Goodrays is eyeing what the CBD drinks business believes could be a “pivotal moment” for the category in the UK.

The London-based company, set up in 2020, has listings with major UK grocers including Tesco, Sainsbury’s and Morrisons. It has also crossed the English Channel into France, where its drinks, which contain 30mg of CBD. are sold at retailers including Carrefour and Intermarché.

The company, which does not disclose its sales figures, nonetheless says it has “doubled revenue year-on-year for three consecutive years while simultaneously doubling profitability”.

Goodrays founder Eoin Keenan sat down with Just Drinks to discuss the company’s plans for further growth, the recent changes to its product range and regulation, with full market authorisation for CBD products expected in the UK early next year, which the business describes as “a watershed moment for the industry” in the country.

EK: The is no legal change to any of our products currently. The FSA has introduced a new 10 milligrams advisory daily intake for CBD. That’s based on three early studies with three specific CBD suppliers. They based the studies on what happens if you use CBD every single day over a lifetime. What they found is that the quality of CBD in the UK is a spectrum.

We at Goodrays use high-quality suppliers but there are low-quality suppliers that have a lower ADI because they don’t have the same quality processes and techniques. Those providers have a lower safety level and the FSA has said: “Now we need to regulate those lower quality suppliers,” which is why they introduced such a conservative limit of 10mg.

They haven’t mandated any changes but they have recommended that suppliers adjust to the 10mg ADI. We are supportive of that and we’re working with the retailers to work out a sensible solution and a sensible timeline.

Having been part of the stakeholder process with the FSA, we’re supportive of this change as it’s another positive step towards full market authorisation. The FSA have set this out as a recommendation rather than a mandated hard change and the suppliers, the retailers and the FSA all understand that there will be a transition period for all parties to implement this recommendation, which is a sensible approach.

EK: UK consumers have adopted CBD at unprecedented rates, faster than kombucha and energy drinks, despite the fact that the market has been going through a lengthy full market authorisation process which has, at times, restricted distribution in certain channels.

With full market authorisation on the horizon, many retailers are looking to double down on the category and use CBD as a catalyst for further category growth. This backing from the retailers, coupled with the fact that CBD brands will be able to launch new and updated products, is only set to turbocharge the growth.

EK: We define ourselves as a functional wellness brand, so we aim to address consumer problems such as mental wellbeing and stress.

If we think back to 2020, the levels of stress in the UK have doubled over compared to pre-Covid. Currently, something like 63% of people in the UK report feeling heavy stress on a weekly basis, which we believe is probably under-reported. We think there is a stress epidemic in the UK that has increased drastically since 2020.

Consumers are looking at their food and drink choices because 73% of consumers think food and drink impact their mental wellbeing. Consumer interest has doubled since 2020, specifically in CBD.

CBD drinks didn’t really exist in the mainstream in 2020. The adoption of CBD drinks in particular has been pretty unprecedented in the UK market.

We’re very lucky. We’re in that space where consumers are genuinely changing and looking for these alternatives and we have retailers who are willing to back this. Tesco, Sainsbury’s, Waitrose and Morrisons are all looking at this and call [functional drinks an] elevated, key category. It means this is now somewhere where they want to grow within the store but they also use it as a way to attract new consumers and to bring incremental value to a category that didn’t exist five years ago.

EK: I think it’s a natural evolution. It’s the result of education of consumers, so the health-conscious consumers become more and more educated over time. When it comes to CBD, initially, we expected more backlash than we received because it comes from a cannabis-derived variety, from hemp.

Hemp, as a plant, actually has a long history that is totally non-controversial. Actually, only in the last 60 to 70 years have people lumped it in with THC in Canada, where it became a little bit more controversial.

CBD is fully mainstream now. CBD products are in every retailer in the UK

What we found is that since the UK has legalised it, since we’ve created high-quality products that are backed by trusted retailers like Tesco and Waitrose and Sainsbury’s and Amazon, consumers have built trust. It’s our job then to deliver high-quality products, invest in R&D, educate the consumer and make sure our products are made consistently up to a high standard.

So we found a combination of those two things, the consumers becoming educated over time, plus delivering high-quality products, and the retailers supporting the category have built a level of trust in the industry. We don’t really think it’s controversial anymore. CBD is fully mainstream now. [CBD products are] in every retailer in the UK and I think last time I checked one in three people have used CBD in the last 12 months.

EK: When you think about the world as drinks markets, we’re in an innovative category. The US and the UK tend to be at the forefront of change in innovation.

The UK has kind of created a blueprint market for CBD. They have moved rapidly. They got retail support. We’ve shown that we can take consumers on a journey, build trust, build distribution and deliver high-quality, consistent products.

I believe there’s a massive amount of headroom in the UK still to go after. The number of consumers looking for these kinds of products is only growing and is significant. We don’t really quite yet have the distribution to match that level of demand.

Having said that, we’re creating a blueprint here to roll that out into other European markets. You look at other European markets and they also have similar levels of demand for functional, mental wellbeing drinks but it hasn’t been met by the brands, by the suppliers and retailers in those markets. They are probably where the UK was three years ago. There’s definitely huge growth potential in Europe. Now it’s about building the blueprint, delivering it correctly into those international markets, and understanding the different cultural nuances in those markets as well, whether that comes from flavour, infrastructure or communication strategies.

EK: I think it’s too early to say. If there’s something to announce in the next month or two, I would absolutely tell you but, right now, we’re analysing.

We’re being selective about which markets we want to go in to spend our time and resources on. We want we don’t spread ourselves too thin over too many markets, because then you kind of wash the impact of the brand out. We want to go and select markets where we think there is the most potential for functional drinks. The demand is there from all of them. It’s just about being a bit more selective.

EK: The way we define premium is both from a flavour and an efficacy angle.

From the flavour and liquid quality point of view, we are looking at staying as clean label as possible, so natural ingredients. Can we use real fruit juices? Can we minimise the use of sugar or any sweeteners and can we deliver high-quality flavour that is premium? We are not looking to be a “Coca Cola plus functional ingredients” or a “lemonade plus functional ingredients”.

EK: We want to find exotic and interesting and great-tasting flavours that premiumise the soft drinks experience.

We work with our “chief liquid developer”, the former chief liquid developer at Diageo, to create these sophisticated flavour experiences. From the ingredient side, we want innovative, effective ingredients that are natural, that can genuinely help us think, clear our minds, feel calmer and stay more relaxed. We position ourselves as the most effective products in the market. We are creating unique propositions to people that are good for their mental wellbeing. Essentially, it’s something you can use every day. It’s about empowering people to be less stimulated, be more more focused, be more relaxed and, ultimately, enjoy life better.

EK: Within our product range, we don’t necessarily look at creating an economy range and a separate premium range.

It’s more about creating incremental opportunities today to help support our community and our consumers. If you are a fast-moving, stressed-out, health conscious consumer, whose day lasts from 6am to midnight, we look at their day and at what points they feel stressed. We observe it and say ‘Okay, what kind of liquid, what ingredients, are they looking at throughout the day?’ It’s more about creating incremental need and occasions for consumption rather than building premium ranges within CBD.

EK: We are trying not to be too competitor-focused within our own category. We look at the functional drinks as a collective to take on other soft drink categories. We believe that we should be working as one big category to gain more space and to drive more consumers to healthier, better-tasting options. Our competitors are more the energy drinks, the big sugar drinks. We believe that in 2030 people will look back on and think: “Why did I use those kind of drinks to fuel my day? I didn’t realise the health impact of those products on me.”

We actually support other brands in our space because we take that category-wide approach to the retailers

We think our competitors, our enemies, are those categories. Those are the ones we want to take on as a category. We actually support other brands in our space because we take that category-wide approach to the retailers. We say ‘Actually, you shouldn’t just be offering Goodrays, you should be looking at multiple brands in the space to offer a choice to the consumer.’

I think the more the more brands deliver a high-quality product within the functional space the better. [The other brands] also need to be supporting their labels, raising funds, [to] invest and drive people towards [the category] as well. Goodrays and two other brands are driving the majority of the growth in the space. It now requires everyone to invest in those brands and grow them.

EK: When I started looking for this role, I wanted someone who had a lot of experience within the beverage sector but who also understood both commercial and brand and had experience in growth in particular. There was probably three people in the UK optimal for this role and then he was number one. I was really looking to get him.

We started the process probably 12 months ago, looking at what I wanted and it was support from someone with a wealth of experience as a right-hand person who could support our growth journey from where we are now through the full mainstream brand and growth plan that we have projected. I needed someone who could deliver that and also support the business with creative ideas. It came down to bringing that level of experience without risking the business and helping to ensure that we got the right structure to continue to grow.

““There’s a massive amount of headroom in the UK” – Goodrays CEO Eoin Keenan talks prospects for CBD brand” was originally created and published by Just Drinks, a GlobalData owned brand.

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