Dive Brief:
- Hain Celestial said it plans to restructure its business to improve growth and generate annualized savings of $130 million to $150 million by its fiscal 2027 year, the organic and natural products company said in a release ahead of an investor day with analysts.
- The company said it will prioritize growth across five core geographies, including the U.S., and focus on five categories: BFY (better-for-you) snacks, BFY baby & kids, BFY beverages, BFY meal prep and BFY personal care. Hain’s goal is to generate a compound annual growth rate for organic net sales of 3% or more.
- The sweeping announcement is the first in-depth assessment of the business by Wendy Davidson, its new CEO who took the helm of the struggling food and beverage company in January.
Dive Insight:
After spending much of the last nine months of her time as CEO reviewing the business at Hain, Davidson has rolled out an ambitious plan to get the organic and natural food and beverage company moving in the right direction.
Once the darling of the better-for-you food space, Hain has seen competition from deep-pocketed CPG companies intensify. It’s also faced headwinds such as COVID-19, inflation and supply chain disruptions.
The challenges have weighed on Hain with net sales down 2.7% during its recent fiscal year, its margins under pressure and the company facing five straight quarters of losses.
A seasoned CPG veteran, Davidson is no stranger to the food space, with experience at Kellogg, McCormick & Co. and Tyson Foods. She also has deep insight into the types of products Hain is selling after previously serving as president of the Americas for Glanbia Performance Nutrition, a maker of healthy food, drinks and other products including Think! Bars and SlimFast.
Her experience and insight into the categories Hain plays in should give her a firm foundation to start with as she puts in place this new plan designed to generate sustainable growth.
The food and beverage maker recently forecast a return to sales growth of 2% to 4% for its fiscal 2024 year, and highlighted growth and market share gains in Celestial Seasonings teas and Greek Gods yogurt. Recent investments in marketing for several of its core brands have boosted their sales, distribution and consumer awareness. But Davidson said more needs to be done.
“Fiscal 2024 marks the foundational year of our plan, during which we will simplify the business, reset our global operating model, initiate our Fuel Program, invest to jumpstart critical capabilities, and begin our pivot to growth,” Davidson said in a statement announcing the restructuring and long-term goals at the company. “By fiscal 2027, we expect to deliver sustained revenue and profit growth.”
Hain’s Fuel Program consists of three main components: revenue growth management, working capital management and operational efficiency.
In an interview last month with Food Dive, Davidson confessed that Hain is “at an inflection point.”
“We need to prove that we can grow and build brands, and we need to prove that we can navigate external macro-environment factors and control our destiny,” Davidson said in an interview. Consumers and retailers love our “purpose-driven brands and they want us to be successful, but they feel like, and to be honest, internally we feel like, we’ve fallen short of our own expectations of what the potential of our portfolio is.”
The restricting plan announced Wednesday is a good first step and a sign that Davidson has found changes that she can make to help Hain regain its footing. While it won’t be easy, Hain was ripe for an overhaul and a different path than it has been going down recently.
Hain announced it would face one-time restructuring and related costs in the range of $115 million to $125 million in fiscal 2024 and fiscal 2025.
