in Colorado.

While many food manufacturers don’t buy hemp directly from small, independent farmers, they are turning to firms such as Victory Hemp Foods, which buys hempseed from farmers or small cooperative farming groups and processes it into hearts, seed oil and protein for use in food, skin-care and other types of products.

The company, founded in 2016, has developed processing technologies that address one of the biggest problems associated with using hemp proteins in food products—their bitter taste, or what founder Chad Rosen calls “sensory challenges.” The Carrollton, Kentucky-based firm expects to purchase 1 million acres of hemp by 2030.

“Customers want fried chicken without the feathers, fish without the fins and burgers without the beef,” said Rosen. “So food manufacturers need some kind of plant substrate to make that happen. That’s where hemp protein fits in well, if it’s processed in a way that avoids incorporating those astringent tannins.”