Cover Story
CEOCFO Current Issue
Cover Story Archives
Private Equity Review
CEOCFO Interview Index
Future Features
Analyst Interviews
Corporate
Financials
Contact
& Ordering |
This is a printer friendly page!
Hemptown Clothing is offering textile manufacturers and consumers
an alternative to traditional cotton fabrics and other material that have been created
using chemicals that affect the environment
Textiles
(HPTWF-OTC: BB)
Hemptown Clothing Inc.
1307 Venables Street
Vancouver, B.C., Canada V5L 2G1
Phone: 604-255-5005
Jerry Kroll
Chief Executive Officer
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
January 12, 2006
BIO:
Jerry Kroll
Chief Executive Officer
Mr. Kroll has been working with Hemptown Clothing since 1997, initially as a
customer, using Hemptown T-shirts for a motorsports team in the C.A.R.T. / Indycar Racing
Series. Overwhelmed by the response to the products, Jerry began applying himself to
Hemptown's marketing efforts and then eventually as executive management.
Company Profile:
HEMPTOWN'S MISSION:
"Hemptown Clothing is committed to the development, manufacturing and sales of
comfortable, durable and affordable daily wear garments that are less harmful to the
environment and provide benefits for the people involved in the entire product supply
chain, from the farmer, to the processors, distributors, retailers and ultimately the
consumer."
"TRIPLE BOTTOM LINE"
Hemptown Clothing adheres to a "triple bottom
line" philosophy which measures the human rights of our many employees, the
environmental impact of our operations, and of course, fiscal responsibility to our
shareholders. Hemptown is committed to producing top quality, competitively priced
apparel though innovation and insight, rather than thoughtless business practices
that exploit the environment or our workers. In 2001, Hemptown established a
corporate office in Shanghai to monitor the quality of the garments we produce and the
working conditions in the facilities they are produced in. We do not condone or use
sweatshop labour and inspect our facility on a monthly basis to monitor these and other
working conditions.
CEOCFO: Mr. Kroll, what was your vision when you started with
Hemptown, and where are you today?
Mr. Kroll: “The vision was fairly similar to what I had
experienced in the food service industry, working with a group of gentleman there about
ten years ago, when we were producing frozen yogurt through this chain of stores and
delivering it in Styrofoam cups. We had just taken a huge order of Styrofoam cups with
fancy graphics on them, to serve a frozen yogurt serving to our customers, when the
consumer newspapers began sending out reports that Styrofoam and the manufacturing of it
releasing CFGs, was causing all kinds of damage to the ozone layer, which then causes skin
cancer. Consumers rightfully said we cannot use Styrofoam cups and we are not going to
rightfully shop anywhere that have Styrofoam cups. There was a great trauma of shifting
packaging from Styrofoam to paper products. We experienced it much the same way as
McDonald’s, Starbuck’s and all other companies did, to accommodate the
environment and the environmentally conscious consumer. When I bumped into Hemptown
Clothing as a customer, I thought it was humorous, using the hemp fiber. Further, I did
not even know what part of the hemp plant was used. When I found out it was not a joke,
but a replacement for cotton, and that cotton is one of the most environmentally damaging
crops in the world, because every T-shirt uses a third of a pound of chemicals and over
1700 gallons of water to produce, the analogy between it and Styrofoam, was obvious and
instantaneous. I said there is no doubt that sooner or later consumers are going to become
aware of the damage of cotton and look for an alternative product the same way they would
look for paper cups to replace Styrofoam.”
CEOCFO: Where are you
with that concept?
Mr. Kroll: “We are very successful and have some of the
biggest companies in the world that are changing over from cotton products to hemp fiber
alternative; environmentally friendly companies like the Volkswagen Group, who have our
products on their website, San Diego Zoo, Toyota Motor Corporation (NYSE: TM), Universal
Music Group. Many companies that do respect what their shareholders and their customers
want, and are leading the way towards these hemp products.”
CEOCFO: What are the
comparisons?
Mr. Kroll: “Whereas cotton needs to grow in a hot
climate with lots of water, hemp fiber can grow in colder climates because it is a hardier
plant. It can sustain itself on rainwater. It is a no-host plant, whereas bull weevils,
aphids, and white flies love cotton; the hemp plant has no such pest problems and it grows
naturally organic. Weeds are another problem for cotton; there are many herbicides that
are sprayed to keep weeds at bay, whereas the hemp plant is a voracious grower that it
chokes out the weeds because it outgrows them. The one-for-one is essentially right now,
that regardless of all the chemicals and water devastation that is caused by cotton, it is
relatively cheap like Styrofoam is cheap, all you have to do is pick the cotton fiber
right off the plant and spin it. However, with the hemp plant, you have to let it
decompose in a field for up to fifty days before you can pull the fibers out of the plant
and process them into a fiber that is suitable for spinning, which is a labor-intense
process. You have about .62 cents a pound for conventional cotton and a $1.50 a pound for
organic cotton and about $3.00 a pound for hemp fiber because of all the work involved.”
CEOCFO: How big a factor
is that in getting people to pay attention to hemp and how do you overcome that?
Mr. Kroll: “Awareness! There is no question that paper
cups are four times more expensive than Styrofoam, consumers are aware of that issue;
there are no ifs, ands, or buts about it. You can go up to Starbuck’s today and save
them tens of millions of dollars on their cup costs by suggesting that they switch to
Styrofoam, but there is no way they could do that because they would lose a large amount
of their customers because the customers would think that they lost their minds switching
to Styrofoam from paper. The same thing with organic foods these days; companies like
Whole Foods Market (NM) are industry leaders these days because the consumer understands
and respects what they are putting in their bodies and they understand what consumption is
putting in the environment and they are willing to make the smart choice for a sustainable
economy.”
CEOCFO: What is CRAILAR™?
Mr. Kroll: “CRAILAR™ is the clothing version of the
hydrogen engine. We were approached two years ago by the National Research Council, which
is a Canadian government research lab, with an amazing discovery that they stumbled onto.
Their discovery allows a custom enzymatic process that is patently organic, to process
industrial hemp and other (inaudible) fibers and extract a white cotton-like substance
that is four times stronger than cotton, uses no water, no pesticides, at an actual lower
price than cotton. It would take 60 days to pull an inconsistent fiber out of hemp; this
process pulls a very consistent, very white, very soft fiber out of a hemp plant in five
hours. We are working with the National Research Council on patenting this process and at
that point. in time, it would be the actual replacement product for cotton in every way
imaginable, including and most importantly the cost factor. It is truly a new age natural
super fiber.”
CEOCFO: How do you reach
the public to make them aware and encourage them to demand hemp and environmentally
friendly products?
Mr. Kroll: “We do interviews with globally renowned
media like you! It is a case of working with the media and working with the consumer. If
you go to Volkswagen.com, and you go onto their shopping website, you will see the hemp
products and an explanation as to why those products are there. Everybody has heard of
Volkswagen, so when a company with the impact of Volkswagen, starts to make a stand on the
environment with the clothing they wear, people pay attention. They have millions of
customers and followers, and their competitors, have to at that point, address the same
issue and facilitate a change. You combine that with the media working in harmony with
these industry leaders to say that is the right thing to do and I am going to promote the
fact that these good companies are doing this. That is what affects change.”
CEOCFO: How does
Hemptown get in front of Volkswagen and other well-known organizations?
Mr. Kroll: “With keystone customers like Volkswagen, we
take the time to actually meet with them and in a period of less than a half an hour,
explain the issue and show them the back-up data from organizations like the World Wild
Life Fund. It is a real problem with verifiable statistics and we hold those statistics on
our website so that anyone can go there and figure out how much pesticides or water
consumption that the clothing they are going to buy uses, and how much they can save by
changing to environmentally sustainable clothing. In a period of thirty minutes, these
keystone clients decide this is something we want to not just be a part of because it is a
change for the environment, but because they can continue to be leaders in this area.
These are clients that we deal with one-to-one and look for in the rest of the various
industries that we work with to follow along.”
CEOCFO: What is the financial picture like for Hemptown
today?
Mr. Kroll: “It is very bright! We have over the last
quarter, raised over a million U.S. dollars in our account primarily to assist us in the
advancement and commercialization of the amazing new fiber called CRAILAR™. Business
is great, we have some amazing collaborators and I can honestly sit here and say that this
company is in the best shape of its ten-year history. Everybody bar-none is thrilled of
the prospect as both an operating and a public company, for 2006. As recently as
yesterday, we announced a collaboration with Serum Versus Venom™ (SVSV) and another
very well known brand called, Triple Five Soul, in using these kinds of sustainable
organic fabrics in their mix. Triple Five Soul is well known as being a leading brand.
This sort of thing helps a company like Hemptown rocket to the top of the charts.”
CEOCFO: Will you tell us
about your triple bottom-line philosophy?
Mr. Kroll: “Triple bottom-line, the three Ps; people,
planets and profits, are held in the same regard, and not to sacrifice one for the other.
You would have the old school types of businesses that would sacrifice anything for a
profit using sweatshop labor or sketchy environmental policies; that is not the way we do
things. You also have another group of companies that are philanthropic where they will do
all kinds of things that are beneficial for the community and the environment but they can’t
sustain themselves because there is no profit to help carry on with the company. We take
all three of those and blend them into a company that is exciting for the environment such
as the developments of sustainable fabrics and the CRAILAR™ technology that we are
working on. It is great for people. We are a sweatshop-free organization and we work with
a number of different charities and community initiatives. In terms of profit, our stock
has doubled in the last quarter. The charts for 2005 are robust to say the least and the
shareholders who have been with us since that time have to be pleased. Those three things
kept in harmony, allow a company to be very sustainable and can carry on with their
business indefinitely without damaging people, the planet, and going out of business.”
CEOCFO: Who is your
typical customer?
Mr. Kroll: “Our typical customers are people who wear
clothes. The only people I can say are not buying our clothing are corporate clients who
are too busy to care about what their customers think, because they think their customers
are not paying attention. This is a big problem on the horizon, people trying to hide
behind a lack of consumer awareness, not realizing that a problem exists. For me, the
analogy is a company continuing to use asbestos in spite of the evidence that there is a
big problem involved. If these companies do not know about it and they are using asbestos,
or cotton, that is one thing, but if you brought something to somebody’s attention
and they continue to use cotton T-shirts knowing what the environmental impact, because
they are too busy to make a change, that is a problem. Everyone else is using clothing
with alternative fabrics and the demand for the CRAILAR™ fiber is outstanding because
of the market awareness that consumers are looking for products that do the right thing.”
CEOCFO: What do
potential investors miss about the company?
Mr. Kroll: “I think the key thing that people do not yet
realize, and we are recruiting some top-line investor marketing companies to project, is
that cotton currently represents a $28.5 billion a year industry, U.S. dollars as of 2004.
What investors are missing is that Hemptown clothing has a collaboration with the National
Research Council to patent worldwide, a replacement for this product, with disruptive
technology, clean technology, cheap technology. If this company is successful in doing
that, it will have the patent to license out CRAILAR™ technology worldwide as a
replacement for a $20.5 billion industry; that is enormous. In watching how that unfolds,
people should look for announcements on collaborations with large spinning mills; large
name brands companies. As these various companies get on-board as licensees and investors,
as joint manufacturers, you have to realize that they see something in this technology and
so should I as an investor. That is what people should be looking for in the announcements
coming from Hemptown clothing.”
CEOCFO: In closing, what
would you like readers to remember about Hemptown?
Mr. Kroll: “The switch to alternative fabrics is a
natural one; it is consumers realizing that there is a problem; not just with the
automobiles they are driving or the food they are eating, but also with the clothing that
they are wearing. The fact that we have been able to stumble into this inexpensive,
patentable, disruptive technology called CRAILAR™, that is really the magic bullet
for the industry and we are just thrilled that we have been fortunate enough to have been
selected by the National Research Council, to be the sole owner of this technology
worldwide. The excitement level here and the partners that we are partnering up with is at
an all-time high. During 2006, we plan to ramp up with our beta testing and
commercialization to actually have the first CRAILAR™ products on the store shelves
in 2007 and 2008. These are exciting times for this company both profit wise, stock
appreciation wise and environmentally to deliver this kind of product out to the people.
It is a bit of a dream coming true to have all these things working in perfect harmony for
us, our customers and shareholders and hopefully future shareholders coming on board
between now and the next 36 months. I think everybody is going to have a very good ride
with this company.”
disclaimers
Any reproduction or further distribution of this
article without the express written consent of CEOCFOinterviews.com is prohibited.
|
