LAKE SUCCESS, NY. – Innovation accounted for 2% of the Hain Celestial Group Inc.’s sales when Mark L. Schiller, president and chief executive officer, joined the company in 2018. Today, innovation accounts for 6.5% of sales and Mr. Schiller expects it to climb to 7.5% to 8% of sales.
“It’s certainly a doable number,” he said during a presentation at the virtual Evercore ISI Consumer & Retail Conference on June 8. “And our innovation strategy is pretty simple. We just take things that people already eat and love and we make a healthier version of it, which means our success rate is going to be well above average because we’re not creating new to the world types of foods.”
Innovation on tap from Hain Celestial includes peanut butter and jelly bites sold under the Earth’s Best brand, the launch of teas with functional benefits under the Celestial Seasonings banner, and a Greek yogurt for children under the Greek Gods brand.
“We fundamentally believe if we can make something that’s healthier, it still tastes great and is affordable and available that they (consumers) are going to migrate to our category,” Mr. Schiller said. “So, our stickiness on innovation has been very good.”
Standing in the way of the company’s innovation strategy has been the supply chain challenges that have plagued almost every consumer packaged goods company. To overcome the challenges, Hain Celestial has been aggressive in getting its innovation on store shelves.
“In this environment, with labor shortages and supply challenges, not every retailer is resetting like they normally would, but it has worked for us throughout the pandemic,” Mr. Schiller said. “If I just get a core handful of retailers to take it and can use the consumption data to make my case to the other retailers, that’s a lot more powerful than concept data where you have to trust me that I talk(ed) to 100 consumers, and they said this is a good idea. So, we think our aggressiveness on innovation is the right strategy and certainly further justification for additional space.”
Mr. Schiller also outlined how the recent shut down of Abbott Nutrition’s Sturgis, Mich., baby formula plant and the subsequent baby formula shortage has benefited Hain Celestial. He said new parents that switched to Hain Celestial’s formula brands are expected to stay with the company even after Abbott resumes production.
“We’ll keep those consumers for the long haul,” he said. “But as the next babies are born, as those brands come back online, I expect that they’ll recoup their share over time. And that’s okay because they’re only in the infant business, and we’ve been successful over time attracting those consumers to our pouches, jars and snacks.“But it’s a lot easier if you get them in at the infant stage and just keep them in. So short term, we picked up a bunch of consumers. Longer term, we’ll probably go back to business as usual, which is fine because, again, we were doing quite well.”