While some of the biggest names in grocery have suffered volume declines in the US as consumers cut back and prices have risen to offset commodity and fuel inflation, Hain Celestial has bucked the trend and continued to generate strong growth in its home market.
The natural and organic products firm, which expanded its international footprint last week with the acquisition of UK-based firm Daniels Group, posted a 28.5% rise in net income to $11.7m on net sales up 13.3% to $292.4m in the three months to September 30 (Q1, 2012).
Greek Gods and Sensible Portions results ‘blew us away’
Speaking on a call with analysts yesterday to discuss its Q1, 2012 results, Hain Celestial US chief executive John Carroll said sales in the US were up 12%.
“We continue to be very bullish about the US business – and see strong momentum across the business – and we believe it is sustainable.”
Bosses were particularly excited by the performance of recent acquisitions Greek Gods (Greek yogurt) and Sensible Portions (healthy snacking), said Carroll. “The Q1 consolidated results from these acquisitions blew away [vs where they were] a year ago and exceeded our forecasts.
“Both of these brands have a lot of distribution and innovation runway ahead of them.”
Almond dairy-free yogurt to launch in January
But organic growth via new products was also a significant growth driver for the business, he said: “Innovation is key in the natural and organic channel because our customers are early adopters.
“This year’s innovation is off to a strong start led by Earth’s Best new puree pouches, baby yogurt, our Celestial Seasonings Kombucha energy shots and our new Garden of Eden sweet potato tortillas.
“Our innovation queue continues to be full with exciting new products like our new Almond Dream non-dairy refrigerated yogurt. [Group chief executive] Irwin [Simon] mentioned it at a recent investor conference and we immediately got calls from several retailers asking when is it going to be available.
“The answer is that it will be available in January. We expect a lot out of that launch.”
Commodity and fuel inflation
While the price of class two milk and fuel were still 35% and 24% higher than they were a year ago respectively, the firm had not taken a margin hit, he said.
“The US supply chain alone absorbed more than $6m in commodity and fuel driven inflation in the quarter and we still maintained our gross margins.”
Hain Celestial has a leading position in the natural and organic products market with brands such as Celestial Seasonings, Garden of Eatin, Rice Dream and Linda McCartney. The Daniels Group UK acquisition gives it a position in cut fresh fruit, chilled soups (New Covent Garden), and fresh squeezed juices.