Living Harvest Has A Hit With Hempmilk

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Drink a glass of hemp milk made by Living Harvest. Sit back, and wait.

Nothing happens.

Yes, the hemp milk is made from the hulled seeds of cannabis sativa, the very plant featured in the 1936 cult classic "Reefer Madness." But these seeds are from industrial hemp, bred virtually free of the THC that powers its disreputable cousin.

Rather, it's the seeds' nutritional cocktail -- including a complete protein, vitamins and Omega-3 and -6 fatty acids -- that helped propel the Northwest Portland company's sales to a projected $6 million this year -- double that of 2007. The numbers also speak to the product's migration into the mainstream -- a point accentuated by the fact that Fred Meyer carries it in about half its 129 grocery stores.

Behind this growth is the near-religious enthusiasm -- and innovative marketing tactics -- of the couple behind the company: Christina Volgyesi, 40, and her husband, Les Szabo, 45, who've helped Living Harvest snag a 29.4 percent share of the hemp-as-food market. Their success also has drawn at least one national food company into the hemp-milk game.

"This has been incredible," Volgyesi said recently at the company's Pearl District headquarters.

With packages of the company's line scattered on a conference room table, she offered samples: hulled hemp seeds -- which taste like sunflower seeds, only richer -- and vanilla, chocolate and "original" hemp milk -- smooth, nutty and light. Packs of hemp protein powder and a bottle of hemp oil -- a nutritional supplement that can be used instead of flax or olive oil -- remained unopened.

Their biggest marketing hurdle, Volgyesi said, was the widespread perception that hemp is attractive only to those drawn to its countercultural symbolism. Overcoming that -- and a limited marketing budget -- forced her to draw deeply on skills she honed while promoting Coke, Pampers and other products in Eastern Europe for the global advertising giant Saatchi & Saatchi.

So instead of advertising directly to consumers, she zeroed in on retailers and distributors, lugging cartons of hemp milk to as many trade shows, conferences, coffeehouses and other venues as she could muster. Her sales pitch was simple: Just taste it.

"When people try it, it's a slam-dunk," she said.

Cynthia Griffin says she probably wouldn't have tried it if not for the sample she was handed during a recent stop at The Dragonfly Coffee House in Northwest Portland. "I liked the taste of hemp," she said. "I don't drink milk, but I would put this on my cereal."


"It's selling fantastic"

Hemp milk is found among its soy, rice and almond brethren in supermarket aisles reserved for shelf-stable nondairy beverages, a category that generated U.S. sales of $62.1 million in 2007, an 8.1 percent increase from 2006.

Living Harvest's hemp milk was the fastest-growing beverage in that category, according to Spins, a San Francisco market research company specializing in natural foods, with sales up 555 percent during that period. Meanwhile, rice milk sales grew a mere 2.1 percent, and soy milk sales declined 2.4 percent.

"It's selling fantastic," said Joel Dahll, director of merchandising for grocery and wellness at New Seasons Market, a Portland-area grocery chain with nine locations. "When they came out with the milk, it was a no-brainer for us to offer it."


The beginning

Living Harvest's story begins in fall 2002 when Volgyesi and Szabo visited Volgyesi's mother in Vancouver, B.C. At the time, Volgyesi was a stay-at-home mom, and Szabo ran his own sports-apparel company, Dunderdon.

But they were looking for a new venture and found it during a routine stop at a health- food store. There, a package caught Szabo's eye.

It was hemp-seed protein powder made by a Vancouver company, Ancient Harvest Conscious Nutrition. They bought some and took it back to Volgyesi's mother's home.

There they got online and learned that Ancient Harvest was looking for new partners. A phone call to its president, Charles Holmes, set up a meeting later that evening at Holmes' house. There was an instant connection.

husiast who, with his wife, Wind Walrath, also owns a company that buys hemp seed from farmers. (Unlike in the U.S., it's legal to grow industrial hemp in Canada.) "There's no way we would have gotten to the next level without them."

Before returning home, Volgyesi and Szabo agreed to promote Ancient Harvest in the U.S.; by summer 2003, they had a joint venture -- Living Harvest Conscious Nutrition -- in place.

Volgyesi and Szabo redesigned the Ancient Harvest packages for the U.S. market and developed new flavors for the protein powders -- vanilla spice and chocolate chili. Volgyesi said sales rose steadily in 2004 and 2005, but she declined to disclose specifics.

But the increased sales came largely from specialty health food stores; the couple knew the potential for exponential growth lay in the regular grocery aisles. They needed something that would get it there.


"Kids were not fans"

Volgyesi and Szabo began playing around with hemp milk at home in 2005, grinding the hemp seed in a blender, sweetening it with agave.

But it wasn't until a conversation with Heather Howitt, a neighbor in Southwest Portland, that they seriously entertained the idea of producing it commercially.

As founder of Oregon Chai -- which Howitt sold to Kerry Group of Ireland for $75 million in 2004 -- she knew the industry. She also offered the expertise of her mother, Tedde McMillen, a woman with 30 years' experience with natural foods.

Volgyesi and McMillen went to work, spending months experimenting with different sweeteners and other ingredients. Volgyesi's daughters, then ages 8 and 6, were taste testers -- a task the two girls didn't much like.

"At first, the kids were not fans, let's just say that," Volgyesi recalled.

The women developed a hemp beverage sweetened with rice syrup that could be scaled up for mass production. By August 2006, a contractor made Living Harvest's first commercial batch of hemp milk, which joined the product line the following December.

Howitt, who joined Living Harvest's board, became a large investor. She and her family poured about $1.7 million into the company over four years.

"Legitimizes" category

The next year was a whirlwind for Living Harvest: By the end of 2007, its hemp milk was in 1,500 stores across the country, The company capitalized on the word of mouth exposure and started promoting its protein powder on its hemp milk labels. Protein powder sales doubled in 2007, and Living Harvest's overall revenue tripled to $3 million.

All without any direct-to-consumer advertising.

"It took Oregon Chai five years to accomplish what they did in a year," Howitt said.

To build on that momentum, the company turned to Hans Fastre, a Belgium national who was chief operating officer of Imagine Foods -- the maker of Rice Dream -- until it was bought by The Hain Celestial Group in 2003. Fastre became Living Harvest's chief executive in June.

"This is very familiar territory for me," said Fastre, who helped rice milk crack the U.S. market for Imagine Foods. "It will be fun for me to pioneer something again."

But the company will soon have to contend with a big-name rival: In May, Hain announced its own hemp milk plans -- "Hemp Dream." The Melville, N.Y.-based company, with fiscal 2007 sales of $900.4 million, already owns some of the best-known brands in natural food, including Arrowhead Mills, Garden of Eatin' and Yves, which makes meat alternatives.

Fastre's not worried.

"It legitimizes the category," he said of Hain's plan. "Now hemp is big enough so the big guys will play."

Fastre's counting on continuing word of mouth -- plus exposure in natural food stores -- to keep driving hemp milk's expansion into mainstream groceries.

That's the strategy that got Living Harvest into Fred Meyer and the five Portland-area Lamb's Markets stores. Mark Wood, grocery buyer for Lamb's, said he added the line at customers' request.

"I was a little apprehensive at first -- every product has to hold its own on the shelf or it's discontinued," he said. "But it's doing well."

Hemp milk costs more than its soy and rice counterparts. At Fred Meyer, for example, Living Harvest Hempmilk is $3.99 a quart versus $2.29 to $2.49 for soy milk.

That price gap is expected to widen. The company's hemp seed comes from Canada, whose dollar rose substantially the past year.

Fastre says he doesn't think consumers will balk. Sales of less-expensive soy milk have fallen, he noted: "That tells me that people are looking at quality, not price."

There's also hemp milk's nutritional qualities: It has three main advantages over soy and cow's milk, said Dr. Tori Hudson, a Portland naturopath and author of the Women's Encyclopedia of Natural Medicine: It contains easily digestible proteins and omega fatty acids and is low in common allergens.

Neither soy nor cow's milk contains omega fatty acids, which, among other benefits, reduce the risks of heart disease, strokes and blood clots.

Now Fastre plans to expand Living Harvest into other categories, though he declined to be specific. "We could mimic soy milk," he said. "Get into ice creams, yogurts, creamers."


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Source: The Oregonian
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