Mental wellness and alcohol moderation will drive the next phase of functional beverage growth, Recess CEO predicts
Breaklaunched in 2018 with CBD Infused Drinks,and says that it stays “the clear leader in the CBD beverage category” with distribution in CBD-friendly states across the country.
However, founder and CEO Ben Witte has made it clear from the start that he is “build a brand, not market an ingredient,”and says the Recess Mood line without CBD – launched in 2020 – now represents 40% of the business and is on track to generate “more than 50% of sales” at the end of 2022.
“We see this as a larger relaxation category with multiple subcategories to play in.‘
Speaking to FoodNavigator-USA after launching three new Recess Mood flavors and beginning distribution in 1,000 Albertsons stores under multiple banners, including Safeway, Albertsons, Pavillions, Shaw’s and Kings, Witte said he has also secured additional listings at CVS and reached deals. with Fresh Thyme and the airport channel via OTG, with additional authorizations expected.
The new Mood flavors, which come with a reduced retail price of $3.49 (down from $3.99), will hit shelves in October, said Witte, who said the brand taps into key trends of “mental wellness and alcohol moderation…we see this as a broader relaxation category with multiple subcategories for us to play around with.
“Rather than position ourselves as a CBD beverage brand, we focused on establishing the use occasion of ‘taking a break’ and developing a leading lifestyle brand focused on marketing a sentiment: calm, cool, serene.”
Regarding the price reduction, he said: “We have worked a lot on optimizing COGS (cost of goods sold) while maintaining quality, so we have moved to larger packers and have economies of scale. Transportation costs and toll rates have also stabilized a bit.”
“We are developing a leading lifestyle brand focused on marketing a sentiment: calm, cool, serene”
He added: “When we talk to retailers, they see alcohol moderation as this mega trend and they see the trend for consumers to prioritize their mental well-being, which will affect many parts of the store across many categories.
“We’re seeing speeds for Recess Mood on par, if not stronger, than our CBD line, and it’s filling a consumer need for retailers who can’t carry CBD. There are also various ingredients in here that we can use for mood and relaxation, whether it’s CBD magnesium, adaptogens, nootropics, etc., and these functional ingredients will combine in different ways.”
Recreational products are typically found in functional drink sets alongside kombucha and other gut-health drinks, energy drinks, and other better-for-your-health drinks, Witte said: “Kombucha is too spaced out, so we’re seeing drinks like Recess, which offer a mental wellness proposition, taking space away from kombucha, even though every retailer is different.”
Formulation: ‘Not tired, not connected…’
Depending on the flavor, the Recess Mood line contains combinations of magnesium-l-threonate* and botanicals such as l-theanine, lemon balm and American ginseng, which are associated in the minds of consumers with calm and relaxation, Witte said. , who says fans of the brand cite multiple occasions for use, from a morning drink to start the day on the right note, an afternoon lull, after work to unwind, or as an alternative to alcohol.
Recess, which is careful not to make harsh claims about the package and uses rather confusing phrases like “to take you to the place where you want to be” Y “adaptogens to help maintain balance” – doesn’t list amounts of magnesium or botanicals in its Recess Mood line, but Witte insists she’s using significant amounts that provide a noticeable effect for most consumers.
“We’re not just spraying it, as we believe it’s very important that people can feel something when they drink our products and we have thousands of testimonials to support that, even though people react to functional ingredients differently.”
CBD: ‘You are operating in a restricted addressable market with a patchwork of state regulations’
Recess’s original products, infused with a blend of botanicals and 10 mg of CBD from a broad-spectrum hemp extract, continue to do well, though regulatory uncertainty at the federal level has prevented many major retailers from entering the market, Witte said. .
“We see both product lines co-existing, and we see a lot of momentum on the CBD side of the business. We now have 24 states that have passed state regulations of some kind. [permitting the sale of CBD-infused foods or supplements] and that’s causing some major retailers like Sprouts and Wegmans to develop the category.
“Large spirits distributors like Southern Glazer’s, Breakthru Beverage Group and RNDC have gotten into the space over the past year, but it’s definitely an unusual business situation to navigate because you’re operating in a restricted addressable market with a patchwork of state regulations. And I think you’ll see that a lot of brands won’t be able to make it to the other side, and I think we’re still a long way from Target or Whole Foods or Walmart carrying CBD beverages.”
When asked about the CBD beverage landscape, he said: “It’s been pretty wild. Since we launched, there have probably been 100 CBD beverage brands launched, but not many have built a very geographically distributed footprint. If you look at just the measured channels, we’re 50% bigger than the number two brand, and that’s not taking into account the independent accounts, like the bodegas and liquor stores in New York City, where we have a really big business, as well as our e-commerce business.
‘We’re not competing with LaCroix’
Asked about the challenges of selling premium drinks to budget-minded consumers in a period of runaway inflation, drinks like Recess “They are not competing with LaCroixWitte noted.
“When people drink a can of Recess, they are drinking it instead of alcohol, iced coffee, or kombucha, and interest in the proposition CBD offers—helping people feel calm, balanced, and relaxed—is only accelerating. , in any case”.
“There was this kind of gold rush mentality and everyone became a hemp grower and CBD extractor.”
So what is happening on the supply side?
when the The 2018 Farm Bill was passed, which removed industrial hemp from Schedule I of the Controlled Substances Act, but did not suddenly legalize CBD and other cannabinoids in food, beverages, and supplements, “There was this kind of gold rush mentality and everyone became a hemp farmer and CBD extractor,” Witte says.
“And basically, the supply got ahead of the addressable retail market and prices went down.”
Looking ahead, he added: “We continue to see a lot of activity in Congress, which is fed up with the FDA’s inaction on creating a national regulatory framework as can be seen in a recent letterwritten to the FDA by the sponsors of the CBD Product Safety and Standardization Act. We still think it’s a question of when, not if, the FDA acts.”
*Some animal studies show that magnesium threonate is more effective at increasing magnesium ions in the brain and improving cognitive function than magnesium sulfate.