As Hain Celestial gears up for a potential disposal of its personal-care business to become a “pure play” food and beverage supplier, the better-for-you-centric company sees sales opportunities linked to GLP-1 drugs.
While Hain Celestial’s US peers in the salty snacks category, from the likes of PepsiCo and Hershey, have recently expressed a limited impact from the rising use of the weight-loss drugs, the health-focused supplier hopes to reap benefits from other parts of its product line-up.
Wendy Davidson, the president and CEO of the dairy-free Natumi drinks and Earth’s Best baby-foods maker, said yesterday (10 February) Hain Celestial has “partnered with experts to understand the unique nutritional needs of consumers on GLP-1 treatments, and assess our portfolio against those needs”.
Discussing what she called a “disappointing” second-quarter revenue performance, marked by a 7% decline in organic sales, Davidson explained her thinking.
“We are currently developing our criteria to define what is GLP-1 friendly based on available science, and we have already identified a number of products in the US that are a good fit for these consumers across our beverage, soups and yogurt brands.
“We plan to begin marketing certain items within our portfolio to GLP-1 users in the near future.”
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By GlobalDataHain Celestial’s drinks portfolio, which also includes Joya plant-based products and Celestial Seasonings teas, are also expected to play a part in a “pivot” back to organic growth in the second half, along with snacks, soups, yogurt and baby brands.
The group has cut its full-year revenue outlook to a 2-4% decline in organic sales, from what was expected in November to be a “flat or better” delivery from the previous financial year.
Davidson said she and finance counterpart Lee Boyce have taken a “prudent” approach in the guidance amid a “volatile” external context.
Boyce, however, stressed Hain Celestial is still on target to “exit” 2027 with an organic growth rate of 3% under the Reimagined strategy introduced by Davidson in 2023, and to turn a gross margin of “at least” 26%. (22.7% in quarter two).
“Our exit rate at three-plus doesn’t mean that we won’t get there before then. It’s just us trying to set an expectation at a rate basis on an annualised number rather than a CAGR over the life of Hain Reimagined,” the CEO added.
“Cautious” on snacks
Davidson gave her response to the challenges Hain Celestial might encounter in the guide through to the current year-end.
“I believe that we have set the right guidance for the things that could go well and the things that could be a risk in the back half.
“I feel very confident about our Earth’s Best and Ella’s Kitchen – the baby category. I feel very confident in the beverage category as we go in the back half and I feel good about the momentum that we have in Greek Gods yogurt and the meal-prep category, in particular soups in the international business.
“I would say where I am cautious is in snacks. We have very good distribution gains and assortment gains in the back half but we definitely need to see the improvement in the productivity of our margin actions play out. And I think we’ve built that into our outlook for the back half to appropriately account for that.”
Snacks took a hit in the second quarter, with group organic sales retreating 13%, leading to a 9% drop in Hain’s North America revenue. International sales were also down by the tune of 4%, while other segments were pressured too.
The baby and kids business revenue fell 1%, while beverages dropped 3% and meal preparations decreased 4%.
“Sales growth in the quarter was hindered by poor in-store performance in snacks driven by marketing and promotion effectiveness as well as short-term supply challenges, particularly in our international segment, where demand outpaced our supply in several of our core categories and brands,” Davidson explained.
She added: “We expect to see accelerated snacks performance in the second half of the year, driven by expanded distribution of our brands, including a 5% increase in distribution for snacks at our largest retail partner.
“While our shift to growth has taken longer than initially anticipated, we remain confident in the pivot to growth in the back half and in our ability to execute on our transformation strategy.”
