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How NeutriSci Is Successfully Tapping Into Japan's CBD Market
After months of formulating a product for the Japanese marketplace alongside TABLETZ LLC, the companies have completed their first large-scale purchase order.
- The CBD market is rapidly expanding with a new generation of products and emerging markets
- Japan is a key market for CBD edibles with a growth rate of nearly 100 per cent year-over-year
- Canadian company, NeutriSci, is well-positioned to capitalize on Japan’s growing market, after completing its first large-scale purchase order of its TABLETZ brand product
Written by Don Hauka
There was a time when consumers had to take their CBD in capsule form or by the sometimes-iffy liquid-dropper method, which lacked precision.
But now there's a new generation of CBD products that meet both therapeutic and esthetic needs of consumers. Chief among these is patented sublingual melt technology that offers precise dosing, is portable and functional.
It tastes good and is easy to use — critical selling points to a rapidly expanding market.
This breakthrough technology is helping fuel forecasts that show the CBD-infused edible market is set to grow by 25 per cent between 2020 and 2027. The recent Data Bridge Market Research study, CBD Infused Edible Market Study Forecast till 2027, forecasts the market to account to USD$5.16 billion within six years.
One of the key markets for CBD edibles is Asia, especially Japan. Another recent analysis by consultant Jacqueline Tschumi estimates that the growth rate of the Japanese CBD market will be nearly 100 per cent year-over-year; by 2024, Japan will become the second-largest medical CBD market in Asia with a scale of $700 million for a total market value of $1.9 billion.
NeutriSci on the ground floor with multi-million-dollar order for Japanese market
One Canadian company well-positioned to feast on the Japanese CBD bonanza is Calgary-based NeutriSci International Inc. (TSXV: NU). The company has completed its first large scale purchase order in Japan for its TABLETZ brand products but expects more orders to come in rapidly.
This initial order consists of several hundred thousand units of both the 3-and 7-tab TABLETZ sticks. Each type has three different flavors – lemon, berry and mint.
"The opportunity is tremendous. In Japan, there's a potential for a fad type of a scenario where you see a quick spike where a product is quite popular with people and then fades," says NeutriSci’s President and CEO, Glen Rehman.
"But we've taken the approach of putting the pieces in place to build something that's going to last and not just be a fad, but something that's long-term."
NeutriSci specializes in the innovation, production, and formulation of nutraceutical products. Established in 2009, the company's initial focus was on areas like heart and cholesterol health, sleep deprivation therapies, immune defense as well as men's prostate and sexual health.
Rehman sees future orders from Japan for replenishments of 3-and 7-tab sticks and a 500 mg bulk bottle product of 35 tablets, with product selection for the bulk bottle consisting of the same three flavors as the sticks.
It's the result of months of planning and preparation, including procurement of the product ingredients, ordering, and receipt of custom manufacturing equipment, packaging approvals, health ministry approvals, final mold productions, and the overall alignment of the logistical network.
"There's a lot of foundational pieces that were put in place to position the product and business opportunity at the forefront with the marketplace," says Rehman. "Hard work that paid off and continues to pay off."
That hard work included building a distribution network through multiple business partnerships that will see TABLETZ launched in up to 46,000 locations throughout Japan. The product also has the advantage of being unique — while there are other CBD products on the market in Japan, there are no other edible tablets with consistently measured doses, technology, and ingredients.
"The functionality, portability, and preciseness of the product allow consumers to incorporate it into their daily lifestyle. You can carry it around in your bag and put it in your car or drawer and you know exactly how much you're going to get each time," explains Rehman.
Japanese Health Ministry rules, health trends put NeutriSci in ideal position
Another factor in NeutriSci's favour is Japan's regulatory regime. The Japanese Health Ministry has put the application process for the importation of any new products on hold and halted the approval of new CBD products into the Japanese marketplace. This gives NeutriSci an advantage to maximize their first-to-market opportunity.
"We have a bit of an advantage because of this. It helps us gather some real estate and establish brand recognition," says Rehman.
NeutriSci's penetration of the Japanese market is due to it being one of few companies partnered with a Japanese company that has the Health Ministry’s approval. The company has created a tablet for Tabletz LLC, the only company selling this type of edible CBD product in Japan.
The company's products also align with the growing trend towards alternative medicine and patient empowerment.
"It's something that comes from a natural source that can help people with their ailments. I think people will try it because of that and because it's been proven to be effective," says Rehman.
Initial shipment of TABLETZ is just the beginning
NeutriSci is benefitting from a perfect storm. With product approvals in hand, a pause on new application approvals at the ministry level, combined with a strong distribution network and positive initial consumer feedback, Rehman's confident that TABLETZ can be one of the top selling CBD brands of its kind in Japan. The initial order — likely to be shipped this quarter — is only the beginning.
"We think we're positioned quite nicely. The fact that our product is chewable and works makes it a lot easier to win over the consumer. And we have the technology behind it, and that's important to us," Rehman notes.
In March 2021, NeutriSci announced that TABLETZ LLC had received approval and classification for a Harmonized Code (HS Code) for the TABLETZ product from Japanese customs.
The receipt of this HS Code is a significant development for the company as it completes the entire process for the TABLETZ product line and makes it available for complete distribution throughout Japan.
So, as TABLETZ swiftly enters the market, NeutriSci has also completed final testing of its Cryopharm product line, which consists of Marbl Melts and Kali Juice, as well as KushTabs and ZenSticks.
Multiple lab tests, including quarantine tests, were performed to satisfy the regulatory requirements for California. These products are now ready for sale in the state’s dispensaries.
NeutriSci has also closed a non-brokered private placement in which it raised gross proceeds of just over $370,000. The net proceeds of the placement will be used for the product launch in Japan and for general working capital purposes to sharply increase the production capacity of NeutriSci’s products.
Investors can look forward to revenue growth and company expansion in 2021
Moving forward, the company looks to build upon the success that it's had to date with Tabletz LLC by launching a 500 mg bulk bottle in Japan and expanding distribution into other countries in the region.
NeutriSci will also continue to further relationships that it has established with other companies that are doing business in South America, the U.S., Canada, and Europe.
A key to that is the company's relationship with Cryopharm, a developer, producer and distributor of medical grade, dose-controlled, recreational cannabis products. NeutriSci is working with Cryopharm to expand distribution and sales of its product lines into Washington, California, and other states.
Rehman says investors can also to see significant revenue growth as the company expands and new products enter the marketplace.
"Over the coming weeks and months, a lot will come to fruition and as a result, the revenues will reflect those efforts and opportunities," says Rehman.
"We've just never been in a better condition. It's quite exciting."
To learn more about NeutriSci, visit their website here.
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Opinions expressed by Entrepreneur Spotlight partners are their own.