NEW YORK — One of the biggest challenges facing packaged food companies today may be consumer demand for simple ingredients, said Irwin Simon, chairman, president and chief executive officer of the Hain Celestial Group, Inc. And leading the charge, he added, are the 93 million millennials whom “no consumer packaged goods companies should overlook.”
“I think one of the big things the big food companies are facing today: ‘I’m not getting any growth; if I’m not getting any growth, do I want to go clean up my product line and have margin dilution because of it, and make a bet that I’m going to get the sales increase?’” Mr. Simon said during a May 27 presentation at the Citi Global Consumer Conference in New York. “‘Or am I just going to hang in there, maybe I will take my trade promotions down, not promote enough; because how far can I fall? But I want to keep my margins.’
“Listen, at the end of the day today, there’s 93 million millennials out there that are focused on ingredients (and) read packaging today.”
Mr. Simon’s Lake Success, N.Y.-based company and its stable of natural and organic brands are well-positioned to deliver on consumer trends. Ninety-nine per cent of its products are free of bioengineered or genetically modified ingredients.
“We don’t have artificial flavors, we don’t have artificial coloring, we don’t have high-fructose corn sweeteners, we don’t have hydrogenated oils,” Mr. Simon said. “Our protein comes from antibiotic-free or organic protein.”
He expects to see continued demand for clean labels and wholesome ingredients.
But gluten-free? Not so much.
“Is gluten-free the rocket out there to go take this industry to the next evolution?” he said. “No. I think the biggest trend that we are going to see continue to change foods is no genetically modified ingredients.”
As for attracting millennial consumers, Hain has refreshed some of its brands and offerings to appeal to the generation’s interests.
“Millennials drink more tea than coffee, so how do we bring millennials into Celestial Seasonings?” Mr. Simon said. “We just did a big packaging overhaul. We have gone into kombucha in a much bigger way, lattes, mates. We are doing a lot with Green Mountain and our K-Cup.”
The company envisions other uses for single-serve pods, including cold-pressed juices and baby formulas.
“Millennials are used to pushing buttons, whether it is a microwave, whether it is their telephone, whether they order things and how they brew coffee and tea today,” Mr. Simon said. “(We see a) big opportunity not only in hot teas, cold teas, kombuchas, tea juice blends, and stuff like that… I also think there are some big opportunities in baby formula, to that degree where they are sold in discs.”
Snacking represents another hot opportunity for Hain to win with millennials. The company has introduced chips made with such ingredients as flaxseeds, sprouted grains and kale.
“What are the next trends?” Mr. Simon said. “We have a $300 million-plus snack business today between Terra, Garden, Sensible Portions. The popcorn industry has been an interesting category as millennials today eat more and more popcorn, without butter, of course, than they are chips.”
Mr. Simon said Hain is able to move quickly on consumer trends, while so many larger packaged food companies have struggled to keep pace.“We are nimble, flexible; how do we execute very quickly?” Mr. Simon said. “And that is a big thing within Hain today, and I think that’s one of the bigger challenges for the bigger packaged food companies today.”