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Hemp business reaps healthy results

Posted on October 19, 2004

Co-Founder of Manitoba Harvest Earns Prestigious “Young Entrepreneur Award”

Winnipeg, Manitoba — In just five years, Mike Fata, 28, and his two partners at Manitoba Harvest Hemp Foods & Oils have built a healthy business from the ground up, literally. What started as a seed of an idea and $50,000 in sales the first year, has bloomed into an industry leader with annual sales in excess of $1 million and a consistent growth of 50% annually. The success of their business has earned Fata the Business Development Bank of Canada’s (BDC) 2004 Young Entrepreneur Award for Manitoba.

“Mike truly represents the younger generation of Canadian businesspeople,” says André Bourdeau, BDC Acting President and Chief Executive Officer and Executive Vice President, Financial Services and BDC Consulting Group. “He has a real passion for what he does. Using creativity and fresh ideas, he has carved out an innovative niche for himself, inspiring us with his ingenuity, commitment and enthusiasm.”

BDC’s Young Entrepreneur Awards recognize the achievements of Canadian businesspeople between the ages of 19 and 35, paying tribute to a young entrepreneur from each province and territory. Winners are chosen by a selection committee, based on a number of criteria that range from operating success and innovation to involvement in the new economy, community work and export performance. The winners will be honoured at a Small Business Week ceremony this evening in London, Ontario. “Recognition from the BDC and other business leaders is nice,” says Fata. “Knowing that more and more people are eating our healthy foods and leading healthier lifestyles is what drives us,” he notes.

Success hasn’t come easy. Along the way, Fata and his partners have handled the challenge of creating a whole new category in the health food industry. “Educating consumers about the incredible health benefits of hemp foods and the fact that health foods can be delicious has been our focus from day one,” says Fata. Hemp foods are gaining more and more recognition from nutrition experts due to their high concentration of Omega-3 and Omega-6 Essential Fatty Acids, strong digestible protein profile, soluble and insoluble fiber content, and their host of vitamins and minerals. Chefs and consumers are seeking hemp because of its pleasant nutty flavor.

Major 2004 Legal Victory Is Boosting Fata’s Sales & Outlook

One of the greatest hurdles to their success was adversity caused by a controversial American government policy, which for several years loomed over their largest marketplace of customers. A major turning point for the company came this year when the U.S. Drug Enforcement Agency (DEA) lost its case to ban hemp sales in the U.S. The final chapter of the battle took place on September 27, when the deadline passed for the Bush Administration’s lawyers to attempt to overrule a unanimous decision from February 2004 by the U.S. Court of Appeals.

“Our industry just won a two-and-a-half-year court battle,” says Fata. “It was a struggle, but the favorable decision and all of the media attention it gained has helped to drive our sales even further,” he adds. “The legal victory straightens out the false “drug” stigma about hemp foods and eliminates regulatory uncertainty for consumers and hemp industry farmers, manufacturers, retailers and investors,” says Fata, “Most of our product sales come from the U.S., so closure on the legal issue is a big boost for us,” he adds.

“Quality From Seed To Shelf”

“Commitment to quality from seed to shelf’ is our mission and one of our key marketing messages,” Fata says. “Unlike our competitors, we are able to promise that because we are integrated and control our process from the growing of the seed right through to our end marketplace,” he explains. “We are vehement about our focus on quality, and we know that’s the way we’re going to attract and keep customers and grow this business.”

Manitoba Harvest Hemp Foods & Oils is the largest integrated manufacturer of hemp foods in North America, a health food category that grew by 66% over the past year. Fresh Hemp Foods Ltd. (DBA Manitoba Harvest Hemp Foods & Oils) contracts hemp seed production on more than 2,000 acres by 20 Manitoba farmers who are shareholders in the company. The raw hemp seed is processed into hemp seed oil, shelled hemp seed, hemp seed nut butter and hemp protein powder at the company’s 6,000 square foot certified organic processing plant in Winnipeg. It is then distributed throughout North America to over 1500 health food stores and the natural food sections of mass-market grocery stores. Products are also sold in bulk to manufacturers of bars, cereals, cosmetics and other products.

Creating And Building a Market for Hemp Foods

In the early 1990’s, Fata lost 120 pounds on a no-fat diet and almost died from restricting his fat intake. “I learned the hard way about the body’s need for essential fatty acids like the Omega 3 & 6 fats that are found in hemp seed,” he says. “At about the same time, I met Alex Chwaiewsky and Martin Moravcik who were lobbying the Canadian Government to legalize hemp seed production.” In 1998, when Health Canada legalized hemp for commercial industrial growth, the three partners got together and by the next year had started pressing hemp seed oil and selling it to four health food stores in Manitoba. “We just grew the business from there by delivering a quality product and educating our customers,” says Fata.

With no real market for hemp food products before they started, the partners have invested heavily in direct interaction with customers through consumer shows and in-store demonstrations, a strategy that has resulted in monthly demand for approximately 350 to 400 large shipments of their products a month. The partners also promote a healthy lifestyle through their own example and by sponsoring athletes and artists to bring the message to younger people that it’s cool to be healthy. “Health has made a big impact on the way that I can perform and so I try to teach that to all of our staff and management and the people we work with,” explains Mike.

“When we first started the business and I told my family I was going to sell hemp seed oil for a living, all I got was laughter around the table,” says Mike. “But by about our fourth year of business, that had changed. People started saying, “Wow, you guys are going to be really successful; the business is just booming.”

At Manitoba Harvest, hemp seeds are celebrated as seeds of change and prosperity. On the production floor in Winnipeg, Fata inspects a sample of the recent hemp harvest and sums things up. “Hemp seeds like these can change peoples’ health for the better, can change agriculture to be more sustainable and provide jobs in a prosperous new economy. All this, makes a positive Triple Bottom Line”, he says. Manitoba Harvest products are offered by more than 1,500 natural food retailers, including Whole Foods Markets & Wild Oats.

About BDC

The Business Development Bank of Canada is a financial institution wholly owned by the Government of Canada. BDC plays a leadership role in delivering financial, investment and consulting services to Canadian small business, with a particular focus on the technology and export sectors of the economy.

Copyright © 2004, Manitoba Harvest. All rights reserved.

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