Theia Ventures is excited to announce our investment in Canvaloop Fibre, along with our partners Social Alpha. Canvaloop is a material science company whose core technology converts agricultural bast fibres – specifically from the hemp plant - into textile fibres, without the use of harmful chemicals. Their fibre has minimal CO2 emissions and water use, and the materials are quickly biodegradable and circular. Canvaloop supplies to top garment manufacturers and apparel brands such as Arvind Limited, Levi Strauss; maintains a yarn joint venture with Bombay Hemp Company and has also kickstarted its own D2C brand, Slow.
Image Credit: Canvaloop Fibre Pvt Ltd
What’s the buzz around hemp?
Hemp, one of the bast fibres, is a highly sustainable and one of the strongest natural, cellulose-based fibres which belong to the cannabis sativa plant family. The hemp plant grows like a weed, eliminating the need for most pesticides, herbicides, fungicides and thriving on 50% less water than most crops such as cotton. It also absorbs carbon dioxide, is anti-microbe and allows nutrients to flow back into the soil. Hemp is often used as a substitute for cotton and blended with other natural fibres to produce textiles.
In terms of supply, hemp cultivation occurs in China, USA, Canada, France, India and parts of Europe, which is also where the suppliers are based. China is the largest producer, accounting for 30-40% of global hemp production in 2019. The USA is one of the largest hemp growers growing 146,000 hectares in 2019, along with Canada, which saw an 80% increase between 2016-2017. France is Europe’s leading hemp grower, growing 44,000 acres in 2017 and the largest producer of hemp seeds in the world.
In India, the hemp market is growing fast, as Arun Janardhan describes in Mint, with start-ups emerging that focus on all things hemp, ranging from hemp oil, seed, powder, nutrition products to textiles. In addition, the Indian Industrial Hemp Association (IIHA) was founded in 2011 for the promotion of Indian hemp products globally; collaborating on seed research with other R&D players, and first to cultivate hemp legally after procuring relevant licenses post-legalization in Uttarakhand. The cultivation opportunity for large-scale industrial hemp is huge in India, with 60 districts having the right climate to grow hemp as well knowledge about this crop from farmer generations in history. Modern infrastructure would also need to be built in agricultural locations where hemp is more traditionally farmed as a subsistence crop. There is an under-utilized market for supply, and to gain widespread utility such as cotton in the US, hemp will need favourable nationwide regulation, similar to that issued by the USDA (see below). India, along with other countries in Asia, is likely to be the next large supplier of industrial hemp and will outplace China due to slightly lower cost of labour and more favourable tropical climates. If this is coupled with strong R&D for fibre extraction and yarn development, then India could be one of the most significant players in the industrial hemp value chain.
Why is the hemp textile market poised for rapid growth?
There are a few reasons why sustainable textiles, particularly hemp textiles, is on the rise:
i) Consumer preferences:
Brands are seeing the younger generation clientele demanding more sustainable and environmentally responsible products. The consumer base is mainly a global one, with clientele buying hemp garments from brands in USA and Europe such as Gap, H&M and Zara. These brands have all pledged to reduce carbon emissions by half by 2025 and made written pledges in their annual reports to substitute cotton and polyester fabrics with hemp, and other cellulose-based fibres. By 2025, it is forecasted that hemp will reach the consumption levels of linen, which is another bast fibre.
ii) Rising deregulation around hemp cultivation:
In the United States, one of the largest markets for industrial hemp globally, the 2018 Farm Bill directed the US Department of Agriculture (USDA) to establish a national regulatory framework for hemp production in the United States, and it was further refined in 2021 through a final rule. As a result, industrial hemp cultivation and hemp demand have skyrocketed in the US while compliance with norms with regards to licensure of growers, certification of seeds, state-wide commissions, and legal protection of growers is still strictly adhered to. As a result, several industrial hemp players are starting to emerge, for example, Panda Biotech launched a new 500,000 square foot facility and the surrounding 97-acre campus that was formerly the home of General Motors’ Delphi assembly plant.
In India, industrial hemp cultivation is currently only allowed in 3 states (Uttarakhand, Uttar Pradesh and Himachal Pradesh) due to regulatory restrictions in cultivating the cannabis plant. Hemp fibre for textiles is extracted only from the stalk (non-edible) parts of the plant, which have below 0.3% THC content. While hemp cultivation has taken place in a subsistence manner in India for centuries, due to lack of technological innovation, there has not been industrial-scale production due to the complex fibre extraction process required to manufacture hemp fibre and yarn at scale. In addition, there is a general caution around farming cannabis due to the negative associations with the edible parts of the crop in recreational drug use.
Companies such as Bombay Hemp Company (Boheco) are lobbying the Indian government along with the Hemp Foundation to encourage widespread seed utilization and mass cultivation of the hemp plant in India, which is projected to take a 3-5 year period to reach fruition. In UP, Boheco has worked with the Council of Scientific and Industrial Research (CSIR) and the National Botanical Research Institute to obtain one of the first licenses to cultivate cannabis for research in India. It has collected over 300 landrace varieties for a seed bank with CSIR partners, which are being studied for their varying THC and CBD levels, and fibre and seed quality.
In anticipation of this, companies such as Canvaloop are currently sourcing hemp fibre and low-value hemp waste from multiple global suppliers and utilizing other bast fibres grown at scale in India (nettle, pineapple, banana and agricultural waste) as blends in their hemp fibre and yarn products. There is no restriction on imports of raw hemp as long as companies comply with India’s phytosanitary guidelines.
iii) Premium pricing:
Due to the low availability of supply and high demand as mentioned above, the price of hemp apparel as a premium good is attractive for global brands, because it can be marketed on shelves as a luxury product and thereby enhance bottom-line margins. The price of hemp is similar to the price of linen, which is also priced higher than cotton (the standard cellulose-based fibre), but although linen has been available for many years, it does not garner the same awareness around sustainability and ecological footprint as hemp. Therefore, brands can benefit from both a higher pricing and positive brand association with the environment.
iv) Versatility of the fibre:
The ability for hemp to be blended easily with cotton, polyester, viscose and many other fabrics while not losing the texture (similar to cotton) or the aesthetic nature (similar to linen) is another attractive feature for brands and end-consumers. Hemp also conducts heat, is durable, dyes well, resists mildew, blocks ultraviolet light, and has natural anti-bacterial properties, making it useful beyond apparel – for example, automobile companies such as BMW use hemp fibre to reinforce their door panels for better safety standards. Levi Strauss, one of the premium denim brands, is known to have initiated hemp in March 2019 when their Wellthread program collaborated with eco-friendly lifestyle brand Outerknown on ‘cottonized’ hemp. Since then, their CEO, Paul Dillinger, is quoted to have said, ‘With hemp, we’re able to deliver a product that’s indistinguishable from a conventional Levi’s product you would expect…we are working to include even more hemp over time, and expect to have products with 55% hemp available within the next two seasons’.
At Theia, we are always excited about sustainable solutions using scientific innovation for large, underserved markets that address the climate agenda, and Canvaloop fits nicely into this thesis. Canvaloop is uniquely positioned to harness the enormous hemp market opportunity not only in India, but also globally, and we can’t wait to see the new textile fibre products that they come up with next. Furthermore, Canvaloop’s planned foray into other agricultural waste such as banana and pineapple is unique and promising.
We look forward to a wonderful journey with an incredible team!