Hain Celestial takes an incremental approach to innovation

SUCCESS LAKE, NY. – Innovation accounted for 2% of Hain Celestial Group Inc.’s sales when Mark L. Schiller, President and CEO, joined the company in 2018. Today, innovation accounts for 6.5% of sales and Mr. Schiller expects it to rise to 7.5% to 8% of sales.

“It’s definitely an achievable number,” he said during a presentation at the Evercore ISI Consumer & Retail virtual conference on June 8. “And our innovation strategy is quite simple. We’re just taking things that people already eat and love and make a healthier version of them, which means our success rate will be way above average because we’re not creating no new types of food in the world.

Hain Celestial’s on-draft innovation includes peanut butter and jelly bites sold under the Earth’s Best brand, the launch of functional benefit teas under the Celestial Seasonings banner and Greek yogurt for children under the Greek Gods brand .

“We fundamentally believe that if we can make something that’s healthier, that still tastes good, that’s affordable and available, that they (consumers) will migrate to our category,” Schiller said. “So our adherence to innovation has been very good.”

The supply chain challenges that have plagued nearly every consumer packaged goods company have hampered the company’s innovation strategy. To overcome the challenges, Hain Celestial has been aggressive in putting its innovation on store shelves.

“In this environment, with labor shortages and supply issues, not all retailers are resetting as they normally would, but it has worked for us throughout the pandemic,” said Mr Schiller. “If I just get a handful of core retailers to take it and I can use the consumer data to make my case to the other retailers, that’s a lot more powerful than concept data where you have to trust me. I’m talking(ed) to 100 consumers, and they said it was a good idea, so we think our aggressiveness in innovation is the right strategy and certainly further justification for additional space.

Mr. Schiller also discussed how the recent closure of Abbott Nutrition’s infant formula plant in Sturgis, Michigan, and the resulting infant formula shortage benefited Hain Celestial. He said new parents who have switched to Hain Celestial’s formula brands are expected to stay with the company even after Abbott resumes production.

“We will keep these consumers for the long term,” he said. “But as the next babies are born, as these brands come back online, I expect them to recoup their share over time. And that’s okay because they’re just in the infant sector, and we have succeeded over time in attracting these consumers to our pouches, jars and snacks.

“But it’s a lot easier if you bring them in as infants and keep them there. So in the short term, we picked up a bunch of consumers. Longer term, we’ll probably be back to business as usual, which is good because, again, we were doing pretty well.

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