Leading CBD manufacturer becomes latest category casualty

The firm was named NutraIngredients Startup Star​ at last year’s Active Nutrition Summit, recognized for its customer trust and quality attributes, but the closure shows that even the most robust firms are at risk in this market.

Marc Burbidge, the company’s CEO, told NutraIngredients that he entered the industry with a passion for innovation but ended up “essentially running a bottling facility.” He said a key issue for the industry is the increasingly restrictive regulations on formulations, meaning customers may not feel the same benefits they used to feel with these products.

“People are only able to sell one isolate of a plant which has around 300 cannabinoids that all work in synergy, and any benefit the customer might have felt initially from that isolate they no longer get as they are building up a tolerance, so now they’re looking into other ingredients to give them that same benefit they felt to begin with," he explained. “Add to that the set 10 mg limit per day​, consumers are probably absorbing maybe 1 mg per day—it isn’t going to do anything.” 

He noted that one of the big challenges for the industry is that it has not been allowed to innovate—a rule put in place by the UK Food Standards Agency (FSA) while it worked its way through Novel Food (NF) applications. Burbidge pointed out this was especially problematic considering that tinctures—the main format available at the time the NF process began in 2019—are “foreign to most consumers.” 

Shomi Malik, the commercial and strategy lead for the firm said that consumer interest in CBD “is flat lining, at best,” attributing this largely to brands failing to invest in education.

"Brands need to invest in the customer journey, in retention, in education, rather than relying on the hype of five years ago because that hype easily transfers to another ingredient—like mushrooms,” he said. 

He added that the popular rhetoric has been to blame regulations for company closures in this category but that a culmination of issues has led to the demise of many CBD companies including the price increases across a supply chain fraught with risk and challenges at the retail level impacting brands throughout the industry.  

These wider market issues were ultimately compounded by the loss of a key client allegedly moving to a different supplier, Malik said. 

The team of nine staff at B3 Labs has worked with its clients to ensure that all data on ingredients and methods for manufacturing have been passed over to the brands so they can go to alternative manufacturers and continue to sell the same products they have previously sourced from B3 while legitimately keeping their place on the FSA list and making their way through the NF authorization process.  

“The team has been working overtime over the last month to over supply our clients so they have a backlog of products after our closure,” Malik said. “It goes to show how much they enjoyed working for the company that they had such a good work ethic even when they knew the closure was on the horizon.” 

Burbidge added he was proud of what his team had achieved and was excited to work with ingredients that would allow his passion for innovation.

"I think the future for me will be about taking a step back from manufacturing and looking to innovation, launching a brand with ingredients I’m interested in," he said. "As a manufacturer, you can’t showcase the innovation you create so I would like to be able to do that."