Episode 90 – CBD as an Ingredient Part 2



Joe: On this episode of the "CPG & CBD University Podcast," part two of our series, Looking at CBD as an Ingredient. Is it still the star of the show, or is it now the sidekick to other ingredients that's been used across the CBD health and wellness industries? This is the "CPG & CBD University Podcast," and it starts right now.

I'm Joe Agostinelli, host to the "CPG & CBD University Podcast." If you are a returning listener, welcome back to our podcast. If you're a new listener, we are glad you found us. Hit that subscribe button wherever you get your podcasts to get notifications of new episodes and don't forget to catch full video episodes on YouTube. You can catch it on the Global Widget YouTube channel and YouTube channels of our brands.

On our last episode, I was joined by Connor Skelly of the Brightfield Group as we went through their new report, looking at CBD as an ingredient versus an industry. We've seen a lot of those trends in recent months with our in-house brands and private label partners. Joining me to continue the conversation from our formulation team, Michael Diaz. Welcome back to the podcast and from our contract manufacturing division. And if you're watching the video episode, you're seeing him twice because he's on the poster or now he's in person. It's Mac Norton. Welcome back to both of you.

Mac: Thanks, Joe.

Michael: Thank you, Joe. Thank you for having us.

Joe: Hey, any time. Always a pleasure to have you guys. All right. So the CBD industry certainly wasn't immune to the pandemic as consumers now refocus their health and wellness need. Is it really more of an ingredient now?

Michael: Yeah, I mean, I think we're seeing a shift now. I think it was such a diverse ingredient anyways, to start off with, that now people are just coupling with it and using kind of like a synergistic effect with these other ingredients to make it work out. And it's... Honestly, the whole industry is pushing that way, I feel, right now.

Joe: Yeah. And what are some of the most requested ingredients to use with CBD?

Michael: Yeah. So I mean, some of the more recent ones we've seen... I mean, CBD has a calming effect on people. So we see it used with melatonin or valerian root extract as a way to kind of put you more at ease, rest, more for those like sleepy gummies type of deal. And then we have other ones that are more for, like, focus. So you have ones, a couple of L-theanines, stuff like that. Again, it's such a diverse ingredient that it's being coupled with these things and it's kinda cool to see.

Joe: And Mac, have you seen this with private-label brands and other CBD brands that you may be working with now on the contract manufacturing side?

Mac: Sure. So, yeah, I mean, no one was immune to the pandemic on it, you know, that's obvious. I think that what we saw was a little bit of stagnation and CBD sales for a couple of reasons, one of which is that lack of ruling from the FDA. Everyone's kind of anticipating that coupled with the pandemic. And so what you had actually was an increase in e-commerce-based sales and a decrease in brick and mortar-based sales and a heightened focus on consumer wellness, especially immunity during this time.

So CBD companies that are looking to, like, any other company, expand sales, grow revenue, and just, you know, grow in general are looking at ways to target the consumers. And ultimately the consumers really drive where they head. But for things like gummies, for things like topicals, it's been really focused on immunity, right? So, you know, elderberry gummies, vitamin C gummies, vitamin D things have come out.

Another thing in terms of CBD as, ingredient really is that they've also been adding in minor cannabinoids too. So when there was just CBD and a gummy, now it could be a presence of CBD and maybe melatonin and CBN, some of the minor cannabinoids that are [inaudible 00:03:30] in research. So all of which, you know, the pandemic has really had them focus more on functionality and hitting some of those consumer targets to increase sales and to get stuff done.

Joe: Now, Michael, when it comes to formulation and hitting on your last point with some of the ingredients we talked about is one type of an ingredient, easier to mix with CBD or...

Michael: No, not really. I mean, so it all comes down to compatibility with what you're trying to put it into, right? And so we always make sure that we formulate so to add anything we want. So I like to say, "We'll make you anything as long as we give it a nice little go and, you know, it's reasonable, the amounts within it, a gummy or topical or whatever we do." It's something that can be put in there and formulated to make it work. Now, CBD is a little bit more on the hydrophobic side of things, so that already contradicts some things that we do, but nothing that we can't formulate pass. It's all about using the science to get it a go.

Joe: And Mac, where do you see this going with private-label brands? Have you seen companies requesting more and more wellness-type ingredients?

Mac: Oh, absolutely. Yeah. Yeah. I mean, I think, you know, about 12 months ago, we started to really see the shift in focus from CBD as the focal point of a product to CBD as more of the functionality of the product, right? I think some prime examples are some branded products that we have here, elderberry combination with gummies, our Defense Boost line, right? From a contract manufacturing perspective, we've seen a lot of these clients launch similar products, apple cider vinegar, ashwagandha, L-theanines, especially immunity-focused, you know.

We've actually seen them actually transfer some of their product lines or a portion of their product lines into those actives-only. So you're seeing CBD companies that are really focused on more of a consumer-packaged goods space because frankly there's more wide acceptance and there's more need for that product. And so if I'm someone that is owning a company or launching a company or wants to grow my business, I think, "Hey, what channel can I sell into that's not impeded by a federal regulation?" And that's, you know, the dietary supplement space, right?

So focus on vitamin C, focus on vitamin D, gummies, right? Obviously, those can get thrown into capsules just as easily. We've seen a focus on sleep-only based tinctures with melatonin, valerian roots, and things like that. So we've really seen the shift from a contract manufacturing perspective into basically CBD plus and...or basically the other side of that, the plus only, so really dietary ingredient-focused products as well

Joe: And trending ingredients that you may be seeing more and more of, what have you seen?

Michael: Oh, we were mentioning a couple of them already, but yeah, so valerian root for more sleep aids. And then you're talking about L-theanines for focus. There's...goodness gracious.

Mac: And you've got GABA, you got five 5-HTP, apple cider vinegar is a huge focus. I mean, any amount of multivitamin too. Another product that we made as a CBD+ Multi, you know, so you're obviously...vitamin A, vitamin D, vitamin K, you know, C things like that.

Michael: Correct.

Mac: Really just a combination of anything that's immunity-focused or just vitamin-focused so that people see...

Michael: Elderberry.

Mac: Elderberry is really a big one too. So that people kind of look at this product more from a wellness perspective with CBD being an element of that functionality, but not the focal point of that functionality I think that's, you know, the whole point of the podcast, right? And that's really the way that they're seeing it now. It's not only about a product that has CBD and then that's where the buck stops. It's about a product that has functionality and CBD is an element of that functionality. And I think the consumer sees that in a different light.

Michael: Yeah, it goes back to the synergistic thing we were talking about earlier. So they're just adding it and it's such a variety... I mean, you can use it for a bunch of things, CBD, that it couples with elderberry, it couples with valerian extracts, it couples with the... We have the roll-on pain-free so Bio Freeze. And so there's stuff like that and everybody's using it now and realizing, "Oh, wow, I can couple of these things that have a much wider market because of the reasons that..." Maybe just, you know, CBD they look at, but now with this, like, oh, wow, this is a very, very good product. So I think it's a very good thing.

Joe: So why the shifts from CBD as an industry to CBD as an ingredient?

Mac: Well, so I think it's what we kind of talk about, you know, in the previous question. I think it's because CBD companies are looking for a way to grow, right? And I think that they're really focused on accessing new consumers. I think they're focused on accessing wider demographics, and I think they're focused on where the future of the industry is headed, you know.

Another thing is that I think there's been a heightened increase in our understanding of the functionality of aromatic herbs and the functionality of different ingredients. For instance, turmeric is a really interesting thing that's been thrown into a lot of these gummies that we haven't talked about yet. I probably had at least a dozen contract manufacturing clients ask about turmeric in combination with CBD because it's supposed to promote, I think. pain relief is what turmeric is actually supposed to promote.

So up until two or three years ago, I really didn't know much about turmeric, but now every single client is asking, "Hey, can we put turmeric in a gummy? Can we work with this kind of ingredient?" And that's not only that ingredient. It's across most of these that, you know, you haven't heard of. Ashwagandha is another one that's kind of now on the fringe, it's I think understood in some sectors, but not nearly as much. And now we have a lot of contract manufacturing clients asking about that.

So I think it's been a culmination of just kind of a cross between trying to access new consumers and across between more insights and understanding from a consumer point of view about other things that can help them with the illness that they think CBD helps with. So if I'm someone that's in charge of a company, I'm gonna say, "Hey, if we think that turmeric is good for pain relief, let's put that into a gummy, right?"

And if we can make it... If you know, Michael and the Global Widget team can make it taste good, then that's a double bonus. Like, can we get this into a gummy and make it taste good? Do people want that? And that's the other consideration, right? All of this stuff has to taste good if it's a gummy. If it's a topical product or capsule, that's a little bit different, right? You know, you're considering different things, but what you want is something that's gonna work. You want something that's going to buy and that's been their focal point. So I think that's really the reason for the shift.

Michael: I agree with that. It's an opportunity to reach a wider crowd now. And not only that, play against those strengths and add things that we know in the past have worked well. So I think it's a wonderful thing to see the industry kind of pushing towards. And we're seeing, you know, a lot of it that way. So we're getting ready over here, always.

Joe: And we've discussed this previously on the podcast and even our podcast has shifted from CBD to CPG and CBD branching out into product-centered, around wellness ingredients picking up steam, our commitment to stay on top of the latest trends. I mean, how hard is it with all these different ingredients or requests from both of your perspectives?

Michael: Well, I mean, from a technical side, you know, we get anything. I mean, we'll always try something. We'll always work with the customer and try to put everything that they want into a realistic product. And so that's where we, as a team, work together. We've got eight formulators working together, and all of us, you know, bounce off of each other and you try to get that product out to them in the way that they want it. Now, you know, there might be some changes, you know, stuff here and there, but ultimately we deliver. So that's the good part about it at least from the technical side.

Mac: Oh, absolutely. You do 100%. And I was in a conversation just quickly with him yesterday. And I was like, ''Hey, you know, we had an issue to overcome in formulation.'' I said, ''How are we gonna get this figured out? What do you think the timeframe is?'' And Michael just goes, ''As long as it takes.'' And that's just a testament to us as an organization. But I think that, you know, we're focused from very different perspectives. We talk a lot about this. We have in-house brands, we have a huge contract manufacturing division. Both of those offer an avenue through which we intake new requests, right?

Contract manufacturing clients are always asking about new ingredients. We, from a brand side, we're always thinking about how do we improve our products? How can we add elderberry gummies, which we've done in our Defense Boost line? How do we do that kind of stuff? So I think we've got really good inroads into the business where all these inquiries are coming in so we can kind of filter through them and say, "Hey, what's going on? How can we use this right? Is it worth doing?"

I think separately than that, we have our formulations team, right? And these, like, we talk a lot about gummies, but they're not only gummy-specific. I mean, they formulate across all the 300 different health and wellness products that we've had since we've been doing business. And these guys were focused on new stuff because that's their job too, you know. So one thing, they will look at and say, "Hey, I kind of saw an interesting study on this. Could we throw it in a gummy?" Or maybe the leadership has an idea, "Hey, we need to do some kind of energy-based gumming, right? What kind of actives could we throw in there?"

And in two or three days or a week or whenever they have been given time, they come back with a really comprehensive formula, you know. Usually, there is CBD in there and usually, there's something else in there, maybe like caffeine or ginseng, you know, something interesting. So I think for us, you know, we do a great job of researching, but through the virtue of all the stuff we have going on, we get a lot of really good requests too. They kind of help us, you know, lift up, you know, the new stuff that's going on in the industry.

Joe: Well, Michael and Mac, always a pleasure to have you guys on the podcast. It will interesting to see where this goes. Next time we get together, what some of the trending ingredients will be by then? Because these always seem to change.

Michael: Yeah.

Mac: Yeah. Awesome.

Michael: Thank you for having us again.

Joe: Hey, any time Michael Diaz, Mac Norton, my guests on this episode of the "CPG & CBD University Podcast." And thank you for joining us for this episode of the "CPG & CBD University Podcast." Reminder to hit that subscribe button wherever you get your podcasts and get notifications on new episodes. I'm Joe Agostinelli, host of the award-winning "CPG & CBD University Podcast."

Mac: I love it.

Michael: I love that. It has a great ring to it.

Joe: It does, doesn't it? Yeah, if you haven't heard the news already, it's on our social media networks, but Ragan Communications and PR Daily recently announcing us as a podcast of the year in their digital media and social media awards. You can check that out on our website at www.globalwidget.com. And we do thank you all for the support and all my great guests like you guys who make this a podcast as fun and educational as we possibly can. So got sidetracked there, but once again, I'm Joe Agostinelli, host of the award-winning ''CPG & CBD University Podcast." Thanks for tuning in.

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