Updated Sep 17, 2009
Hemp for Hanes
It took a decade to prove that hemp could be soft as cotton. Now Naturally Advanced Technologies is starting to draw interest in its product from big players.
After nearly a decade of working to prove that burlap–like hemp can be as soft as cotton, Naturally Advanced Technologies Inc. has caught the attention of some of the world’s biggest consumer brands.
Now it’s on the verge of generating revenue from its technology.
“The company is an eight–year overnight success,” said CEO Ken Barker.
The Portland, Oregon–based company this month announced a string of deals aimed at commercializing its Crailar Fiber Technology, which employs an enzyme treatment to make hemp and other organic fibers suitable for apparel and other uses.
The most notable is a joint development agreement with Hanesbrands Inc., which is among the world’s largest consumer apparel brands with $4.2 billion in sales last year.
Under the agreement, Naturally Advanced will retrofit existing Hanes dyeing equipment with the company’s enzyme process to study how its organic fibers can be entered into mainstream production.
If that phase is successful, the companies will work toward a marketing plan for Crailar in various Hanes categories and determine how it could be commercialized.
But whether hemp can rise above niche status to mainstream appeal will have a lot to do with cost.
In a conference call with investors, Barker said that because Crailar shrinks far less during production than cotton, the resulting savings could bring its final cost closer to regular cotton than organic cotton, which is 60 percent more expensive than regular cotton.
While Barker said it’s too early to guess how lucrative the Hanes deal could become, the partnership serves as “absolute validation that our technology is viable and capable of mainsteam apparel production.”
The deal was borne from successful tests conducted at North Carolina State University which, according to Barker, proved hemp can easily transition away from being a niche consumer fabric.
Matt Hall, vice president of external communications at Winson–Salem, North Caorlina–based Hanesbrands, said the idea isn’t to replace cotton. But if Crailar can be commercialized, it would mean being able to produce organic fibers for everyday products at competitive prices.
Hemp grows faster and uses far less water than cotton, making it a favorite among champions of sustainable apparel, which was a $3 billion international market in 2007, according to a report last year by Packaged Facts, a division of MarketResearch.com.
Even so, Naturally Advanced is eyeing more than just apparel markets.
In what could be an equally sizable deal, the company in June signed a development deal with Georgia Pacific Consumer Products LP, which makes household paper products such as Brawny paper towels. Barker said he was prohibited from disclosing details of the agreement.
It also reached a spinning and trademark licensing deal with Patrick Yarns of Kings Mountain, North Carolina, a maker of industrial yarns, to produce Crailar products for denim, work wear, home furnishings and carpet markets.
The company’s also developing uses of the technology applicable to forestry pulping and as diesel fuel.
Until now the company generated revenue from HTnaturals Inc., a wholly–owned sustainable apparel company. Last week it announced second–quarter sales of $401,000, down from $580,000 a year ago.
But now the company is shuttering HTnaturals and expects to generate its first revenue from Crailar in the next quarter. The anticipated revenue–the amount of which Barker declined to release–will be generated through a manufacturing agreement with Philadelphia dyehouse G.J. Littlewoods & Son Inc., which will produce the fabric ordered by Patrick Yarns.
“As we introduce Crailar into the market and into the industry next year, we’ll start generating the revenue everybody’s been waiting for,” Barker said.