Wall Street’s love affair with natural and organic got a little more interesting as two recent conference calls suggest that our analysis of Whole Foods efforts as sluggish, are on the mark, while our previous doubts about Hain Celestial Foods long term strategy for growth needs some rethinking.
Furthermore the company is undergoing an extensive program of SKU optimization, eliminating under performing products as well as evaluating the potential that are not high volume or number one or two in their category.
Previously some critics, including NBN, have viewed Hain’s strategy as a conquer at all costs approach, buying a wide number companies at top dollar and neglecting internal efforts at growth.
The recent call indicates a more sophisticated approach to managing their existing equity and trimming the fat. While some would say this approach has always been in operation, we only know that a company which owns two competing brands in non-dairy beverages, three cooking oil brands oils, six snack brands, not to mention six different body care brands, nearly all of which were bought, will be able to gain some powerful efficiencies with a more nuanced look at market opportunities. Of course some would say that is the magic in Hain’s aggressive approach, something that while we don’t necessarily fully agree we have been rethinking this position as of late.
Hain stated that it is targeted to eliminate 30% to 40% of their body care products, to be “offset by an acceleration of sales of continuing SKUs with higher margins along with the sales of new products.” This makes sense. Additionally, the company announced that it will be consolidating most of its body care production to Jason plant in Southern California by 2009, eliminating reliance on co-packers and with a corresponding increase in margins.
Stay tuned for details. We’ll be looking closely at Celestial Seasonings new line of coffee and premium teas and see if the brand that gave us the beloved Sleepytime Bear has managed to get out of its slippers and shake things up again.