‘Certain retailers move the needle and others don’t’ – Glossy

When Schmidt’s Naturals co-founder Michael Cammarata left Unilever to join Canadian cannabis company Neptune Wellness Solutions last year, like many presidents and CEOS in today’s climate, he couldn’t have imagined what 2020 would bring.  

Just prior to Covid-19 quarantines and retail shutdowns in March, Neptune Wellness Solutions developed its first branded hemp CPG line, Forest Remedies, that includes products in beauty, personal care and home care. The line launched in 100-plus Albertsons, which was a saving-grace since mass stores and grocery stores did not experience the same closures as beauty-specific locations. Cammarata is now playing that forward with a namesake Neptune Wellness Solutions brand, debuting in Costco stores nationwide this month.

“It’s probably the worst time to be a CEO of a publicly traded company,” said Cammarata, half-joking.

But according to consumer insights platform Persky, retailers like Costco and Walmart are gaining traction with younger consumers due to the uncertainty of the pandemic: Thirty-eight percent of surveyed consumers say they will be more likely to shop for essential items in-person at big box stores moving forward.

“Albertsons was our test-and-learn partner: What store placement worked? What kind of branding worked? What appealed to millennials and then worked for baby boomers?” said Cammarata. “Now we feel like bringing plant-based solutions to every part of the home — cleaning, personal care and beauty — is resonating.”

Neptune Wellness Solutions’ first cannabis CPG brand, Forest Remedies, has seen its “hand sanitizing business skyrocket” during coronavirus, said Cammarata. And in the current quarter, Neptune Wellness Solutions expects see revenue to grow 300-400% year-over-year to between $18 million and $22 million. In fiscal 2020 results, reported in June, Neptune Wellness Solutions saw total revenues increase by 21%, “primarily driven by revenues in the cannabis segment.”

Ahead, Cammarata discusses Neptune Wellness Solutions’ plans for pushing ahead in 2020 and introducing new brands by year end.

What was the rationale for introducing a branded business for Neptune Wellness Solutions?
“Just like we did with Schmidt’s Naturals and Unilever, I thought we could have a cannabis brand business that was affordable, accessible, mainstream and high quality. A lot of that agenda we have been able to fast-track in the pandemic because household products were deemed a necessity during the pandemic, and plant-based solutions in beauty and personal care have mattered more as people think about about health and wellness. From my past experience, grocery chains like the Targets and the Costcos of the world are incredible and credible retailers. Certain retailers move the needle and others don’t, and we wanted to move the needle here. Grocery and mass doors are going to see an even bigger uptick because of Covid, and it’s going to be about buying there and buying online, which we feel we are well positioned for.”

Tell me about Albertsons and what is working there?
“Albertsons was all about understanding what worked and why. We were and are innovating on the spot. We put Forest Remedies in the aisle, by the checkout counter, adjusted packaging and pricing, introduced new scents and sped up our household cleaning products by a year, because we saw how well our hand sanitizing business was doing. We also launched Dr. Jane Goodall’s line with Forest Remedies, which she co-developed.”

How receptive are grocery and mass customers to cannabis products?
“It’s very clearly two different kind of customers we are seeing: millennials and baby boomers. It’s the first time I have had a product like that; Schmidt’s wasn’t like that. But we do know that people are still getting used to the idea of cannabis and any plant-based product. With Coscto, we aren’t launching our hemp products there yet, so the customer can get to know us and our name without having any pre-conceived ideas. We’re going to test and learn there, too. After proving how good the products are and what they can do, we will grow there with our cannabis assortment. Personal care, beauty, toothpaste are all multi-billion dollar categories, and so is cannabis. They can be integrated together or they cannot, so we want to get into that market space today and grow into it with the customer as they become more comfortable with cannabis.”

How are you thinking about future innovation?
“Prior to Q1, our white-label side of the business was our biggest share of revenue. Now, we have proven our branded concept, so we want to launch a handful of other brands this year that speak to the cannabis lifestyle merchandising we are building. We’re still building on our white-label businesses, but we’re ready to gear up our Neptune Ventures platform. We want to partner with founders and believe in them. Before, the only options is for a little brand is to get bought by a strategic company and become a big brand, or get investment from a PE firm. Then the PE firm worries about the founder selling the brand after you have invested the time in building retail and marketing. Instead of all that, we think we can be a better solution and help build relationships with founders. We think of ourselves as having the benefits of a strategic firm, but not having to trade the entrepreneurial part, which is what we know founders love.”