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Hemp, a sustainable source of omega 3s and protein, offers growing market for investors

Omega-3-6-9 fatty acids are important nutrients for all systems of the body to function normally, including skin, respiratory system, circulatory system, brain and organs. They are also known to reduce inflammation, which is the source of many illnesses including arthritis, stroke and heart disease. Although indispensable nutrients for good health, the human body cannot produce omega 3 and omega 6 fatty acids on its own, making omega-dense foods a critical component of a healthy diet.

Global consumer trends are increasingly moving toward healthier, more environmentally sustainable food choices such as plant-based ingredients. Millennials, a consumer segment with a growing position in the marketplace, are demanding alternatives to meat consumption as a source of protein.
These two drivers are creating significant opportunities for hemp, a plant-based protein source that is also rich in omega fatty acids.

Plant-based protein market driven by Millennials and socially conscious consumers

The global plant-based protein market In 2017 was valued at US$10.5 billion and is projected to grow at a rate of CAGR 5.7 percent to reach a value of US$16.3 billion by the end of 2025. The market applications for plant based proteins are numerous and wide-ranging, including supplements, nutritional powders, beverages, protein and nutritional bars, bakery and snacks, breakfast cereals, meat products, dairy and dairy alternative products, infant nutrition, pet food and treats and animal feed.

A major driver of this growth is the changing attitudes of consumers as they become better educated about the benefits of plant based nutrition and the environmental impact of meat-based protein consumption. Socially conscious consumers, according to market research, makes up about two-thirds of the market and their number one concern is environmental sustainability. Research firm Nielsen reported that in a recent consumer survey, 46 percent of respondents said they are willing to pay a premium for products and services that demonstrate a commitment to such concerns.

A large majority of socially conscious consumers are under 40. In fact, millennials are considered one of the most powerful consumer groups in the North America, outspending baby boomers, and more than 60 percent consume plant-based meat alternatives.

According to a research study by Mintel, around 35 percent of Americans are eating more protein from sources other than red meat. In fact, per capita red meat and dairy consumption in the US have both fallen by one-third since the 1970s as consumers look to avoid cholesterol, saturated fat and the overuse of antibiotics and hormones contained in meat and dairy—all of which can have deleterious effects on one’s health.

“With so many consumers turning to protein from sources other than meat and poultry, there is an opportunity for marketers to reach a sizable group with concerns related to health, particularly cholesterol and fat content,” said Billy Roberts, senior food and drink analyst at Mintel.

In a significant strategic paradigm shift, Cargill the world’s largest privately held food and agriculture company, recently sold off the last of their US animal feedlots and its Swiss-based animal feed business in order to invest further in plant-based proteins. Last year, the corporate giant dropped the word “animal” from its protein division, opening the door to alternatives to meat-based proteins and have focused more on plant-based proteins.

Hemp leads the pack in plant-based proteins

The protein profile for hemp seed makes it a great alternative to meat and fish. Containing 33 grams of protein per 100 grams, hemp seeds are on par with or higher than most fish and meats and have more digestible protein than all other plant sources including soy, pea chia and flax. Considered a complete protein, hemp seed contains all the essential amino acids required for the human body for optimum health. Hemp contains 30 percent albumin (similar to egg white protein) and 65 percent globulin Edestin protein—an essential protein in cellular repair at the DNA level. In addition, Edestin is compatible with the human digestive system making it an easily digestible protein that doesn’t cause the same stomach issues as other forms of protein, including soy and whey.

Hemp also contains important minerals such as iron, magnesium, folate, copper, manganese in addition to insoluble fiber. And unlike flax and chia, hemp seeds are far more versatile and easy to incorporate into your daily diet as you don’t need to grind the seeds or soak them in water to obtain their nutritional benefits.

Plant-based diets are not only healthier than meat-based, they are also better for the environment—an important factor that appeals to today’s more socially conscious consumer. Global research firm Nielsen reports that in a recent study of consumer preferences, 46 percent of respondents said they would be willing to pay a premium for products and services from companies that take seriously their environmental and social impact.

Livestock production requires vast amounts of water, is a significant contributor to greenhouse gas emissions and responsible for deforestation in some regions. Agricultural production of plant-based foods, such as a vegan-based protein source like hemp seed, has a lower direct environmental impact than does the production of livestock, especially when it comes to water consumption, water and air pollution, and deforestation. Hemp is well suited to organic cultivation, requiring little if any use of pesticides, herbicides or petrochemical fertilizers.

The right Omega ratio is crucial

North American’s are not consuming enough omega 3s and that has a lot to do with our meat-based diets. Poor memory, fatigue, and depression may be signs of an omega deficiency.
Omega 3s are critically important to the body’s production of docosahexaenoic acid (DHA) and eicosapentaenoic acid (EPA)– both essential for human health. And the right balance between omega 3 and omega 6 is important to the body’s ability to convert omega 3 to DHA and EPA. Too much omega 6—commonly found in red meat, poultry and eggs—can actually inhibit this process and cause inflammation.

“A healthy diet should consist of roughly two to four times more omega-6 fatty acids than omega-3 fatty acids,” states a report by the University of Colorado, Colorado Springs. “A typical North American diet may contain 11 to 30 times more omega-6 fatty acids than omega-3 fatty acids, contributing to the rising rate of inflammatory disorders in the United States.”
Robust growth in the omega market

Consumers across North America, Europe and Asia are becoming more health conscious and adopting healthier lifestyles. This increasingly global trend is fueling significant market growth in dietary, nutraceutical and cosmetic applications for omega 3s. In 2016, the global market for functional food market reached US$250 billion while the omega-3 foods market reached US$37 billion.

Omega 3 supplements are a leading category within the nutraceutical industry. Grand View Research analysts expect by 2025 the omega 3 supplements market will hit $57.07 billion on significant growth in product applications. “Numerous factors such as urbanization and government efforts to educate consumers and provide superior healthcare services are likely to fuel the utilization of omega 3 based products,” stated a recent report by the firm. “In addition, increased consumer willingness to spend is anticipated to provide a positive outlook to the omega 3 supplements market.”
Outside of supplements, the applications for omega 3s are numerous and of great consequence to overall health. Omega products are gaining traction in the functional food market in categories that include dairy, pizza dough, pasta, baked goods, beverages and even pet food.

Omega 3 fatty acids promote the healthy development of the eyes, brain and nervous system. The Grand View Research report cites infant formula and the sports nutrition applications as significant contributors to future growth in the omega-3 market. In addition to the food industry, omegas are also used in cosmetics.

Hemp offers healthier, sustainable alternative to traditional marine sources

Fish is the most commonly consumed omega-rich food. The American Heart Association recommends including 2 servings of fish to your weekly menu; however rising levels of toxins such as mercury, dioxin and PCBs in many of the world’s fish supplies pose potential health risks. Even fish oil supplements may contain mercury, and farm-raised fish have significantly less omega 3s. Environmentally, there is increasingly consumer concern about sourcing omegas from farmed fish as well as from already rapidly declining global fish stocks .

While the fish oil sector is still expected to account for a large portion of the market, plant-based omega products such as those derived from hemp are beginning to play a larger role in the market as consumers push for more sustainable, healthier alternatives.

Seeds and nuts—whole, ground or as an oil— are the best plant-food sources of omega fatty acids. Plant-based sources such as hemp, flax and chia offer a healthier alternative to fish-based omega consumption. A further plus, incorporating more plant-based foods into your diet can help ensure a better balance of omega 3 and omega 6 in your diet.

Hemp seeds, for example, are comprised of nearly 85 percent EFAs and a one tablespoon of hemp seed oil provides more than the FDA’s daily EFA requirement. Hemp seed oil also has an ideal omega 3 to omega 6 ratio of approximately 1:3.

Fish oil’s inherent chemistry leads it to degrade faster than plant-based oils, increasing the potential for ingesting rancid pills. This risk is significantly reduced in hemp-derived omega supplements which have a much longer shelf-life. Omegas from fish have had limited success in fortifying foods. The fishy aftertaste associated with this type of fortification has had its challenges resulting in limited product development. Hemp can be more easily incorporated into an almost endless number products for omega fortification.

Hemp market growth

Hemp’s stellar nutritional value and impressive omega and protein profile have positioned it for market growth in a variety of industries. In the United States alone, hemp products—including shelled seed, protein powder, soaps and lotions, and CBD (cannabidiol) products— sold for an estimated total retail value of $688 million, according to Hemp Business Journal.

“The omega and protein markets are witnessing a monumental shift and hemp-derived omegas and proteins are becoming a driving factor. Increasing global awareness, education and continuous progress made amongst multiple countries in the EU, Asia and across North America and most recently in Australia have continued to open up new opportunities for hemp,” said Bryan Carson, Executive Vice President of Innovation at Naturally Splendid (TSXV:NSP). “With the continued lifting of prohibitions globally, new hemp research is now available to educate consumers on the nutritional benefits the plant provides. With regulations continuing to evolve in a positive fashion, these opportunities are expected to increase significantly.”

Through the application of advanced science and technology Naturally Splendid has built an award-winning portfolio of high quality hemp and plant-based extraction and formulation technologies and products. Distributed through North America, Asia and Europe and Australia, the company’s retail product lines span a number of market segments including functional foods, pet care and cosmetics, including its innovative omega ingredient HempOmega®.

In October 2017, Naturally Splendid received a provisional US patent for the market’s first hemp protein isolate superior in concentration to currently available hemp proteins. The ability to increase bioavailability and increase concentrations gives Naturally Splendid a unique advantage over most other hemp based companies who produce products primarily with the more standard hemp protein and omega as ingredients.

“Hemp offers its entire make-up to the food, beverage, pet, cosmetic and even bio-fuel industries,” explains Carson. “The revenue silos can be drawn to formulation of the plants naturally expressed oils (plant-based omega nutrition) derived from the plant.”

Growth categories for hemp products include cereals, sports nutrition and snacks, says Innova Market Insights, which reported a 76 percent jump in the bakery category for hemp applications between 2015 and 2016. And now with evolving new regulations allowing for more uses of the hemp plant such as CBD extraction and formulation, these opportunities are sure to expand.

The Canadian Government has proposed changes to existing industrial hemp regulations allowing for the extraction of CBD and its use in a wide variety of products. According to the recently released Canadian Government report, “A new pathway is proposed for NHP (Natural Health Product) submissions containing parts of the cannabis plant subject to the proposed Cannabis Act, such as products derived from cannabis flowers containing cannabinoids such as CBD. To minimize the risk of psychoactivity, the same 10 ppm THC limit would be applied to such products”. This extends to Veterinary Health Products, which are used to maintain or promote the health and welfare of animals.

Cosmetics and personal care is a growing market for hemp as consumers move toward more organic and CBD-based products. Grand View Research pegs the global market for organic personal care products at $10.6 billion. According to a report by CFN Media Group, “a recent review of available research suggested that cannabinoids could help reduce itching, modulate inflammation, and potentially treat certain skin cancers. Their anti-inflammatory and antioxidant characteristics could provide anti-aging properties, while hemp seed oil contains both omega-3 and omega-6 fatty acids to protect from sun damage.”

“CBD (a non-euphoric cannabinoid) is taking the market by storm and becoming accepted and deregulated across the globe and in Canada as well,” Carson added. “The research being conducted is proving up of the benefits of CBD and this is translating into a strong surge of demand from consumers seeking plant-based nutrition and relief from ailments and deficiencies.”

“We estimate that the hemp industry will grow to $1.8 billion in sales by 2020, led by hemp food, body care, and CBD-based products,” said Sean Murphy, Founder of Hemp Business Journal. “The data demonstrates that the hemp industry is growing quickly at 22% 5-year CAGR and being led by food and body care products.”

Further growth and opportunity

The health and wellness industry and all its subsets—including supplements, functional foods, and cosmetics—offer numerous entry points for investors to take advantage of the dynamic hemp-derived omega market. Consumer demand for more plant-based protein choices and the global awakening to the health benefits of cannabinoids will also serve as further drivers of growth for hemp-based businesses. The hemp sector is poised for significant growth in multiple consumer categories and the big differentiator as it often is in these emerging categories, will be product innovation of the inherent beneficial characteristics of hemp through solid research and development.

This INNspired article is sponsored by Naturally Splendid (TSXV:NSP). This article was written according to INN editorial standards to educate investors.


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