In August, Kylie Jenner posted an Instagram story to her 146 million followers endorsing a CBD-infused beverage called Happy Tea. In so doing, she didn’t just push awareness of the product to her followers — she also generated headlines.
“Kylie Jenner is promoting CBD-laced ‘Happy Tea.’ What is it?” asked CNN, in one example.
Kylie Jenner arrives at The Metropolitan Museum of Art Costume Institute Benefit Gala, celebrating the opening of „Manus x Machina: Fashion in an Age of Technology” on Monday, May 2, 2016, in New York. (Photo by Evan Agostini/Invision/AP)
Evan Agostini/Invision/AP
While her sister, Kim Kardashian, has long been on board the CBD bandwagon, even hosting a CBD-themed Baby Shower in April, this was Kylie’s first foray into the trending industry. The reality star and cosmetics mogul currently ranks seventh on the list of the most-followed Instagram accounts worldwide (with sister Kim coming in one spot above her at #6), so virtually everything she posts garners major attention.
CBD — the non-psychoactive compound found in cannabis plants that has been touted for a wide range of health benefits — is now broadly legal and widely available, especially after the 2018 Farm Bill was signed into law. Under this legislation, hemp-derived products, including CBD, are no longer subject to the tight restrictions mandated under the Controlled Substances Act’s Schedule I classification.
The Farm Bill opened the CBD floodgates. In recent months, major brands, including Fortune 500 companies like CVS and Walgreens, have begun to offer CBD products, in addition to scores of health stores, vape shops, and other smaller retailers. It’s arguably the hottest ingredient in cosmetics at the moment, with retailers like Neiman Marcus and Sephora, among others, also getting into the game.
But as we’ve seen with Jenner, it’s not just the products that are becoming a booming business. Influencers are also raking in cash to promote them. And that’s why, when Happy Tea CEO Michael Gonzalez started the company, he immediately looked to influencers as a way to scale it.
Kylie Jenner “is one of the biggest voices in the industry,” Gonzalez said. “She has the cool/it factor with a massive audience reach that cannot be reached through any other means. To get someone like Kylie to reach that audience is a huge accomplishment.”
In many ways, Gonzalez’ influencer marketing of Happy Tea replicates his earlier successes with Fit Tea, the detox beverage company that he started in 2013. Both products were originally developed for his own use – Fit Tea to help him detox and lose weight, and Happy Tea to help him recover from an anxiety disorder sparked by his divorce.
When he started the company, he says, Instagram had only existed for three years and thus hadn’t attracted the massive following it boasts today.
“I paid people to promote the product, but was unaware of how influential that would be,” he said. “I also didn’t realize how quickly I would be able to reach celebrities.”
It wasn’t long before most of the family — Kylie, Kim, Kourtney, Kendall, and Khloe — were touting his product.
Now, as a result of his earlier successes with influencer marketing, Gonzalez’s Fit Tea products can be found in many of the country’s retail giants, like Walmart and Target. With celebrities like Kylie Jenner accelerating Happy Tea’s growth, the company is now positioned for what comes next.
In a recent interview with The Street, Gonzalez announced that Happy Tea just closed a $6 million Series A funding round, and he hopes to raise another $6 million before taking the company public in December. That would make Happy Tea one of the biggest CBD-specific consumer brands to capitalize on the nascent market with an IPO.
In that same interview, Gonzalez said this funding, coupled with aggressive marketing, is the first step toward his dream of becoming a major name brand in the consumer packaged goods space, like Coca Cola.
For the time being, it looks like Gonzalez is on his way. The industry is young and heating up, and he’s there at the right time. As influencers continue to drive brands in this space, turning more people on to CBD products, it is poised for tremendous growth. And if Happy Tea continues to blaze a trail for consumer CBD products, Gonzalez’s success story will become a case study for other entrepreneurs and influencers looking to cash in.