Hain reaping rewards of healthier habits

by Monica Watrous
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LAKE SUCCESS, N.Y. – For the Hain Celestial Group, a year of record sales signals a shift in consumer behavior.

“When you look at the entire food industry, our organic and natural products outpace conventional products by three times,” said Irwin Simon, president and chief executive officer, during an Aug. 21 earnings call with analysts. “Overall food consumption is not growing; consumers are seeking out more and more organic and natural products versus conventional products.”

The trend translated to a 26% jump in net sales to $1,734,683,000 for the year ended June 30, up from $1,378,247,000 for fiscal 2012. Sales in the United States surpassed $1 billion during the year – a first in company history.

Net income for the fiscal year increased 45% to $114,656,000 from $79,225,000 during fiscal 2012.

“On a global basis, people are increasingly aware of what they consume with a focus on health and wellness,” Mr. Simon said. “… in the U.S., the (Centers for Disease Control and Prevention) recently showed some stabilization in obesity rates in adults, the first time in a long time, and even a decline in obesity rates in children across several states, which is music to my ears. So, we believe healthy eating is here to stay with a broader consumer focus on products that are organic, natural, gluten-free, non-G.M.O. and B.P.A.-free, just to name a few.”

On-trend innovation bolstered sales with double-digit growth from such brands as Earth’s Best, MaraNatha, Spectrum, The Greek Gods and Garden of Eatin’. More than 300 product launches during the year included Garden of Eatin’ chia tortilla chips, MaraNatha coconut almond butter, Earth’s Best organic shelf-stable mini-meals and Earth’s Best organic veggie and protein pouches. A pipeline of 40 new product launches across Ella’s Kitchen and Earth’s Best baby food brands is planned for the remaining calendar year.

To offset commodity headwinds for chia, almonds and dairy ingredients, the company generated more than $30 million in productivity savings during the year, in part by reducing supply chain costs.

“One of the biggest challenges in this industry today is supply, and that will separate us from our competitors,” Mr. Simon said. “We have a great global supply team, and our procurement team will allow us to go out there and source on a global basis with wider access to new markets so we do not suffer from out-of-stocks and have the opportunity to procure other fruits and vegetables around the world.”

During the fiscal year, the company completed three strategic acquisitions, including United Kingdom-based Premier Foods grocery brands, BluePrint brand of cold-pressed juices and Ella’s Kitchen organic baby food.

“We’re still in the early stages integrating these businesses, realizing the expected synergies, savings, accretion and future growth,” Mr. Simon said. “So, we believe there’s tremendous opportunities with the acquisitions that we’ve done this year, and there’s still plenty of acquisition opportunities that we will continue to look at. Our balance sheet continues to be strong and provide us with financial flexibility to pursue strategic opportunities as they present themselves.”

For the fourth quarter, the company reported record sales of $463,470,000, up 32% from $350,792,000 during the same quarter of the previous year.

Income for the quarter climbed to $25,933,000 from $23,390,000 during the same period of the previous year.

“It is an exciting time for the organic/natural category,” Mr. Simon said. “It is an exciting time for our brands, our people and the opportunity to sell healthier food and personal care products around the world.”

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