Clean and Green November 2019 Past Issues

Greenstar Plant Products, Inc. – Solutions for growers

November 7, 2019

Greenstar Plant Products, Inc.

Solutions for growers

Business View Magazine interviews Simon Hart, Director of Brand Development for Greenstar Plant Products, for our series on Cannabis and Community in Canada.

Greenstar Plant Products, Inc. is an internationally recognized leader in the manufacturing of plant nutrients, producing premium horticultural products and solutions for global, domestic, and commercial use. Their brands are utilized by commercial operators including growers, landscapers, greenhouses, nurseries, organic farms, as well as independent retailers. With a vision to cultivate mutually beneficial long-term relationships built on trust, quality horticultural products, and world-class service, Greenstar is well poised for future growth, particularly in the cannabis sector.

Business View Magazine recently spoke with Simon Hart, Director of Brand Development for Greenstar Plant Products, about the company’s evolution from distribution to manufacturing, current challenges in the cannabis sector, and insights into what the future holds. The following is an edited transcript of that conversation.

BVM: Can you give us some background on Greenstar Plant Products?

Hart: “The company has been around since 1998. It started in distribution, supplying our own fertilizers, other fertilizer brands, and gardening equipment to independent lawn & garden and hobby-hydroponic stores across Canada. Five years ago, a new CEO, Michael Nemirow, came into the organization with a specific directive from our Board to go over what the critical parts of the business were and decide where to focus our energy and resources for the future.

“What we had was an evolution away from distribution, which was a good business, but one that is difficult to scale in Canada – especially in the lawn & garden sector – because it is seasonal and the weather can have a major impact on the market and the overall size of the season. So, as a group, we decided we should focus on what was really the heart of the company – the fertiler brands that we manufacture ourselves. . That’s when we really started to see a shift in our company and its positioning in the market Canadian market as a focused manufacturing business, which is how we were already perceived around the world. The move to sell the third party distribution part of Greenstar to focus on producing the science-based fertilizers that we had been evolving with different brands and products for different markets for over 20 years was a great shift for the company. This ability to focus on our own brands allowed the company to experience significant growth and a real sense of purpose – it has been amazing”

BVM: How did cannabis become one of those segments?

Hart: “In Canada, we already had a very technical fertilizer line, Grotek – high-powered formulas for people that were very serious about gardening and getting the best results possible – clearly many people who had been growing cannabis in the past were using these products given their focus on producing premium plants. The Grotek brand lent itself very well to cannabis when it first came on our radar as a commercial industry around 2015 and we started seeing the opportunity for a strong market with initial players like Tweed (now Canopy). We saw a natural fit between our science-based fertilizers that already had premium ingredients, and this premium crop that also had a pharmaceutical-type component to it. The purity and the science and the production efficiency were all things that matched up the Grotek fertilizer brand really well with the commercial cannabis space. Then last year, we acquired Gaia Green; its main focus is on well-certified organic products. Again, we saw a natural fit within the cannabis space, where people go looking for that connoisseur quality, living soil atmosphere.

“Our other fertilizer brands are: Agrotek (a limited line; the main product is a fungicide that is selling into the cannabis space), Supergreen (a basic gardening option), EarthSafe (liquid organic), and U-Cann (Canadian-specific, targeting people who want to grow four plants at home). It’s a very straightforward kit that gives people the option – if you enjoy gardening and want to try cannabis, this is an easy way to get your foot in the door and get growing without much hassle.”

“At this point, sales for the commercial cannabis sector in Canada (and the U.S. through some of our partners that sell into the space) account for about 20 percent of our revenue and we’re looking to increase that revenue number over the next couple of years. We have a plan to deliver steady growth in this market with products that provide a great return on investment rather than a flash in the pan blow out of commodity products, so we’re taking our time, doing the research, digging into the data as it comes out. It’s important to remember that cannabis as a crop really couldn’t be studied effectively until three or four years ago. We’re sticking with our science of plants ethos and pushing our marketing and sales efforts with a plan to grow overall business significantly over next two years and continue a strong growth rate from that momentum. So with these plans, a five to ten percent increase in terms of the commercial cannabis percentage of revenue within that growth is going to be a big boost in actual revenue.”

BVM: Who are your typical customers?

Hart: “I would say commercial cannabis clients are about five percent of our clientele, right now. Probably 10 percent of our customers are Canadian independent lawn & garden; 15 percent Canadian hobby-hydro (people focused on indoor gardening and temp-based systems or hydroponic units for retail); and the balance is international sales. Our international business has surpassed our domestic business and that has to do with many years of trying to cultivate those opportunities. We have a very strong presence in the US, Western Europe, and we’re growing our presence in South America, with products registered in Chile, Argentina, and soon, Brazil. The international following is generally with Grotek, but we see it as an opportunity to get on the ground in those countries, build a reputation as a science-based brand, and then, what we learn from our domestic cannabis experience, we can apply when other countries start coming on with their own regulations.

“Our head office is in Langley, B.C., as is the bulk of our manufacturing, simply because we have strong technical specifications on our products and it’s much easier to make sure your quality assurance program is in place when you’re doing it in-house. Our facility has about 10,000 sq. ft. of manufacturing and 34,000 sq. ft. of additional warehouse space. As a company, if you include our remote reps, we’re at about 75 employees. Our raw material sourcing is a very involved process. We source from around the world; the majority comes from Europe, the Middle East, and North America. And some things we get from Asia.”

BVM: Do you have an in-house R&D team and what role does technology play in manufacturing?

Hart: “We have on-staff agronomists and other PhD on staff and as consultants. Also, within the organization, we have a lot of hands-on experience and scientific background within the general team. Science, and understanding modes of action of different inputs, are critical for us evolving as a business in the future. In our manufacturing facility, we have become more automated over the last few years, as sales have grown and new team members have been added who bring additional experience to how we run the business. We are looking at technology enhancements right now to go even further. In manufacturing, you have to be specific in how you mix things, and the volume you’re mixing, and, as in all things, human error can cause problems. So, we’re continuously working to bring in new technology to further ensure our people manufacturing the products have the tools and support they need from the equipment they use to do the best job possible. Along with this, we have made tremendous investments in quality assurance and other support functions to help us continue to grow at a fast pace without compromising quality in any way.

“In terms of our products, we develop some of our science in house and also outsource some of the proprietary technology we use. There are companies spending millions of dollars doing research on interesting or novel components, and we look at what is available from them in the marketplace and see how we can enhance the current formula or develop something new around what are intellectually protected concepts or inputs.”

BVM: What are the biggest challenges, right now?

Hart: “Cannabis is a very fluid and fast-moving dynamic in Canada, especially. We don’t deal directly with any cannabis operations in the U.S., but we know the market in the States is also full of changes. We work with partners that service those clients, because as a Canadian operation, we have to be very careful and respectful of U.S. law. It’s interesting being in an industry that is emerging from essentially nothing. You’re seeing consolidation, regulatory hurdles, and numerous other complex dynamics – there is so much happening in real time. That is a challenge for us in this space, for sure.

“When you touch the edge of agriculture and technology, you have to be very cautious because you’re moving beyond the basic nutrients and into this novel chemistry, which can raise red flags. We try to work with what’s been commercially accepted as a concept. Obviously, we’re very aware of different regulations in North America and Europe, in terms of the inputs you’re allowed to use in formulas. With environmental sustainability in the cannabis industry, I think you’re seeing a shift away from indoor growing to an outdoor-based system – whether it be greenhouses or true outdoor. And a lot of that has to do with electricity usage. In terms of the environmental responsibility around fertilizers, we recommend application rates that are guaranteed for uptake by the plant, there’s very little unused waste.”

BVM: What else would you like to share about Greenstar Plant Products?

Hart: “Networking in the industry is important to us. Our CEO and many members of the executive team are involved in numerous industry events and activities. We target events like the Marijuana Business Conference in Las Vegas, regional shows such as Lift & Co, and an enormous number of trade and consumer shows around the world. Going forward, cannabis and organic agriculture are the two primary drivers of any acquisition or joint venture talks we plan to be involved in.

“What’s great about Greenstar is we really feel good about our place in the industry, in terms of the products we offer, the size of the organization, the scope of our international footprint and the way we are growing. It’s really enjoyable working for, what I consider by feel and definition, a small company and yet we’re pushing out products to over 20 countries around the world. It’s that combination of international focus, the ability to be an international business but still somehow a very local company, great culture, and excitement of rapid growth that make this place feel so special.”