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Naturally Splendid (TSXV:NSP) is a technology-driven health food and nutraceuticals company which develops, produces and sells hemp-derived nutrient-dense omega foods and related products. The company is quickly advancing its award-winning products throughout North American and Asian markets.
Naturally Splendid is a finalist for the prestigious NutraIngredients Awards, in the category of Start-up Ingredient of the Year, for their innovative omega ingredient HempOmega®. The company recently reported $1,385,000 in gross sales for Q1 2016. Earlier this year the company landed a nearly $1 million purchase order for hemp food products for Korea Beauty & Health Care Co. and secured a marketing platform for its NATERA line on South Korea’s Lotte Home Shopping Channel.
The Investing News Network recently spoke with Naturally Splendid CEO Craig Goodwin to learn more about these developments and the company’s growth strategy for 2016.
Investing News Network: Craig, it’s amazing to see how far you’ve come in so little time. You were recently ranked number four in the Diversified Industries sector on the TSX Venture Exchange. Could you give our readers some background into the company as it is today?
Craig Goodwin: Absolutely. We first started off as a private company as most people will know and we went public in 2013. Initially, we were involved in the superfood category. We were interested in the retail lines and our first product line centered around hemp. But we began to realize that at the retail level our company was going to be up against a commodity based product.
So, we invested quite heavily in science and technology, and eventually a processing facility in Saskatoon which is the POS Bio-Processing Center. We’ve grown from a retail super food line. We are now invested heavily into research and development which really emphasizes the benefits of plant-based ingredients.
We were able to extract and formulate these ingredients into value added products. So that’s really the differentiator between Naturally Splendid and many other companies out there. Not only do we have strong superfood retail lines, but our science and technology actually enhance those product lines.
INN: At the end of 2015 you acquired Chi Hemp Industries (CHII). Can you tell us about the acquisition and its significance for the company?
CG: Absolutely. Chi Hemp Industries was one of the original online hemp companies. I believe they were established in early 1998. They were more recently bought by a business in Victoria, British Columbia. So the CHII sales are continuing to increase and are providing positive cash flow right now for Naturally Splendid.
However, their area of expertise is really online marketing. So as important as the CHII brand was, we also acquired their online expertise. We’ve engaged the personnel within CHII to optimize our websites. In fact, I think we have now upgraded six of our sites and we now have a more effective online presence.
INN: Fantastic. Recently, you announced your HempOmega® bioactive ingredient is a finalist for a prestigious NutraIngredients Award. Can you tell us more about this product and its recent market success?
CG: Absolutely. We’re extremely excited with HempOmega®. Many of our followers will know the story well. HempOmega® optimizes hemp oil by taking what is already a perfect ratio of omega 3 and 6 which makes it more bio-available in the body. More importantly, we take that oil and we microencapsulate it into a powder, which then is dispersible in beverages or as an ingredient in foods.
Omegas are a massive consumer market not only in North America, but throughout the world.
They are known to reduce inflammation which is the source of many illnesses. Not only can HempOmega® be used in food and beverages, but it can also be used topically in the form of nutraceuticals. So by providing an omega ingredient that can be widely used or adapted to a number of products, we are actually creating a new omega market that has never before existed.
We have been conducting studies with HempOmega® as an ingredient in existing pet food formulations. Up until now, most companies have used fish oil with some success as far as health benefits, but our early findings show our product can deliver maximum omega nutrition to canines.
Another great addition to the HempOmega® story is our recent poultry study at the University of Manitoba, where we had absolutely incredible results. Incorporating our HempOmega® as an ingredient in the chickens’ daily feed actually enhanced the omega concentration in eggs by more than 500 percent and in the meat of the chicken by almost 300 percent. This is important because consumers are looking for omega nutrition and our HempOmega® clearly delivers in that category.
Our ingredients can enhance the nutritional value of existing product lines in not only human and pet applications, but in livestock applications as well. We see this as a massive opportunity and if we had international recognition by winning the award in Geneva in the middle of May, that would be absolutely phenomenal. By being one of three finalists, I think we’re already a winner.
INN: Right. You’ve been aggressively growing the product lines and now your distribution channels as well. Can you tell us more about the headway you’ve made into Asian markets this past year?
CG: You know, absolutely. We have continued to make progress on the NATERA line and we are now seeing traction with positive effects. But really where we hit most of our growth right now is through our bulk division that was previously called BC Ingredients. We renamed that division Simpli Ingredients and we’ve been pursuing international contracts for exporting. The first country in Asia that we’ve been able to make inroads in is South Korea through Korea Beauty & Healthcare or KBH.
We have been able to report over a million dollars of business so far in the first quarter and the second quarter is showing great promise as well. It isn’t an individual retail line that’s showing the most growth right now, it’s really in the export opportunities. South Korea just being the first of the Asian countries that we hope to continue to penetrate throughout the region.
INN: Excellent. Can you tell us more about you’re opportunity with the home shopping channel in South Korea and what this means for growth and future sales in the region?
CG: Absolutely. We’re very fortunate to have a strong partner in South Korea with Korea Beauty & Healthcare. They are a marketing machine. They focus heavily on online sales as well as becoming a specialist in the home shopping channel space. And the home shopping channel opportunity in South Korea is really a phenomenon that many North Americans, including myself in the very beginning, don’t fully grasp.
Shopping channels run 24 hours a day seven days a week and we’ve seen reports now that their sales are actually greater than the traditional brick and mortar retail opportunities. A package sitting on the shelf simply does not begin to tell the full story of the health benefits of these products. So for health and wellness products, to be able to tell that message to the consumer through live spokespeople has proven greatly beneficial.
We have launched on the Lotte Home Shopping Channel which is the second most successful shopping channel network in South Korea. I think they reach over 21 million people if my numbers are correct. In our first show, we sold over 40,000 pounds of shelled hemp seeds in the first hour.
We have accelerated the programs that we’re running to additional home shopping channels. We expect that success to continue and in fact increase. The Paleo / NATERA shelled hemp seed line, which is a partnership between our Korean supplier and ourselves, is off to an incredible start and we expect that growth to continue.
We will be expanding the product offering to South Korea to not only include our whole hemp seeds or hemp hearts but also our hemp protein and hemp oil. And I’m circling all the way back to where our science and technology R&D is of great benefit. Those are commodity based products that we are clearly competitive with our HempOmega®. And so, we began discussions with KHB on how to either sell HempOmega® in a number of different forms, whether it be just value added capsule and ingredients, or as an added ingredient to existing product lines that KBH already carries.
So in addition to continuing growth of our hemp seed line, we’re going to expand that product offering into protein and oil. But the real big uptake I believe is with our proprietary HempOmega®. That’s a product of course that only Naturally Splendid has and I think that reduces competition and puts us clearly ahead of everybody else.
INN: Yeah. It’s a great growth strategy and it seems to have already translated into $1.35 million in sales from the first quarter. What’s your target for future sales?
CG: We recently attended a trade show in Singapore as an official member of the Canadian Trade Delegation. We were invited by the BC Ministry of International Trade to participate in the BC booth as part of the Canadian pavilion. In Singapore we made extensive contacts with a number of foreign ministers in surrounding Asian countries. So our objective is to duplicate the success we’ve had in Korea throughout that region.
Now, it is worth pointing out there are challenges to bringing hemp-based products into certain Asian countries. But I can tell you there are multiple opportunities throughout the Asian region where we can begin exporting hemp-based products. In countries where there’s a regulatory challenge for hemp-based products, we are prepared to market other products in our plant-based ingredient line. We are also actively looking for other products that we can add to our existing offerings that would be of interest in those regions.
So, Asia is very much a target for growth. I think that’s where you will continue to see the biggest sales and that’s going to augment nicely with the retail sales that we are beginning to generate in North America.
INN: Excellent. And wrapping up, what other catalysts can investors look forward to this year?
CG: At Naturally Splendid our goal is to continue to add significantly to our top line sales. We have that true hockey stick revenue chart right now and that will allow us to be profitable quickly or much sooner than later. The first goal of our company was to gain market share, which we’ve done. That has given us buying power and that’s only going to enhance our margins as we move forward.
So the goal for Naturally Splendid is to continue to increase our top line sales and increase our margin, which will then lead to profitability. At the same time, we’ll continue to add to our product lines, enhancing what we already have with other plant-based ingredients.