Episode 57: Innovation Grows Gummy Capacity



Joe: On this episode of the "CBD University podcast," it was a big year for our award-winning and industry best-selling gummies. So how do we improve on our CBD gummies done right? Innovation, manufacturing, and capacity. Here about 2021 will be an even bigger year on this episode of the "CBD University Podcast," and it starts right now.

I'm Joe Agostinelli, host of the "CBD University Podcast." And if you're a returning listener, thank you once again for coming back to our podcast, if you are a new listener, we are glad you found us on your favorite podcast platform of choice. We hope that you will subscribe to our podcast wherever you get your podcasts. And don't forget, full episode video is available on the Global Widget YouTube channel and the YouTube channels of our brands Hemp Bombs and Nature's Script.

Well, last year was a big year for our CBD gummies with the debut of our new and improved CBD gummies in July, they were named the CSP Retailer Choice, best new product and the CBD in hemp category in 2020. And our Hemp Bombs brand leads the convenience store space with over 60% of the market share according to the latest IRI SPINS data. Plus stay tuned to our podcast for a special edition episode in the near future on the launch of a new non-CBD gummy variant focused on health and wellness and response to industry trends. But before we get to all of that, how do we top everything that went on in 2020? And my two guests here today will tell you all about what's in store for the year of hemp when it comes to gummies. And I welcome our Chief Operating Officer, Salim Baltagi, and Vice President of white label and raw materials Chad Levitt. Thanks for both coming back to the podcast.

Salim: It's good to be here.

Chad: It's good to be here.

Joe: Salim, we'll start off with you when it comes to formulating and manufacturing our gummies, it all starts way before you get the finished product in the bottles, as you can see some of them here on our list the Nature's Script brand, and that's a Hemp Bombs brand. And we'll talk a little bit about the white label opportunities when Chad joins us. But before we even get to that stuff, we got to have the right formulation and we gotta have the right technology and processes, and that's something we are expanded on as we go into 2021 and something we expanded on in 2020.

Salim: That's exactly, Joe. And it all starts with the recipe, it all starts with a team that we have our own recipes in house, we create our own recipes. And then the formulation team is exceptional, they take pride in everything they do. And then our gummies are just coming off the press I mean, they're delicious. They're just like we have capacity, we are adding equipment then we'll talk about that in a little bit as well, we continue to expand and tell you enough about our team.

Joe: And we do have some behind the scenes videos available longer to YouTube channel that takes you behind the scenes of the gummies and how they are made. And you talked a little bit about the machines, two machines so far a third one just coming online.

Salim: Exactly.

Joe: Not too long.

Salim: So we have three gummy lines and then we're ordering a fourth one, so that will be coming in very soon in the next few weeks. So we're expanding our capacities and then it's exciting. It's exciting that we're investing in the business, we continue to grow, our gummy business is great, as you mentioned earlier, the award-winning gummies. So it's all exciting, 2021 is gonna be a great year for us.

Joe: And, Chad, another reason for success in the gummy market, and then coming over to the white label is the endless possibilities because of that capacity. So when we talk about capacity... I mean, you're smiling already. So go ahead, tell us all about it and how it really affects the white label and raw ingredient site.

Chad: Well, what it allows us to do is with this capacity and capacity starts, and let's back up even more so than that, let's back up to the formulations team. The commitment that the company has made to formulations in just in terms of the people itself, our team has actually doubled in size over the course of the last like 60 days. So with that happening, that just gives us even more possibilities. And what was that born of? Well, we were having great conversations with a number of companies out in the industry now and starting to look at, you know, in the past, I was like, "Hey, let's reverse engineer, let's look backwards at some of the products that you have, and maybe people that are having challenges because of their current supplier has capacity issues." And so what does that mean? It means that things that turn around at 6 months at other facilities turn around the 30 to 45 days here.

And that itself combined with a low accuse that we require per gummy say private label formula mix those together with that increased capacity, Salim talked about the third machine that's online with the fourth is being ordered, you add all that together. And what happens is, is our capacity, we're not near our capacity, but allows us to kind of continue to say, yes, let's look at these other opportunities, yes, it allows us to expand and look at other vitamins, other cannabinoids, other, you know, different sizes shapes.

And really the speed and efficiency of which we operate and also combined with the years and years of experience, specifically gummy experience from our formulations team, it really has allowed us to kind of grow in this market. And what we've seen really since the contract manufacturing team has come online, really just a little over six months ago and no other word other it's just exploded. And we've really been fortunate that it's been a great ride and I've been really enjoying to be a part of this.

Joe: And when we talk about capacity, just to put it in perspective, how does it work with the manufacturing team? Like how many gummies can we make on maybe daily basis, weekly basis, monthly basis? I mean, it's just like Willy Wonka's chocolate factory, are the machines running all the time?

Salim: And our machines are actually, yes, we continuously run our machines. And like Chad mentioned, we still have capacity, but we are getting more capacity in order to prepare for anything that's upcoming any additional business, any new business, but on average, we run over 1.5 million gummies a day, you know, with a fourth machine coming in, it will be over 2 million gummies today. So that's gonna allow us to do all kinds of things. So it's exciting, it's a lot of capacity available and we're looking forward to fill all those machines and maybe order a fifth one.

Joe: All right. Let's see what happens, that'll be awesome.

Salim: That's right. It's just exciting times, it's exciting times when you have three machines and you have all these capacities and you got a fourth one the way, so why not?

Joe: And what kind of certifications or state licenses are needed for, you know, making your own gummies? I know there's some things in the work, but what so far is like the key license or certification to have so we can be doing this on a daily basis?

Salim: Well, we know in 2020, the Florida hemp permit, so we already secured that, we have our audits already done, we have the Florida hemp certificate that we can make edibles in our facilities, so we're proud of that. We continue to work on additional certifications as they come on board, we'll be talking about those.

Joe: And for more stuff on the State of Florida, you can take a listen back to episode 44, Holly Bell, the cannabis director from the State of Florida appeared on our podcast just a couple of months ago, but her information is still very pertinent as to what we talked about even though we're a few episodes down the road, once again, that's episode 44. So Chad on topic capacity, the ability to control that process from the formulation to the time it gets on the store shelves really speaks to the vertical integration, efficacy across just about any brands or type of gummy, correct?

Chad: Yeah, it is, you said it great. Really in terms of vertical integration, the fact that our company, we actually extract material and have the capabilities to do so that really means that that material once it's received to us, we'll say biomass form, you know, which is just the raw hemp itself has been milled down, once we receive that material, it won't leave this facility until it's got a label bottle shrink, no cap, it's ready to go. And then it's been tested, you know, in terms of the third party ISO lab, that's given the go-ahead and verify that's within a certain spec.

You know, when you work with products that are, you know, in the past, what's been traditionally understood in the market is what's acceptable, in CBD specifically is gummies can be really kind of coming in any form. And what I mean by that is it can come in any shape and size, but in how it's even manufactured, you could spray the material, which is literally you're spraying and coating the gummies itself. And, you know, Global Widget realized that, "Hey, it's just a great opportunity to as for kind of like say, well, let's take a little different approach, a much different approach and say kind of align more with CPG, consumer packaged goods in the industry, let's infuse these.

So what does that mean ultimately, at the end of the day? It means that you go from these super-wide variances on a per-piece basis to something narrow is more like 10%. And I'm talking about why? Like you're talking like it could be 20% and 30%. You know, you get a 10 milligram gummy, it could be as low as like five milligrams as high as 15 when sprayed on average, you know, that various gives from like 9 to 11 when you're looking at an infused product, that is the beauty of having infused. And that means that the customer is getting a better experience, they're getting more consistent product, so therefore, they're getting the real effects and the real benefits, you know, that they feel that they're getting from the CBD itself.

Joe: And, Salim, how important is it to find the right balance of ingredients in the formulation so the gummies are produced to our very high-quality standards, especially when it comes to new machines, obviously, it probably takes a little bit to get the look and feel the machine and how gummies come out, correct?

Salim: Exactly. I mean, our machines, typically any industry, you put a brand new line inside your facility, it takes you 30 to 60 days to get it up and running. We are fortunate to have an exceptional engineering and maintenance team, and our machines as they come in within three weeks, we're up and running. But you have to experience in each line is a little bit different even though they're made similar and we're having redundancy to make sure that our equipment similar as we move forward. But it's definitely from cooking it at the right temperature, producing it, cooling it through the cooling tunnels as it comes out, coating it, whether it's wax-coated or whether it's sugarcoated, it all has to be at the right time and the right place, and then drying it and making sure that that gummy when it comes out, it's ready to be put in a package that is gonna be ready to be consumed at some point in the future. That is the form is correct, the molds, the shape, everything else, and the taste and texture. So we take broad in every step of the way, and that doesn't happen by accident, you have to test it, you have to try it, you have to dial it in. So it takes a little bit of time to get it up and running, but once our lines are up and running, they are consistent every one of them.

Joe: And finally, Chad, what's the feedback you get when people realize that our gummies are made exclusively in house, and when you have them here, they see the technology and the innovation, and maybe even some folks who have been here in the past and they come in now and they're like, wow, this is completely? I mean, it's completely different from when I first walked in the back when I started here in 2019 to today, what's it like for the folks who are here that you're bringing around?

Chad: You know, we still will take on visitors and we also had a tour even as recently as this past Wednesday, and the comments that we get from folks really just you guys really have something that's quite unique in this industry and what that is, is capacity. We're talking gummies on this one, this is what the focus of this conversation is, but there's capacity in other areas too, so it becomes a wow effect. When you look at the capabilities of the company from a production standpoint, from a distribution, from an extraction standpoint, we really kind of are far superior to what we see really it's well-received, we'll expected in the market, there's just a difference. And, you know, people are back there they're working every single day. I mean, we are cranking.

I mean, you go back to this, we have three lines working, we have another on the way, there's five bagging machines right now with three more on the way there, you have multiple sorting lines and packaging lines as it relates to the bottle. So this is just related to gummies my friend. So this is like, we've got so much more to offer too in addition to that, it's exciting. But these things along with what we are working on in terms from a compliance and regulatory standpoint, that is what really kind of sets us apart because we're looking not just what we were yesterday, but how do we become better for everyone going forward as well?

Joe: And we'll have more on that topic in episode coming up in the very near future with our chief compliance officers. We talked about some of the labeling and packaging initiatives being undertaken here in 2021 to comply with the ever-changing industry and some new regulations around the country, so tune in for that. But for now, I want to thank both of you for coming on the podcast, I think we'll be having both of you back throughout 2021, it's a lot of exciting stuff going on.

Salim: Absolutely.

Chad: Thanks, Joe.

Salim: Thank you, Joe.

Joe: Salim Baltagi and Chad Levitt, my guests here on this episode of the "CBD University Podcast." And don't forget, you can subscribe to our podcast wherever you get your podcasts. Receive notifications. When new episodes are published each week, plus catch full video episodes on the Global Widget YouTube channel and the YouTube channels of our brands. I'm Joe Agostinelli, host of the "CBD University Podcast." Thanks for tuning in.

These statements have not been evaluated by the Food and Drug Administration. The CBD products are not intended to treat, cure, or prevent any disease or condition. Always consult your personal physician about CBD and using CBD products. CBD should never be used by anyone under the age of 18. This content is not intended to provide legal advice regarding the legal status of CBD and CBD products.