LONDON — Although his company’s first entry into the U.K. marketplace in 2007 was sandwiches, Irwin Simon, founder, president, chief executive officer and chairman of The Hain Celestial Group, Inc., said he never set out to become “Irwin the sandwich maker.” Instead, he set a course to be “about brands.”
Eight years later, Mr. Simon and the Hain Celestial business are delivering on their mission.
In a May 19 presentation at the JPMorgan Consumer and Retail Conference in London, Mr. Simon offered analysts an inside look at Hain’s strategies for growing the business in the United Kingdom, especially as the company barrels toward its goal of becoming a $3.5 billion business by 2018.
In the United Kingdom, Hain’s sales are approaching $1 billion, and the company has relied on strong brands — such as Tilda, Ella’s, Linda McCartney, Hartley’s, New Covent Garden Soup, Sun-Pat, Gale’s, Rose’s and Frank Cooper’s — to strengthen its position in the market. The company also has sought to add scale.
One way it has added scale has been through partnerships with retailers such as Sainsbury.
“We do a lot of their (Sainsbury) desserts,” Mr. Simon said. “You wouldn’t see us doing a cheesecake in the U.S., but a big part of our business with Sainsbury is doing a lot of their desserts, plus a lot of their other owned label. Sainsbury is our top customer in the U.K. today.”
Retailers also are looking for U.S. products, which creates an opportunity for Hain. But Mr. Simon cautioned that what Hain is trying to avoid is just bringing its brands overseas and hoping they hit the mark with customers.
“What I didn’t want to do was come in here and bring Earth’s Best, which is our baby food business in North America, and bring it to the U.K.,” he said. “Because you had Ella’s; you’ve got Hipp; you have Heinz. What could we add value, and we’d be just spending money. So we bought Ella’s. And together with Earth’s Best, we created a global infant/toddler food business. And the good news is Ella’s is using a lot of the innovation and intel from Earth’s Best. And along with its own creativity, Ella’s is the No. 1 baby food today in the U.K. And you think about the competitors that we had to deal with in Heinz and Cow & Gate, which is Dannon. So strategy here is to build scale, bring in some U.S. products, partner with the U.K. retailers on their own label. But going after healthy categories — not categories of anything — is making sure we do healthier categories.”
The snacking aisle was mentioned by one analyst during the conference as an area lacking leadership on the health and wellness front. Mr. Simon agreed, noting that Hain sees opportunity to make a mark. The question now is how.
“There’s not a good tortilla chip here in the U.K.,” he said. “And I think we could bring one in with our Garden of Eatin’. Our Sensible Portion sticks, which is a great baked, extruded snack. Tyrrell is here with a great chip similar to a Terra chip, but Terra chip is a vegetable chip. So the consumption of chips in the U.K. is the highest of any market. So we see a big opportunity to come into this category with snacks. You can get Terra chips at Whole Foods in the U.K., which come through our European operation. So that is a big focus for us. And we have a $300 million plus snack business in the U.S.
“Do we buy something to help us come in here in a bigger way? What I’ve always liked to do was buy something, have that as our foundation to help bring in some of our other products.”
Aside from the snacks segment, Mr. Simon said he also sees an opportunity in tea.
“Our herbal tea and wellness teas — Twinings and Tetley — have done a great job, but more on black teas, not so much on wellness teas,” he said. “Maybe you guys think I’m a little crazy trying to sell tea to the British. But I think we can make teas, especially our herbal and wellness, a lot better than they are today.”
Mr. Simon concluded his remarks by offering his perspective on the state of the U.K. market.
“I think if anything, food retailers in the U.K. have over-branded themselves with their own brand,” he explained. “I don’t believe a Tesco brand or Sainsbury brand can go on everything in certain categories. I think that’s where brands are important. And what I want to be able to do is bring uniqueness in brands. What I don’t want is my products to get caught in a price war, like a Heinz ketchup or a Heinz tomato soup or something like that. So, again, I want to be able to bring them brands and have uniqueness to it.“Ella’s baby food getting caught in a price war does not make sense. So as I said, what I want to be to U.K. retailers — I want to be able to bring brands. I want to be their private label supplier. And, I want to be able to bring innovation to them that they are not getting elsewhere.”