Consumer Education and Regulations Insights from Nia Davies, Co-Founder of Yugenial

Consumer Education and Regulations Insights from Nia Davies, Co-Founder of Yugenial

Today I’m chatting to Nia Davies about her self funded CBD wellness startup called Yugenial.

This was such a fascinating episode and I was learning a lot about an industry I know little about. We’re covering the challenges Nia faces in building a business that fits into what the government calls a ‘high risk’ space, how she works around the fact that normal marketing channels aren’t accessible for her and why we need more consumer education and regulations to evolve.

The Cost of Starting a CBD Brand

Launching a CBD brand requires significant capital, and Nia shares that the costs can be more daunting than anticipated. "I’ve been on a long learning journey regarding budgeting and financing," she admits. For those curious about entering the industry, understanding the costs associated with developing formulations is crucial. There are generally two routes: using a private labeler, which is more expensive but allows for custom formulations, or opting for white-label products, which have set formulas but may be more affordable. However, she warns that private labelers often aren’t transparent about pricing upfront, which can lead to surprises down the line.

Navigating Funding Challenges

When it comes to funding, Nia explains that the cannabis industry faces unique hurdles. Securing funding can be tricky, especially with initiatives like the SEIS (Seed Enterprise Investment Scheme) not supporting high-risk sectors like CBD. As Nia points out, "You have to find people willing to take the risk." However, she notes that high-risk industries can also be recession-proof, pointing out that cannabis, alcohol, and other sectors tend to weather economic downturns well.

Understanding High-Risk Business Regulations

So, what does it mean for a business to be classified as high-risk? According to Nia, it relates to the strict regulations surrounding the cannabis industry. She recounts her struggles with payment processing—many providers, like PayPal and Stripe, won’t support CBD businesses. Instead, she turned to Dutch and Canadian payment providers, which involved a lengthy process but ultimately allowed her to accept payments. With the upcoming changes in regulations, keeping up with industry standards will be vital for success.

Manufacturing Process: From Plant to Product

Nia's manufacturing process involves importing hemp from the U.S., where it’s grown and processed, before being manufactured into products in the U.K. She emphasizes the difference between hemp and marijuana: while both come from the cannabis plant, hemp has high CBD and low THC, making it the ideal choice for wellness products. Finding the right manufacturer was essential, and Nia chose a small boutique team that shares her values and passion for CBD.

Navigating the World of CBD Products

As someone who personally experimented with CBD after university, Nia understands the confusion surrounding the myriad of products available. She shares some tips for those starting out, such as looking for third-party lab test certificates to ensure quality and opting for full-spectrum CBD, which may enhance the effects through synergistic properties. Nia also suggests considering bioavailability; for example, smoking CBD offers the fastest effects, while oils and edibles have their own pros and cons.

Building a Customer Base Without Paid Advertising

When it came time to launch Yugenial, Nia relied on organic growth through social media and collaborations with bloggers and podcasts. This approach not only created authentic connections but also helped her find her initial customers. The experience of seeing people come to her brand organically has been incredibly rewarding. Despite the challenges of paid advertising in the CBD space, Nia has learned to navigate the system creatively, focusing on partnerships and organic traffic instead.

Wholesale and Retail Opportunities

Yugenial isn’t just about direct-to-consumer sales; Nia also partners with like-minded retailers that share her values. Collaborating with boutique stores and wellness centers allows her brand to build credibility and connect with a broader audience. This shared mission makes these partnerships especially meaningful, as they’re aligned with Yugenial’s ethos.

Adapting to Changing Consumer Behavior

Lastly, we touched on the impact of the COVID-19 pandemic on buying behaviors. Nia observed that while Yugenial’s sales during the festive season were strong, they saw a shift in demand post-holiday. Many of her products are ideal for gifting, so she anticipates seeing a resurgence in interest during the upcoming holiday season.

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