These days, the Hain Celestial Group is recognized as a company that offers a lot more than tea and a bag of chips.
Following the January acquisition of Alba Botanica and Avalon Organics from North Castle Partners, Hain Celestial beefed up its natural care brand portfolio — which includes Zia Natural Skincare, Jason and Queen Helene — to become a bona fide player in the category. The $120 million deal brought Hain Celestial two brands that make skin care, hair care, bath and body, and sun care products, which generated combined sales of over $40 million in the most recent fiscal year.
“Our goal is to become one of the largest natural organic personal care companies. Between the international and domestic markets, we’d like to double the size of [our] business coming from organic growth in Europe and Asia over the next two to three years,” said Irwin Simon, Hain Celestial Group’s president and chief executive officer. Hain Celestial, based in Melville, N.Y., is a publicly traded firm with approximately $739 million in net sales for the year ended June 30, 2006, most of which came from sales of food and beverage — Terra Chips, Earth’s Best and Celestial Seasonings. Its personal care business makes up about 15 percent of overall sales, or $125 million.
Company executives cited SPINS data from the 52-week period ended Oct. 7, 2006, that showed Alba Botanica, Jason and Avalon Organics ranked as three of the four top brands in skin, bath and hair care in the natural channel in the U.S. — Alba Botanica ranked number one, Jason was number three, and Avalon Organics was number four. Number two was Burt’s Bees.
According to Simon, the company was founded in 1993 and was built on acquiring food products that are “better for you.” The food side of the business took off.
“With the growth of Whole Foods [Market], people began reading labels and wanted to buy healthier products,” said Simon. “People were getting so concerned about harmful ingredients in food, so I started to think about skin care, hair care and other personal care products.”
In 2004, the company made its first entry into personal care by acquiring Jason from founder Jeffrey Light.
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“It was a smaller company run by entrepreneurs,” said Simon. “There was no real brand consistency or marketing in its packaging. They were good quality products, but innovation really wasn’t happening.”
Simon first considered purchasing the Avalon Organics and Alba Botanica brands four years ago, and last year’s growth in the natural and organic skin, bath, hair and personal care categories was enough to convince him that the time was right to make a move. Simon said that according to the company’s research, the global natural cosmetics market has grown by about 17 percent annually. According to Euromonitor, the market is currently estimated at $3.9 billion as of late 2006. With numbers like these, Simon hopes to see “high double-digit” growth of 15 to 25 percent for Hain Celestial’s entire personal care business for 2007. Simon noted he’s hoping to add between $25 million and $30 million to the company’s overall earnings from Hain Celestial’s personal care portfolio by the end of 2007.
“With the growth of natural food stores, it made me excited to expand the category even more. It was important for the company to have a major stake in the personal care business,” said Simon. “[Avalon Organics] had great quality products that were going after female consumers from a higher-end standpoint, which complemented the Jason line.”
Simon is still interested in the natural color cosmetics and hair color categories, as well as department store distribution for Zia Natural Skincare and Avalon Organics. Although Hain Celestial has not opened its own retail stores, the company is in talks to enter new retailers like Sephora and club stores like Costco. The company is also in discussions to expand its duty free presence since it already is sold in Norway and Sweden. In addition, Simon hopes to continue building Zia for Men, which launched last spring.
With a manufacturing plant in Culver City, Calif., Avalon Organics and Alba Botanica are looking to consolidate shipping and packaging with the rest of the company. The company is currently upgrading its planogram for all the Hain Celestial brands to offer retailers “one-stop” shopping for the natural and organic personal care category.
“We’d like to offer a [natural] set of all our different products together,” said Simon. “With Hain Celestial now covering the complete range of natural and organic personal care, we are better positioned to be the category manager and offer retailers one-stop planograms for the category. This allows us to go after every age group buying personal care products.”