One-on-One

Growing CBD at Retail

Kadenwood’s co-founder discusses how to drive consumer adoption of the category

Kadenwood has been on a roll lately. The Newport Beach, Calif.based CBD company made a name with its Level Select brand and its vertically integrated approach. It recently acquired Social CBD and closed a $50 million funding round. Drug Store News spoke to CEO and co-founder Erick Dickens about pressing issues in CBD and how Kadenwood approaches retail.

Drug Store News: How has the market for CBD products changed in the past year? Has the pandemic had an impact on consumer interest in the category? Erick Dickinson: Like many other consumer product categories, we saw a shift away from retail to direct-to-consumer. We believe success at retail is necessary for this industry to scale and are seeing signs of recovery as pandemic-related restrictions lift. Consumer disappointment with poor quality products, high retail prices and a lack of advertising has impacted consumer interest more than the pandemic. Kadenwood has positioned its portfolio of consumer brands to overcome these hurdles to accelerate category growth as the economy reopens.

DSN: In a saturated market, what can suppliers and retailers do to stand out from the crowd? ED: Brands need to advertise, and they can’t get by on digital marketing alone. This industry needs brands to step up and build national brands with broad reach consumer advertising. Kadenwood has committed $20 million to advertising its portfolio of brands over the next year, including national and regional TV and radio, to drive consumer pull. Retailers need to support brands that invest in advertising with feature, display and promotion in store. These tools for success aren’t new; they just haven’t been applied to the CBD industry with scale and consistency.

Erick Dickens , CEO and co-founder, Kadenwood

DSN: When it comes to regulatory compliance, what actions or initiatives should suppliers take in advance of federal legislation to protect themselves and their customers? ED: Suppliers need to continue efforts to strengthen product quality, supply chain integrity and produce clinical studies for products to substantiate consumer claims. Kadenwood is one of the few fully vertically integrated companies in the industry and owns the ingredient supply chain from genetics to finished isolate and distillate. This vertical integration provides Kadenwood’s consumer brands a strategic cost-ofgoods advantage over other brands in the industry, but more importantly provides the company the ability to control the quality of input materials in their products, as well as the ability to scale quickly when the FDA provides further regulatory guidance.

DSN: How important is consumer education in this category? How do you provide accessible, reliable and accurate information for your customers? ED: Consumers are curious about the benefits of CBD and other plant-based wellness products. Since brands are limited in what they can communicate directly to consumers, industry publications and product studies done by third parties remain some of the best sources of consumer education materials. Kadenwood’s commitment to producing products with high levels of efficacy results in higher-than-average product repeat purchase rates and generates word-of-mouth advertising that helps consumers educate each other based on their product experience.

DSN: Tell us a little bit about your company. How do you compete in this category and what differentiates your approach? ED: Most brands in the industry depend on third parties to supply their ingredients and take a “one size fits all” approach to branding. Kadenwood’s leadership, a cadre of CPG professionals with decades of proven success across multiple categories at some of the nation’s largest brands, recognized the flaws in this approach and built a company capable of leading the next phase of growth. Kadenwood created the industry’s only conglomerate, combining complete vertical integration with a portfolio of consumer brands designed to reach distinct consumer segments. Kadenwood also assembled a war chest of media assets to ensure the portfolio of brands had the proper advertising support to spur consumer trial and build brand loyalty.

DSN: Can you give an example of one of your products or lines that has done well and how that exemplifies your company’s approach to the market? ED: Kadenwood’s Level Select CBD line of sports creams showcases the company’s approach to building a successful brand in this industry. Kadenwood’s medical advisory board, led by the 17th U.S. Surgeon General Dr. Richard Carmona, provided the science needed to formulate products that delivered real consumer benefits. dsn