May 4, 2016

By GAI News Staff

Consumers are shifting their market demands and dedicating their spending to better-for-you, value added products that offer a high level of transparency and natural ingredients. In response, the largest food companies that find it challenging to accomplish rapid market response are establishing venture capital arms – such as General Mills’ 301 Inc. and Campbell’s Acre Venture Partners – to meet consumer demands through the acquisition of natural, organic, and disruptive food brands.

Although a smaller company, Hain Celestial has followed suit with the launch of a new venture unit, Cultivate Ventures. Hain already has an established portfolio of better-for-you products on which to build, so the move could see Hain becoming a major rival to some of the largest U.S. food and beverage companies.

Cultivate Ventures has been tasked with three goals according to the company –

-to strategically invest in the Company’s smaller brands in high potential categories such as SunSpire® chocolates and DeBoles® pasta by giving them a dedicated, creative focus for refresh and relaunch;

-to incubate small acquisitions until they reach the scale for the Company’s core platforms; and

-to invest in concepts, products and technology, which focus on health and wellness.

Within its third quarter results, Hain expanded upon Project Terra – a strategic review of the company’s operations that has identified $100 million in global cost saving measures that can be accomplished by 2019. The multi-faceted plan includes the divestment of select non-core brands representing $30 million in sales earmarked to be sold as a group, the optimization of production plants, packing facilities and procurement systems, and streamlining the company’s product portfolio. The savings derived from these actions will be reinvested to support brand building initiatives and market penetration.

As part of this reorganization and re-prioritization program designed to drive growth and sales, beginning in FY 2017 Hain Celestial US will establish five strategic platforms:

-Fresh Living—includes poultry, yogurt, plant-based proteins and other refrigerated products;

-Better-for-You Baby—includes infant foods, infant formula, diapers and wipe products that nurture and care for babies and toddlers;

-Better-for-You Snacking—wholesome products for in-between meals;

-Better-for-You Pantry—core consumer staples; and

-Pure Personal Care—personal care products focused on providing consumers with cleaner and gentler ingredients.

“We are excited about the launch of our new platforms in fiscal year 2017, which are uniquely aligned with consumer eating habits and usage needs,” commented Irwin Simon in the third quarter performance report. “We believe our platforms represent distinct opportunities for incremental growth and margin improvement. We expect this new approach will enable us to define more distinct channel strategies for our branded product offerings, and ensure that we continue to extend our organic and natural industry leadership position.”

Food Dive points out that these strategic moves taken by Hain point to negating the possibility of a rumored takeover of the company, but at the same time, they increase Hain’s attractiveness as an acquisition target for larger food companies.

In any case, the strategic re-structuring and re-organization and the launch of Cultivate Ventures will help position Hain to achieve its expected sales of between $2.95 billion and $2.97 billion for fiscal year 2016 – a year on year increase of between 9 percent and 10 percent.