Hain winning more center-store shelf space

by Keith Nunes
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Irwin Simon, chairman, president and c.e.o. of Hain Celestial, said he has never seen so much demand from retailers for more natural, organic products.

MELVILLE, N.Y. — Irwin Simon, chairman, president and chief executive officer of the Hain Celestial Group, has spent many years proselytizing about the benefits of natural, organic and non-bioengineered food and beverage products. He and his company have benefited as Hain has grown through acquisition and through the expansion of such retail partners as Whole Foods. Now the company appears to be reaching a new growth phase as more mainstream retailers seek to stock their center-store shelves with products in Hain’s sweet spot.

“I have never seen so much demand, so many retailers wanting to bring more and more natural, organic products, including our on-line business of Amazon, and many other direct retailers that are looking to get into the natural organic product line,” he said May 6 in a conference call with financial analysts to discuss third-quarter results. “Although Hain organic and natural brands appeal to all consumers, millennials, in particular, are increasingly more health-conscious and are making product choices based on their lifestyle, with an emphasis on farm-to-table, organic, natural, free-from ingredients. Health now has a greater meaning for many in a world with an abundance of information, social ethics, and transparency matters.”

John Carroll, c.e.o. of Hain Celestial United States, put the demand into context when he outlined the number of new points of distribution (POD) the company is gaining, including: 50,000 new PODs at Wal-Mart Stores, Inc.; 26,000 at Target Stores; 21,000 at Kroger; and 11,000 at Publix Stores.

“We’re actually now seeing beyond Kroger, beyond Publix, a whole second tier of conventional retailers asking for products,” Mr. Carroll said. “Hy-Vee in Des Moines, Iowa, wants us to come out and help them establish and drive their natural and organic strategy. So I think what we are starting to see is we had the early adopters like Kroger and Publix, but we are starting to see a whole second tier of retailers, say: ‘Look, this trend is for real; it’s key for us to attract millennials that we play in this area; and we need some help working our strategy. So I think this is one that is going to keep building upon itself.”

But Mr. Simon noted there will be growing pains. As more C.P.G. and food service operators shift all or a portion of their offerings to an organic or non-bioengineered positioning, it will create ingredient supply constraints in the marketplace.

Irwin Simon, chairman, president and c.e.o. of the Hain Celestial Group.

“No. 1, it’s not so much organic; it’s G.M.O. free,” Mr. Simon said. “That’s where the demand is today. As you’ve heard, Chipotle is moving towards that. So, just a lot of retailers and a lot of restaurants looking to get into those categories.”

Mr. Simon emphasized he does not believe raising prices to slow growth is the answer. Rather, his executive team is focused on building out Hain Celestial’s infrastructure.

“So, there is a plan in place to support growth,” he said. “But if you have a 4,000-store retailer that comes in tomorrow and wants certain items there is going to be a constraint on that.”

For the third quarter ended March 31 Hain Celestial saw its net income fall to $33,394,000, equal to 33c per share on the common stock, from $35,241,000, or 35c per share, during the same period of the previous year.

Sales for the quarter rose to $662,739,000 from $557,420,000 the previous year. The increased sales were driven in part by acquisitions during the previous year.
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