- Hain Celestial announced Wednesday the launch of a new venture unit, Cultivate Ventures. It will be involved in strategic investments in small, high-performing brands; the incubation of small acquisitions until they scale to integrate into the company's core platforms; and investments in concepts, products, and technology related to health and wellness.
- Hain is also implementing a restructuring of its core platforms after conducting a strategic review known as Project Terra. The company will divest certain brands, worth about $30 million in sales, that no longer fit the newly structured core platforms:
- Fresh Living
- Better-for-You Baby
- Better-for-You Snacking
- Better-for-You Pantry
- Pure Personal Care
- The company has appointed James R. Meiers to its newly-created COO position, effective immediately. Meiers will be responsible for overseeing global cost-cutting operations, including $100 million in global cost savings the company identified under Project Terra, which it expects to achieve in fiscal years 2017 through 2019.
- Hain reported a 13% increase in fiscal third quarter net sales to $750 million, including a 2.7% increase in U.S. net sales on a constant currency basis. Quarterly earnings per diluted share rose 47%, or $0.47 per share, and net income was $49 million for the quarter.
Hain is a smaller company compared to the likes of Kraft Heinz and General Mills. But its exponential growth in recent years has given it the clout and confidence to make the moves that could position Hain to become a major competitor for leading U.S. food and beverage manufacturers.
Other large companies, such as Campbell, Coca-Cola, and General Mills, have venture businesses. But Hain's new venture platform demonstrates that, while smaller, it can still keep up with food industry leaders in strategic investments, acquisitions, and incubation.
The key difference is that Hain's platform already revolves around natural and better-for-you products. For Coca-Cola and General Mills, these ventures are ways to reposition their portfolio with better-for-you brands. Hain's core platform of brands is already there; it's just deepening its focus and gearing up to bolster its brands. Hain's moves could quell rumors of its own acquisition for now, though further success could also make it an attractive target for a large CPG competitor.
If Hain becomes a true competitor in the race to acquire startups, its growth will only expand its dominance in the natural and better-for-you food and beverage business. That being said, legacy CPG companies are not to be underestimated due to sheer industry capital and history.
Hain's restructuring of core platforms suggests that the company didn't feel confident it could become a major player in its former state. The changes Hain has announced make sense, including segmenting infant foods and care products into their own category. The same goes for maintaining separate segments for snacking and "pantry" consumer staples, as these categories are growing at different paces and require different strategies for consumer targeting and innovation.
By strategically aligning core platforms with consumer needs and becoming leaner and more profitable in other areas, Hain is setting itself up for a bright future — a significant milestone for an all-natural company.