- The new Recess platform is designed to offer subscriptions to consumers for shipments.
- A b2b platform brings retailers a chance to buy in bulk at wholesale prices to resell in their stores.
Businesses in the retail industry are doing their share of suffering during this widespread pandemic, leading many to produce new ways to get their products to customers. Online shopping has never been more popular, especially for CBD products, and a hemp-infused beverage brand called Recess has decided to take advantage with their new platform, according to reports from Food Navigator USA.
Founder Ben Witte released a statement to explain the damage that his company has sustained in retail, explaining that many of their sellers are independent locations that consumers aren’t frequenting right now. Social distancing has shut down many of the places that Recess drinks would be sold, as Witte remarked, “[P]eople are not at Penn Station buying Recess before they get on the train or grabbing lunch in lower Manhattan.”
While the in-person sales opportunities may be down, the online sales have increased by four times what they normally are since the virus reached the masses. Though the new platform wasn’t up and running at the start, the company had just launched a hemp-infused sparkling water with 10mg of CBD 18 months ago. In fact, Witte states that the brand had already made deals with retailers in several major cities that would’ve been extremely popular for travel, including New York City, Los Angeles, Miami, Chicago, and Austin.
Recess was never started as a brand that was meant to work anywhere but as an in-person purchase, and Witte admits that they’ve been taking the growth easy to keep expanding with the demand. He explained,
“[F]or the past year, we’ve been slowing down in order to speed up, build our infrastructure that will allow us to scale.”
Now, hitting the market with a brand new website, Witte and his team have found a way to get their products in the hands of consumers with more consistency. For the everyday consumer, there’s a subscription service available through the website, which lets them ship their hemp-infused and CBD-infused beverages to clients regularly. However, for businesses and retainers, Recess now has a b2b portal, which Witte says, “allows us to sell Recess at wholesale prices at a set of economics that make a huge amount of sense to us.”
Elaborating, Witte added that their new plan is “to seed the market through this and then transition that relationship over to a distributor.” Essentially, the company is making the public more familiar with their products before they launch, creating an audience that is ready for their options. While it is much more expensive to ship beverages than it is to ship to retailers exclusively for in-store purchases, Witte remarked, “the economics of e-commerce make sense for us.”
While there are many companies suffering through the changes that COVID-19 has created, the lack of regulatory certainty around CBD-infused drinks and foods has been a massive bump in the road. Retailers were already hesitant to sell CBD products in stores without a thumbs up from the FDA, but there’s still a huge long-term opportunity in the market left. In fact, Witte believes that the spread of coronavirus “makes Recess even more pertinent for this moment.”
With this new launch, Recess has decided to bring new flavors to their customers, Black Cherry, Blood Orange, and Coconut Lime. Available in an 8-pack or a 12-pack, the ability to spend $5 per can may be a bit much for most budgets with tight purse strings right now, the same can be said of products like kombucha or other specialty drinks. The brand has also launched their Realitywear apparel collection. Still, for the people who want to shell out the money, Witte highlights the flavor profile, the benefits, and more as reasons why he is confident about the future. He added,
“Another reason I’m so excited by this category of CBD and calming beverages is just how many consumer occasions we observe for ‘taking a recess,’ whether it’s when you wake up, before you go to bed, while you’re working during the day, as a substitute for afternoon coffee, or as a substitute for alcohol.”
This flexibility is exactly why Witte still has faith that his brand will make a profit right now, especially considering how new these opportunities are to utilize.
Despite regulatory measures being halted by the FDA, these products are set to be huge when approval happens. As Witte sees it, “the game hasn’t really started yet,” which means that consumers could see a major boom with big retailers like Whole Foods, Target, and others with the official launch in physical stores. Some CBD brands may not make it, even with Series A funding rounds and great products. The reality is, not all CBD brands that have been ready for their launches or created partnerships will survive the stress of COVID-19.
The FDA still says that foods or supplements with CBD cannot be added to the nation’s commerce, but they haven’t demanded a recall or shut down these brands. Instead, they’ve focused on preventing companies from making “egregious” claims, which Witte takes to mean that there’s still hope for civil litigation. Unfortunately, this leaves the industry open to “fly-by-night beverage companies that aren’t taking quality and compliance seriously,” which hurts retailers when they try to vet suppliers and have no direction on the regulations of the industry.
Most recently, there’s been substantial concern by the FDA over how constant and repeated exposure to CBD will impact consumers. However, since Recess only has 10mg of CBD per serving, comparing the reaction that lab rats have sustained by ingesting over 1,000 mg of CBD daily isn’t quite the same. Witte jested,
“[I]t’s like saying if you have 100 Red Bulls a day you might have a problem, well yes, you might.”
To learn more about the hemp industry’s steps through this pandemic, Witte will be speaking at a webinar called Where Next for Hemp and CBD? at 9:30am PST on May 20th, 2020. Other speakers will include Eric Schell from Mood 33, Sharon Leite from Vitamin Shoppe, Greg Kaufman from Eversheds Sutherland, and Will Kleidon from Ojai Energetics.
The event is free to attend, and potential attendees can register here.