Hain Celestial – Continued Domestic Tailwinds & Mid-term
Outlook – 4 March 2021
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Specialist:
Title:
Teresa Lafferty (TL)
Former Senior Director, Sales Strategy & E-commerce, Canada at The Hain Celestial Group
Inc
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Agenda:
1. Sales growth momentum in grocery, snacks and personal care
2. Hain Celestial's (NASDAQ: HAIN) transformation strategy and margin expansion
3. Potential for future distribution gains and e-commerce growth strategy
4. Mid-term outlook
Contents
Q: Could you give an outline of a couple of pre-coronavirus trends you found in Hain’s core US categories
across grocery, snacking and personal care?
Q: What could be some of the longer-lasting structural impacts of coronavirus on Hain’s categories?
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Q: Hain’s management really believes these gains across the categories are likely sustainable. What are your
thoughts on that assessment? Is there anything that you think should revert back to pre-coronavirus ways
rather sharply?
5
Q: Hain has this four-pillar principle it uses to describe its strategy throughout the company. One of those
initiatives of the strategy is simplify, which includes shedding low-potential brands. In the CPG [consumer
packaged goods] industry as a whole, what do you think these firms are assessing to understand what
qualifies as a low-potential brand or a high-potential brand? What are some of the factors that go into that? 5
Q: Hain likes defining clear brand roles, and I guess this is a common practice throughout the industry. How
5
do you define a brand’s role?
Q: I think you touched on the Canada landscape and how it was very consolidated. Could you touch on the
competitive landscape for Hain in the US? Who is it directly up against?
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Q: What would you say are some of the advantages that Hain has over competitors?
Q: Would you strictly attribute weakness to bigger brands jumping into Hain’s categories, or do you think
there are other weaknesses that Hain has too?
Q: Hain has strong demand in its grocery channel. Do you think Hain is doing anything differently that’s
translating to higher sales, or is it benefiting from the overall strength in the channel due to coronavirus?
Q: I think you touched on Hain’s get bigger brands vs the get better initiative. Could you expand on this?
How long was this going on? What are your overall thoughts on the structure, because I think it’s very
interesting that it separated the businesses into two categories, making it easier to allocate resources.
Q: What do you think are some steps management is taking to become more competitive in this channel?
Q: Even pre-coronavirus, plant-based meat consumption was rising in popularity and demand. Why hasn’t
Hain been able to capitalise on this opportunity in the US, given it has offered plant-based meat items in
England for some time now? I think it acquired a specific brand a while back, but could you elaborate on
that?
Q: Do you think management should prioritise the plant-based meat category?
Q: Which brands would you say are really driving the growth in Hain’s grocery channel?
Q: Which brands or categories do you think Hain should prioritise regarding marketing spend and
investment within the grocery channel?
Q: Hain already made a push to online sales before most CPGs, and it has delivered consistent online sales
growth of above 50% throughout the pandemic. What are some ways e-commerce is really affecting this
channel?
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Q: Management have reallocated marketing spend to the e-commerce channel. What are some challenges or
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benefits associated with running campaigns on a digital landscape?
Q: Could you give us an overview of Hain’s personal care business?
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Q: Hain’s personal care category also experienced a favourable boost from the pandemic, with sales growing
more than 30% YoY consecutive quarters. Could you elaborate on some of the drivers of this
outperformance?
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Q: Where are the sales in personal care coming from? Are people just buying these items online, are they
going in store to the retail stores? How are people purchasing these products?
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Q: Is there any added complexity to shifting personal care products vs another category, such as snacking, as
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it relates to e-commerce logistics and packaging?
Q: Management considers innovation as a key catalyst for growth. In personal care, what are some ways
Hain could capitalise on past growth and improve the product or products?
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Q: Unlike most companies that focus their resources on either food and beverages or personal care, Hain has
a presence in both. What are your thoughts on Hain’s ability to innovate and successfully grow its brands
between each category it plays in these different business lines?
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Q: What is your outlook for Hain Celestial regarding best- and worst-case scenarios over the next six
months?
Q: You touched on greenwashing earlier. How does Hain overcome that stigma about the industry of this
health and wellness when it comes to everyone saying they have the most clean ingredients?
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Hain Celestial – Continued Domestic Tailwinds & Mid-
term Outlook
Transcription begins at 00:00:07 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Hain Celestial – Continued Domestic Tailwinds &
Mid-term Outlook. I am Nyree Hinton, and I will be facilitating today’s Interview with Miss Teresa Lafferty,
former Senior Director, Sales Strategy and E-commerce at Hain Celestial Canada.
Teresa, before we start today’s Interview, please state I agree or I disagree to the following statement: You
understand the definition of material non-public information and agree not to disclose any such information
or any other information which is confidential during this Interview.
TL: I agree.
NH: If you would, could you begin with a brief background or introduction of yourself and previous roles
you’ve held in the industry?
TL: Sure. I’ve been in CPG for almost 30 years, starting my career in conventional and then moved into more
health and wellness when I went to Hain. Started right from the ground up, carrying the bag, if you will, as a
sales rep for Kraft, and then moved into more progressive roles through different organisations such as
Campbell’s, Frito-Lay, spent a small stint at Nielsen because in this industry, understanding data and how to
leverage data is very critical. I spent some time there, stepped out of CPG for a bit and went to Kodak, but we
all know what happened to Kodak, but good experience because I was the Director of Walmart, and I wanted
that experience. Just from there, moved into more senior roles, category management and managed teams,
sales teams. I spent some time in private label as well, for Cott, working on Loblaws, which is the biggest
private label retailer in Canada. From there, moved into health and wellness space, more because spent my
time in conventional but I wanted my work to be congruent with my life. I live in the health and wellness
space. I’m very much a whole food shopper. That is the space I live in, and so I felt I wanted my work life to
balance that out.
Loved Hain, loved being there, had a great opportunity. It’s unfortunate that they went to a North American
model and decided to, one day, cut 40% of these staff in Canada, but I totally understand why they did it, and
if I was in their shoes I probably would have done the same thing. Progressive experience in category
management, called on major customers. I have probably called on all customers in Canada, either directly,
through a team or by myself, so I have good business acumen when it comes to the Canadian landscape. That’s
about it.
[00:03:06]
Q: Could you give an outline of a couple of pre-coronavirus trends you found in Hain’s core US categories
across grocery, snacking and personal care?
TL: I would say snacking, having experience at Frito-Lay, snacking is big, it will always be big, but you find
that there’s a trend towards wanting healthier snacks, wanting to still indulge in snacking, but not necessarily
with conventional brands. What I did see, though, with snacking, is that you have conventional brands moving
into the health and wellness space, so it gets a little bit messy. When you look at the natural-organic shopper,
it’s a very small group, and then you have people in the middle that may dabble in some organics but still live
in the conventional space. It is those groups in the middle that you want to target, to move it totally into health
Private and confidential 3
and wellness, but when you have large brands that they know and feel comfortable with, the challenge is that
they will migrate into those brands. Even though they may not be as healthy as the ones in health and
wellness, they just feel they’re making better choices. Saw that with snacks. With skincare, it is interesting.
Years ago I had moved into the health and wellness space with skincare, so I was already in it, but what we’re
seeing with that is people understanding no parabens, but the reality is, if you ask most people why would you
not use a paraben, they probably wouldn’t be able to tell you because they just know from omission. They’re
seeing larger companies like the L’Oréals and some of the other health, I’m sorry, conventional products
moving into more healthy products.
You’re seeing consumers move there, not necessarily moving all the way into health and wellness. When you
think of health and wellness, and I know from my own personal journey, it doesn’t go from zero to 100. It’s a
journey. I can tell you from personal experience, products I may have used 10 years ago, I’m not using now
because it’s an education. There’s a lot of information. There’s a lot of wrong information, so, for a consumer
and a shopper, it’s very confusing. There’s a lot of greenwashing that’s going on, and that’s what I saw in the
beauty and the health and wellness. A lot of greenwashing, whether it comes to products or it comes to
personal care. There’s a real education that has to go behind the products, and that requires a lot of marketing
by the company. I would say that those are the general trends I saw going on when I was at Hain.
[00:06:04]
Q: What could be some of the longer-lasting structural impacts of coronavirus on Hain’s categories? You
touched on some of the trends you were noticing pre-coronavirus, such as greenwashing and that trend
towards health and wellness. How might these trends have accelerated or decelerated?
TL: I think there are two. I think there are converging trends. I think there’s a trend where people have lost
their jobs. There’s a lot of heartache out there and hardship, and so even though you may want to eat healthier,
there’s a budget. I think there’s that trend, but I also think there’s a place where people have become more
aware of immunity. 70% of your immunity is in the lining of your gut, so you’re seeing a lot more people
understanding that better, understanding that, “I need to build my immunity. I need to eat healthier,” so that
comes with food, the whole thing. I don’t know if you guys are familiar with Dr Mark Hyman. He’s a great MD
from the US who is into this whole holistic. He talks about food is medicine, and I think people are
understanding that better, so you know, if I’m going to drink something, I’m going to drink a more healthy tea.
There are functional teas and there are more refreshment teas, but I know that Hain has gotten into more
functional beverages, so, I think you’re going to continue to see that. It takes 30 days, they say, to create a
habit, so I think once you start in a particular way, I think you’re going to continue that. When it comes to
beverages, I think that people are going to consume the healthier beverages, especially being at home, tea
consumption, I know from what I’ve read, has gone up, just as a category.
Snacking, there is a lot more snacking when you are at home. I think people are a little more conscious.
They’ve put on some pounds and they’re thinking, “I’m going to be home. I’m going to be snacking, but I really
need to look for healthier options.” I think that trend will continue, for sure. When it comes to beauty, I think
hand hygiene is something that’s going to continue. I know that’s certainly ingrained in the people I am
surrounded with and family, although I have a lot of clean freaks in my family. They were already doing that
before COVID, so it wasn’t a long stretch to get to clean your hands for 30 seconds. I think those are trends
that will continue, but I think you’re also going to see people that were in the middle of the road and have
budget constraints that may not continue down that way, or they will maybe buy, but maybe not as frequently.
I think your diehards will continue, I think the middle of the road people could maybe go back and forth and
anyone who is at the fringe I think will maybe fall off. Like I said, it’s a journey. You don’t get into health and
wellness overnight, so I think there are going to be certain things that will stick with people just because
they’ve been doing it for a long time.
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[00:09:48]
Q: Hain’s management really believes these gains across the categories are likely sustainable. What are your
thoughts on that assessment? Is there anything that you think should revert back to pre-coronavirus ways
rather sharply?
TL: Let’s start with snacks. When I was there, continuous growth in our snack category, although at some
point, there’s price sensitivity because, again, you’ve got the Frito-Lays of the world moving into the health
and wellness space. They’re going to bring in something organic or they’re going to bring something in that
maybe is not fried. That option is the healthier option, and people know that brand, so they’ll feel more
comfortable buying. I think that what’s going to have to happen is innovation. You can’t just rest on your
laurels and say, “We had this trend and it’s going to continue,” because you’ve got big players out there that
are also looking for market share and looking for share of stomach. I think you’re going to continue growth. I
don’t know what they’re growing, but for the point of this discussion, if they were growing +30%, I don’t know
if 30% YoY is sustainable. I think you’re going to have to bring in maybe some innovation, cleaner ingredients.
One of the things I loved about Hain is we were always looking at the ingredient list. What can we make
healthier? What can we make? Challenged also by some of our customers like Loblaws or Costco. I don’t know
if you can sustain that growth just by doing what you’re doing. I think you’re going to have to continue to
innovate because the big players are going to. I think education is critical. I think there needs to be a lot more
of that, and I think they can use e-commerce for that platform. Today, the consumer wants more information,
more educated today than ever, so I think they need to break through by providing the right products, making
sure they talk about the right ingredients or have the right ingredients and then also some education.
[00:12:20]
Q: Hain has this four-pillar principle it uses to describe its strategy throughout the company. One of those
initiatives of the strategy is simplify, which includes shedding low-potential brands. In the CPG [consumer
packaged goods] industry as a whole, what do you think these firms are assessing to understand what qualifies
as a low-potential brand or a high-potential brand? What are some of the factors that go into that?
TL: Trends. Is it fitting into where the consumer is going? Consumer has a big voice today, so I would say that.
I would say profitability. There are some great products, but if they’re not making money, you can’t run a
business, so profitability is huge. The competition. Where do you sit in that space? Are you number one? Are
you number five? If you’re number five, you’re going to struggle, and the retailers, especially in Canada,
because it’s very consolidated, not so much in the US, but in Canada, you’re not one, two, three, you’re out. I
can’t speak for all the retailers in the US, but I imagine Walmart is the same. They’re always doing assortment
and looking at the top-selling SKUs, so I would say your position in the market. Ease of production. If you’re
co-manufacturing, there are a lot of ups and downs that you can’t control, so I think all of those factors, ease of
production, profitability, trends in the market, your position in the market, those are the things that I would
look at if I was doing a SKU wrap.
[00:14:23]
Q: Hain likes defining clear brand roles, and I guess this is a common practice throughout the industry. How
do you define a brand’s role?
TL: How do you define a brand’s role? It’s partly defined by your consumer. Who is your target consumer and
what is the need that brand is trying to fulfil? I would say it always starts with the consumer, and today, you
have to be very specific because the consumer is a lot more complicated. I would say for snacking, there are a
number of different brands they have, so they would have a family brand, they would have a more adult brand
and they would target their positioning on pricing, all the tactics around that, even their marketing and
advertising. I think that’s how they would define a brand role.
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[00:15:54]
Q: I think you touched on the Canada landscape and how it was very consolidated. Could you touch on the
competitive landscape for Hain in the US? Who is it directly up against?
TL: It is interesting, because Hain, because they play in a number of different categories, and I think one of
the best things that Mark Schiller has done is you can’t be everything to everyone, and you can’t be in every
category, because you can’t promote and advertise and support. Our challenge is that we have some players, so
when I looked at when we were in non-dairy beverage, non-dairy beverage as an example was one category for
us, but for a company like Silk, that’s what they did. When you get into those spaces where you have
competitors and all they do is focus on that one category, there’s going to be a lot more manpower, brain
power, marketing information and all of that that you can’t compete with. You just don’t have the resources
and the funds to be competing at that level on every single category that you’re in, so I think that’s a challenge.
Within the space of the health and wellness, you have manufacturers who are focused solely on those
categories. Then you have the big guys like the Krafts. Kraft launched natural peanut butter, so again, someone
who has been using Kraft for forever is now going to buy, “I want a healthier product. I’m going to buy Kraft
natural peanut butter,” because they’re familiar with the brand, so that’s a big competitive… when you have
someone like General Mills who bought Annie’s, even though people that were diehard natural space, they
were up in arms, but those things happen. You had Hershey’s, they bought Amplify Snack. That’s the popcorn.
What’s the name of those popcorns that I always buy, that I should stop buying? Anyway, so you’ve got
companies that are in the conventional space moving in and buying health and wellness brands, and they’re
doing that. I think it started back, after the big crash, they weren’t growing. Big brands are not growing, so
they need to come into the space where you’re seeing double-digit growth, and that’s I think one of the key
things that’s going to be challenging for anyone in that space, regardless if it’s Hain or anyone else when you’ve
got the big brands moving in.
[00:18:59]
Q: What would you say are some of the advantages that Hain has over competitors?
TL: They live in the space, and you know, if you’re in the conventional space, that’s going to be your bread and
butter. You’re not going to invest the same amount of time and effort and have the same passion because
you’re doing it for ulterior motives. You’re doing it because, “This space is growing. I need to be there.” It’s not
what drives you. What drives Hain is to make sure we’re delivering a healthy way of life, and so that’s been an
underpinning of what they do. That’s not the underpinning of all these other companies coming into the space.
That’s the biggest difference. I think, for me, because I lived in that space, I was able to bring a lot of insights
to the retailers that other companies wouldn’t bring because they don’t live in that space, so I think that’s the
key advantage.
[00:20:01]
Q: Would you strictly attribute weakness to bigger brands jumping into Hain’s categories, or do you think
there are other weaknesses that Hain has too?
TL: I think they’re starting to address the weaknesses and I think they’ve done a good job. They’ve divested
out of brands that weren’t making money, taking away resources, so I think they’ve done that well and
continue to do that. I know in reading, and I still keep an eye on what they’re doing, so I know that in the
recent investor report that Mark Schiller talked about get bigger or get better. I think they’re defining the
brands better, and really they do that because they do it to define focus and resources. Those are the negatives
Private and confidential 6
that I would have said, but now they’re trying to move those into positives, so they’re trying to fix those issues.
I still think that one of the things that breaks my heart, I wish we would have bought the Amplify Snack. If I
was making the decision, and this is pre Mark, this is the old leadership, they missed the boat on some big
snack companies to make the brand or be bigger in the category and have a bigger share of voice. I would say
that’s something that we missed the boat on.
[00:21:38]
Q: Hain has strong demand in its grocery channel. Do you think Hain is doing anything differently that’s
translating to higher sales, or is it benefiting from the overall strength in the channel due to coronavirus?
TL: I think COVID is helping every manufacturer in the grocery channel, so yes, but I think because they’re
more focused, I think that they’re focused on brands that are growing, like teas, like snacks, like hand soap and
Live Clean, because they’ve made a point and an effort to allocate resources there, I think that’s helping them.
[00:22:24]
Q: I think you touched on Hain’s get bigger brands vs the get better initiative. Could you expand on this? How
long was this going on? What are your overall thoughts on the structure, because I think it’s very interesting
that it separated the businesses into two categories, making it easier to allocate resources.
TL: Sure. If you look at the old annual reports, when Simon, I’m sorry, Irwin, he probably has two first names.
When Irwin Simon, the Founder, Owner and CEO, when you look back at those annual reports, the focus back
then was top line, of course, bottom line, because shareholders want bottom line, but there was a lot of top line
focus. If you look now within the recent two years, what Mark talks about is how much profit they’ve
increased. The top line is increasing, but not at the same rate, and so they had to focus, because the get bigger,
is the trends and where things are growing so they can drive top line and bottom line. I think the get better is
they are just milking those brands. I think those brands are all about making sure they are just profitable and
sustaining. I think they had to do that because they had way too many brands. That’s why they sold a lot of
brands off. He’s even said, “We’re going to get smaller before we get bigger,” and I think they had to do that.
They had to build the base.
If you look back in the last 10 years and all the companies that were purchased, Hain was all about acquisition,
and when I was in Canada, we bought 5-6, I can’t keep track, but let’s just say we bought a handful of
companies. When you’re buying companies, it hides a multitude of sins, and what I mean by that is when you
focus on acquisition, there’s a lot of resource and manpower that goes into integrating those businesses. What
happens is you don’t focus as much time and effort on the other brands, and so I think in any company, you
have to have a strong base and then you build innovation on top. The other thing is we’d integrate all of these
organisations and do a lot of innovation, but you have to build the base. I think that’s what Mark is trying to
do. I think he’s trying to have a stronger base and then layer in innovation, and I think that’s the right strategy,
I do. If I was there, I would 100% be totally supportive of that.
[00:25:34]
Q: What do you think are some steps management is taking to become more competitive in this channel?
TL: From what I’ve been reading, again, because they’re allocating resources to the fast-growing brands, I
think that is something that’s helping them for sure. I think they are also looking at how they go to market. I
think they’re looking at different pack sizes and different consumer needs and adjusting accordingly. I think
there is that. I think they’re providing retailer incentives to buy. Not to buy in eaches which is beyond me,
because when I was at Kraft, there was no way that would ever go down. Buy in pallets because there are
Private and confidential 7
efficiencies. I think they are doing all of those things. I think if I had to summarise this in a nutshell, what
they’re doing, Mark is strong CPG background. I think Chris Boever, who is the Vice President of Sales, a
strong CPG background. They are bringing CPG best practices into Hain, and that’s what Hain needed because
Hain was very entrepreneurial. I think that is the difference, they’re bringing and instilling those processes
which work in every other organisation to be more profitable, to be more efficient, and I think that’s what
they’re doing and that’s exactly why they were hired.
[00:27:43]
Q: Even pre-coronavirus, plant-based meat consumption was rising in popularity and demand. Why hasn’t
Hain been able to capitalise on this opportunity in the US, given it has offered plant-based meat items in
England for some time now? I think it acquired a specific brand a while back, but could you elaborate on that?
TL: Sure. Let’s do something closer to home. They have the Yves brand. Yves brand has been around for 30
years. Yves was bought by Hain Canada, because it was a Canadian brand, probably 15 years ago, and Yves is
huge in Canada. Up to until Beyond Meat came in, Yves had an 80% share, huge in Canada, and other
companies tried to come in but just never made it. Now, Beyond Meat is making some headway, but like I said
before, it’s about the education and a lot on marketing and what you’re seeing is they’re going from food
service in. A lot of trends start in food service and then move into home, and that’s how they built their
business. I’ll talk about some differences and hopefully we will get to the answer to your question. In Canada,
it’s in the fresh department, so it’s either in produce or in deli, but fresh is a huge category in Canada. Frozen
is smaller. In the US, it’s the reverse. In the US, when I’ve done store tours, it’s big in frozen and smaller in
fresh. Yves, when I was there, we were moving in to the US, but it’s a smaller play, so I think that’s why it’s
never been as big in the US, because you have Yves, a brand who plays in fresh, the marketing in the US is
frozen, and I know that Yves has made some headways in the US now. Also, because of Beyond Meat, there’s
heightened awareness of that category. I think the brand you might be referring to in the UK is, I’ve tried their
products, they’re really amazing, Linda McCartney’s brand. I think the reality is, and the challenge is that
name doesn’t mean as much in North America. I’m not sure what the US has even tried or done with the Linda
McCartney brand. That, I can’t speak to. I can speak to the fact that they have a great brand called Yves, and
I’m not sure where they’re at with the US. I know they were moving into the US, but I’m not sure what the
status of that business is.
[00:30:52]
Q: Do you think management should prioritise the plant-based meat category?
TL: The plant-based?
NH: Yes, plant-based in the US, just especially with how important health and wellness is and the
significance, the success you’ve seen with Beyond Meat and others too.
TL: I think plant-based is big. You’re seeing that now touted even in beauty products. It’s just my opinion of
the products out there. This is my opinion. I’m not sure how healthy they are. They’re still processed food. I
think what you’re going to see is that, consumers over time, and it depends on where you are on the
continuum of the healthy natural space, I’m maybe further ahead than most, I will give you an example of one,
but I have a niece who is a vegan. She will never eat that product, she is clean, raw foods, whole, and I think
you’re going to see a movement towards whole foods with less preservatives. I know that label reading is big. I
think it’s just going to continue, and with some of the leaders out there and their voice, they are going to talk
about cleaner ingredients and healthier foods. I think plant-based is important. I think the ingredient list has
to be cleaner. Down the road in, say, 10 years, what’s going to distinguish people within that space is their
ingredient list, and I think that’s what is important. For myself who is in the natural, organic space, I avoid
those products because it’s highly processed, and they use canola oil, which I totally am against. As people
move, as I said as, into the continuum of moving on into more cleaner, healthier, it could challenge those
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companies, all companies, including Beyond Meat, is that you have to have a cleaner ingredient list.
[00:33:02]
Q: Which brands would you say are really driving the growth in Hain’s grocery channel?
TL: I would say snacks and tea. I would say hand soap. Hand soap is on the rise, but also people are home
more, so I’d say hand soap, tea and I think probably their yoghurts, because yoghurt is a healthier option, and
they do have Greek Gods, and it is a pretty clean product. I would say one of their cleanest products. I’d say
those are the brands probably driving some of the grocery business, off the top of my head.
[00:33:50]
Q: Which brands or categories do you think Hain should prioritise regarding marketing spend and investment
within the grocery channel?
TL: I think their tea business could be bigger than it is. They have got great product, and they have a lot of
SKUs, so I think the tea business for sure. Let me think here. Live Clean is an undervalued brand. Live Clean is
a great product, and I like it because it also targets mainstream, where people may not be, necessarily, all the
way to where I’m at, but it still offers them a great, cleaner ingredient list. I think that they should really focus
on the Live Clean brand, and I love the premise of it, plant-based, natural, good for the environment, eco
conscious, which is great for the millennials. I mean they love that piece of any company. You have consumers
who will support companies who are good for the environment. I think that brand is under-marketed. I think
that is a huge opportunity in Canada and in the US.
[00:35:17]
Q: Hain already made a push to online sales before most CPGs, and it has delivered consistent online sales
growth of above 50% throughout the pandemic. What are some ways e-commerce is really affecting this
channel?
TL: Hain was into e-commerce more in the US, when in Canada we were dabbling in it, then I took over the
team and we were focus ing more on that, I’d say Amazon. I would say COVID, and it’s interesting because I’m
taking an e-commerce course right now at the University of Toronto, and it’s interesting because what we’re
talking about is COVID has propelled e-commerce 5-6 years ahead of where it would be today. Grocery, I think
what you’re seeing a lot of is click and collect, so people go online and it’s the ease of picking up. It’s not just e-
commerce and have it shipped to your door. I think pure play is gone, which means if you’re only going to do
online, I don’t think that’s where the consumer is at, I think it’s omni-channel. You certainly see anyone who
has been in bricks go online, anyone who is online going on bricks. Amazon is a great example. They bought
Whole Foods, and they have the Go stores. In order to be in the space, it’s no longer just online, it’s omni-
channel, and anyone who does that is going to be successful in the future. You have to be able to integrate that.
I think with grocery as a whole, up until COVID, you had maybe grocery was 1% of most sales in Canada. I
remember seeing some Nielsen stats on that, and then health and beauty and wellness was about 2% of the
penetration.
When you think of e-commerce North America, it’s way behind the world. When you think of Canada and the
US, I can’t remember now how they rate, but they’re not one, two, three, I think five or six or something like
that, even lower. You’ve got the China and Korea and all those countries and some European countries that
had been into e-commerce way sooner and more developed than the North America. I think that for Hain
specifically, certainly, COVID has helped accelerate that, just as it has for every other grocery manufacturer.
Will that continue in the future? I would say yes, but I also think that, as I said, it’s the whole omni-channel
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experience. It’s people want to be able to have the option of doing shopping wherever, whenever and be able to
access it, whether it’s picking up in store. I am going to give you an example which may be of interest. If it’s
not, stop me. Loblaws has done a good job. They now have a number of different ways for consumers to pick
up their groceries. They will have depots at the train station. They will have lockers where the food can be
delivered there, and on their way home they can pick it up, and they have trucks that will stop at certain places
and people can go in.
I think what you’re going to see is that COVID has totally changed how people are going to shop as a whole,
and it’s not just going to be online, it’s going to be online, it’s going to be pick-up, it’s going to be, I’m picking it
up in my locker on the way back to work, sorry, back to home. I think the COVID has really accelerated e-
commerce for the consumer, across all different categories, across grocery and whether it’s tech or whatever. I
think things are never going to be the same. I think for grocery specifically, they’re going to have to be smart,
to be effective in how they manufacture, how they ship out. They have to create, maybe, specific packs. Nobody
wants to buy six shampoos, but they’re willing to buy a shampoo and conditioner together, or maybe a
shampoo, conditioner, body wash. I think, to be successful in this business, you’re going to have to
continuously evolve, and packaging is going to be a big part of that.
[00:40:13]
Q: Management have reallocated marketing spend to the e-commerce channel. What are some challenges or
benefits associated with running campaigns on a digital landscape?
TL: Yes, running campaigns online is not as easy as you think. It’s not just, “I’m going to put a campaign
online and we’ll see what happens.” There are a lot of analytics that have to go behind that and continuously be
monitored. You have to have a big staff, and you have to have the right people in that staff. You have to have
the analytics. E-commerce business is not as simple as just, “I’m putting product online.” I was always trying
to reinforce this with my management team, when you go and you list something, and I go to Kroger, if you list
that product, when you go the next week, you probably see it the same place on-shelf. Online digital shelf
changes by the minute. It depends on what the competition is doing, driven also by behaviour of the
consumer. Online business requires a lot of time, effort and resources, and you can spend money that is not
effective. In order to maximise your ROI, you have to constantly be analysing. That’s why you hear this term
big data, lots of data. I’ve always been in big data when it comes to bricks, but it is a way more complicated
business than it is in bricks. Certainly, going through the course at UOT, that’s been brought to my forefront.
It’s like, “This is so much more complicated than bricks-and-mortar,” because in bricks, you may change your
shelf once, twice a year.
In e-commerce, online, you can be changing digital shelves weekly depending on the category you’re in. It’s
just a lot more intensive. If Hain is allocating more money, I don’t know how much that more is, and is that
enough, depending on what their goals and objectives are? One of the things about e-commerce too, you have
to be so defined about what’s your overall goal, and what your KPIs are and what’s your metrics, extremely
identified, because then you need the data and the backup to monitor and make sure that you’re actually
delivering, because it could be a money pit if you’re not following through and analysing, and making sure
you’re getting your ROIs. Them investing money, that’s great, I just don’t know, do they have enough people to
be doing the analytics and making sure that their investment actually returns a great ROI? That’s the only
thing I would have to say.
[00:43:25]
Q: Could you give us an overview of Hain’s personal care business?
TL: Before we purchased Live Clean, we had AAJ, so Alba, Jason, Avalon, and those brands focused on
different consumers. Your Avalon is organic, so it’s strictly your organic shopper. Jason were all family, and I
would say Alba is the younger, it skews younger. Then, Live Clean came in, and Live Clean was mainstream,
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because they purchased Belvedere, who launched Live Clean. An interesting side that I actually worked for
Belvedere for a short period of time years ago, so it was interesting how then we ended up buying that
organisation. Live Clean came in to bring a cleaner ingredient list to the mainstream. Then, Live Clean was
focusing on mainstream, and the other brands were focused more in the health and wellness space. Today, I
don’t know if they’ve changed that. I don’t know if they changed strategy, and how they’re managing Live
Clean with the other brands, but that’s basically the brands and their focus.
[00:44:48]
Q: Hain’s personal care category also experienced a favourable boost from the pandemic, with sales growing
more than 30% YoY consecutive quarters. Could you elaborate on some of the drivers of this outperformance?
TL: First of all, people are at home more, so hand soap has gone way up, but I would say that a big driver of
that space has been Live Clean, the hand sanitiser. I think that’s been a big driver of their growth. I was
watching a programme, I think something on the Raptors, and they had Live Clean as one of their sanitisers.
Live Clean wasn’t in the US. I think it just started growing with COVID. Live Clean was big as a hand sanitiser
in Canada, and I think they had it under a different brand name, so they relabelled it to Live Clean. I think
that’s one of the key drivers, and hand sanitisers will continue to be big. I think consumers are going to be very
self-conscious moving forward and always making sure they have that on hand, so that’s been big. Hand soaps
in Canada, I can’t speak to the US because Live Clean is a bigger brand in Canada, one of the top-selling hand
soaps in Canada is Live Clean, and I think it can be for the US as well. It’s a great product because it’s clean,
it’s not harsh on the hands, they have great SKU variety, eco-conscious.
I think that particular segment of Live Clean will continue to grow. I know that they have a Live Clean Baby,
and new mums will always buy the best for baby and baby organics. I think that’s a brand that will continue to
grow. I think it’s really underdeveloped. I think it has huge potential because you have the big guys like
Johnson & Johnson, but I think it’s a much cleaner product than any of the brands out there, so I think, again,
it’s about marketing, educating the consumer on that. I think those things will continue to grow for that
category for Hain.
[00:47:20]
Q: Where are the sales in personal care coming from? Are people just buying these items online, are they
going in store to the retail stores? How are people purchasing these products?
TL: I think that people are purchasing them. I can’t speak to specific websites to the US, but I think iHerb is a
US website. I think that, when it comes to some of these products, you don’t have to be in store to buy them.
It’s not like produce. A lot of people like myself, I want to pick up my own produce, but anything like this you
can buy online. I think that that’s going to continue to be an area of growth, and it’s easy for you to order that.
Sample of one, I now buy a lot of my hand soap and anything like that at Well.ca, they’re a health and wellness
web-based business in Canada, because it’s easier for me. I don’t have to go to Walmart to pick it up, or I don’t
have to go to wherever, and I can just buy a bunch of it, and it’s in my cupboard, and I’m good to the next time.
I think it’s easy to buy that product online, and I think it’s going to continue. I think, when it comes to Live
Clean and some of those products, online will continue to be big.
One thing, and I can’t speak for the US, but what we’ve seen here in Canada is that because consumers like to
one-stop shop, because they don’t want to be driving all over the place due to all this COVID, a lot of
consumers have moved their purchases to grocery. Stores that are in the natural health and wellness space
have lost share in the last, I think, was it 12 weeks? I can’t remember, but they’ve lost share. Is that going to
continue? I don’t know. I don’t think so. That’s also very personal because I still go to my health and wellness
store to pick up certain things that I can’t pick up somewhere else, but I think that if people can buy that
online, they will buy it online. Also, a lot of grocery stores don’t carry some of these products, so online gives
the opportunity for more SKU to be lifted, the long tail. There are a lot of products. Retailers can only have so
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much product on shelf. What online does, it gives the consumer the opportunity to have way more choice. I
think, when it comes to, again, health and beauty products, consumers like to try new things, new scents. I
think online will continue to grow in that respect.
Whole Foods is big in the US, small in the Canada, there are only 10 stores. I think they will continue to do
well because of their platform. In Canada, and I can’t speak to the US, there are huge discount chains here,
and I’m sure there is, like Aldi, and what was the other one, Lidl, so consumers, for a period of time, have just
gone to conventional because they can do a one-stop shop, and that channel has declined, but I think once
people feel more comfortable and the vaccine has been permeated through society, I think people are going to
start shopping back to some of their old ways, but I think there are some things that I think will stick to online
because it’s just easier.
[00:51:22]
Q: Is there any added complexity to shifting personal care products vs another category, such as snacking, as it
relates to e-commerce logistics and packaging?
TL: When I get my product, whether it’s from Amazon or Well.ca, and I purchase hand soap or other liquids,
they wrap them. I know, for Amazon, and this is well-known in the industry, they’ll charge you for that. It’s
called the prep charge. It can be very expensive. I think what manufacturers are going to have to do is find a
way to provide the right packaging for Amazon to not incur those charges. The decision there is is it more cost-
effective to do it internally, or is it you might as well just pick up the prep charges because it’s less resource-
intensive at the vendor side? Yes, buying liquids is more difficult or shipping liquids is more difficult.
[00:52:42]
Q: Management considers innovation as a key catalyst for growth. In personal care, what are some ways Hain
could capitalise on past growth and improve the product or products?
TL: When I think of Live Clean, it could be such a huge brand for them. I think they just need to market what
the brand stands for more. Eco-friendly, clean ingredients. They recently have taken out colour out of their
product. That has to be marketed to consumers in a way that resonates with them. The whole eco-conscious
piece, I think that’s what they need to focus on. Whether it’s television or print, I can’t speak for the US, but a
study was done recently. Television still has a big impact. I know people, they’re investing in social, but it’s
interesting enough that TV still has a huge impact in terms of advertising and getting to consumers. What e-
comm can do that television can’t do is that you can really go to a niche consumer, where TV is more a blanket
approach, e-commerce could be more targeted. Again, you have to have the right resources and tools to be able
to do that, but certainly that’s the advantage of an e-commerce. With Hain, I just think that they need to
decide what brands they want to grow, and I think Live Clean is one of their go-bigger. They just need to
decide what segment, because it’s such a big brand. You’ve got shampoo, conditioner, so what product are you
going to use to bring people into the category? I think they just need to figure that out.
[00:54:47]
Q: Unlike most companies that focus their resources on either food and beverages or personal care, Hain has a
presence in both. What are your thoughts on Hain’s ability to innovate and successfully grow its brands
between each category it plays in these different business lines?
TL: When you think of their mantra, healthier way of life, they do cross different categories because they’re
trying to provide a more holistic shopping experience for the consumer, so it’s food and beauty. I would say
that they can still play in those categories, they just need to figure out how many brands do I need to play in
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that category. I think that’s what I would think. Can Live Clean be a brand that I can sell throughout? I know
that to sell at Whole Foods, there’s a very long list of criteria in order to get into that space. They may need to
have multiple brands in order to play in the different channels. Sorry, I got lost in my train of thought here. I
don’t think there’s anything wrong with playing in food and in health and wellness, I just think, within those
categories, do you have the right brands? Like I said earlier, I wish they would have bought SmartPop!. I think
that that would have just helped magnify their share of voice and presence in the category. I think, with
innovation, they just need to decide what’s going to be that best innovation that’s going to stand out from the
competition in that category. Is it a cleaner ingredient list? Is it a totally different product that’s not currently
on the market? I think they can play across those categories, they just have to be very, very strategic in how
they’re going to play in those categories.
[00:57:17]
Q: What is your outlook for Hain Celestial regarding best- and worst-case scenarios over the next six months?
TL: I think that plays well over the next six months. Like I said before, they’re in the health and wellness
space. It’s who they are. They walk the talk vs other manufacturers who want to play in that space. I had to
laugh when Beyond Meat partnered with Pepsi. When you think of Pepsi, you don’t think health and wellness,
you think of a very unhealthy beverage.
NH: Yes, that’s actually a really good point.
TL: That’s an odd partnership to me, but anyway, they don’t have to pretend, and they don’t have to use cloak
and daggers. This is who they are. They are in the health and wellness space. Their focus is health and
wellness, and I think that is going to help them. They’re one of the biggest manufacturers out there. I think
that is the advantage for them. I think the challenge is, they have to be more strategic in how they spend their
money because you’re going to have players in those categories that only are focused on those categories, so
how do you compete? What’s your point of differentiation vs the competition in those categories where that
may be one of your brands and that may be their only brand? I think they’re doing the right things. I think
they’ve got some CPG mentality, I think they’re putting the right tools in place, I think they are poised for
success if they continue down this road.
[00:59:05]
Q: You touched on greenwashing earlier. How does Hain overcome that stigma about the industry of this
health and wellness when it comes to everyone saying they have the most clean ingredients?
TL: I think it’s their certifications and talking to the consumer about what they don’t have. One of the things,
when I was there is there are a lot of big brands, like Aveeno, natural health, and thinking, “Really?” and
because they have a celebrity influencer touting it, so people gravitate to that. I think one of the things they can
use is their e-commerce platform, their websites, to educate consumers about the ingredients to avoid,
because when you tell someone that you’re non-GMO, again, I bet you a lot of people don’t even know what
that is, but because it’s that whole, “My brand doesn’t say it’s non-GMO,” it raises the question and highlights
the issue potentially with the brand they’re using. I think they can do a better job of that. There are a lot of
brands, I think it was a baby product, that used PEG, and I can’t remember the long Latin name for it, but it’s
basically a plastic in a baby product. We were like, “We don’t have that. We need to talk about what
ingredients we do have but also what we don’t have because that helps people to understand, ’that’s not as
healthy as you think’.”
Also, consumers are a lot more educated and getting smarter. If it’s a long ingredient list, a lot of times, or if
it’s too hard, or if they can’t pronounce the name or they can’t understand it, consumers will back off from it. I
think one of the things that they could do, and I like this in Tom’s, if you pick up a Tom’s in Maine, one of their
toothpastes, they’ll have an ingredient, and then in brackets, they’ll talk to you about where it’s derived from. I
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think that’s the way to get consumers to understand better the ingredient list, so to help them to avoid
greenwashing.
[01:01:35]
NH: We will now end on that note. Thank you, Teresa. It was a really good Interview, and I’m sure clients
were also pleased by your answers and also want to thank clients for joining Third Bridge Forum’s Interview
today. Clients, if you wish to speak with our specialist, Teresa, in a private call or meeting then please let your
relationship manager know. Goodbye.
TL: Okay. Take care. Bye bye.
Transcription ends at 01:01:52 of the recorded material
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