Cannabis inherently carries a promise for unlocking our body’s hidden potential for spiritual, mental, and physical respite and wonder. As such, it has all the makings of the ultimate wellness product, one that caresses each of our senses.
It is precisely this tremendous potential that Neptune Wellness Solutions, a 50-year old Canadian company, is seeking to explore by joining forces with International Flavors & Fragrances (IFF) and acquiring SugarLeaf. Neptune’s pedigree is rooted in science-based research and development involving extraction, formulation, and turnkey packaging solutions.
This is a “historical step” for both Neptune and IFF, as its CEO Michael Cammarata puts it. For Neptune, this is a chance to benefit from IFF’s “global customer base of 35,000 customers” and their leadership in “research and development of fragrance formulations,” and for IFF, it means gaining a foothold in the exciting cannabis industry.
This partnership is likely a harbinger of the future trend in the cannabis sector – expansion to new, bordering territories.
“I think the future of the cannabis industry is in personal care, home care and beauty products that can benefit from cannabis- and hemp-derived ingredients. As traditional CPG [consumer packaged goods] brands enter the cannabis space, partnerships will be crucial to accessing and supporting the customers who seek these products,” Cammarata explains.
And Neptune is positioning itself strategically at the intersection of new sectors across the developing cannabis landscape which should take form once the regulatory dust has settled.
“Being that the United States is the leading market, the industry is in a unique situation; a lot of the bigger players are waiting for FDA [U.S. Food & Drug Administration] and regulatory clarification until they enter the space. Once we see more clarity on this front, there will be four key customer bases: nutraceutical, pharmaceutical, traditional CPG, and cannabis licensed practitioners. Neptune is in business with all four,” Cammarata says.
In fact, it was precisely the uncharted “non-vice” territories within the cannabis field that drew Cammarata to it in the first place. Before that, he worked at Unilever, a consumer goods company that produces beauty and personal care products, among other things. Cannabis posed an exciting opportunity to put his experience to good use in a novel setting.
“What drew me to the cannabis field was the power of cannabis- and hemp-derived ingredients in traditional personal care and beauty products. When I was initially researching the sector, I found the market size and potential for the “non-vices” versus the “vices” were relatively untapped. No one was really focusing on the nutraceutical or investment potential of the personal care market,” Cammarata explains. “Cannabis is a key player in the move toward natural products. Hemp and CBD [cannabidiol] in a deodorant formulation, for example, can add moisturizing, anti-fungal, and antibacterial properties to the product. Disinfectant wipes – which are formulated with a lot of toxic chemicals – are just as effective when reformulated with natural cannabis- and hemp-derived ingredients.”
Besides the partnership with IFF, Neptune also acquired SugarLeaf Labs which not only gives it a firm foothold in the U.S. market, but in the largely unexplored beauty and personal care niche within it, placing the Canadian company in a unique and favorable position. With a “state-of-the-art factory and custom-built extraction machine”, in combination with their U.S. footprint following the SugarLeaf acquisition, Neptune has a competitive edge in the market. “Simply put, we’re the only company that will be able to fulfill the market demand for cannabis-derived beauty and personal care items,” Cammarata states.
This year might prove indicative of the dividends that Neptune’s strategic positioning will pay, since Cammarata believes it will be a “pivotal year for cannabis.”
“In the US, the upcoming election is bound to shift the market for cannabis- and hemp-derived products – we’re already seeing presidential candidates shifting their views toward legalization,” Cammarata says. “Hopefully, we’ll see clarity in what’s going to be regulated by which regulatory body. I think CBD isolate will become a regulated drug, while broad- and full-spectrum products will fall under supplements. As the FDA gives clarity and the infrastructure is built out, the upside for the market will be massive.”
As for the Canadian market, the key to maximizing its potential lies in better hemp regulations, in Cammarata’s opinion. “My hope for Canada is to see improved regulations on hemp-based ingredients, allowing its use in personal care, home care, and beauty products. This will move the Canadian market in the right directions.”
And globally, we might start seeing cannabis brands that transcend the industry and come to stand for something more than cannabis alone, in a similar fashion to how brands from other sectors assume a symbolic significance rather than a strictly commercial one.
“More generally, I think we’ll see the start of the “mega brand” in the cannabis industry that will spearhead the cannabis- and hemp-based product market by really connecting with consumers. The shift toward an organic biomass will play a huge role in this.”
Only the future will tell whether Neptune’s ambitious plans will pan out. What is certain is that their business approach to capturing budding, niche cannabis markets, reminiscent of a giant octopus spreading its tentacles in multiple promising directions, will increase their chances.