Hain Celestial sells Dream and WestSoy to SunOpta for $33M

Dive Brief:

  • The Hain Celestial Group sold nondairy beverage brands Dream and Westsoy to SunOpta for $33 million. In a statement, Hain Celestial President and CEO Mark Schiller said these brands are considered noncore to the company, and will not impact the profit margins for the rest of its business.
  • Dream, which was first launched in 1982, is the No. 2 shelf-stable plant-based milk brand in the U.S., according to a press release from SunOpta. The brand has plant-based milk made out of almonds, rice, soy, cashews and coconut, as well as frozen desserts. WestSoy’s products are certified organic and also have a heart-healthy certification from the American Heart Association. Prior to the sale, SunOpta already produced half of the products in the Dream portfolio and all of the products in the WestSoy portfolio.
  • Hain Celestial has been working to downsize its offerings in recent years to both streamline its portfolio and concentrate on brands that have growth potential. It’s been active in divestitures, with Schiller saying in a call with investors in February that the company had sold or shut down 17 nonstrategic businesses in the previous 20 months.

Dive Insight:

Hain Celestial has been on the quick path to a full transformation for the past several years.

Schiller laid out the company’s new strategy at its February 2019 Investor Day presentation: It’s time for Hain Celestial to stop trying to be all things to all people, and instead concentrate on brands that have significant growth and innovation potential. These “Get Bigger” brands would get more marketing, innovation and distribution attention. The overall plan is that Hain Celestial will get smaller, grow faster and become more profitable.

Since that presentation, Hain Celestial has done all three of those things. The company has been the most active in divestitures, though most of the recent ones have been non-U.S. brands. Its last big U.S. divestitures were in 2019 when it announced the sales of its Hain Pure Protein meat business and the tofu, seitan and tempeh businesses under the WestSoy brand in the space of a week. It also sold its Arrowhead Mills and SunSpire baking brands and Tilda basmati rice that year. In 2020, Hain sold Canadian brands Casbah and Europe’s Best, and French organic fruit and vegetable product brand Danival. So far this year, it has also divested U.K. prepared fruit business Orchard House Foods.

Hain Celestial has also seen its sales and profits increase in the past year. In its most recent quarter, net sales were up 4% when compared to the same time the year before — which the company said bumps up to 6% when divestitures and currency differences are taken into account. And Hain’s gross margins also improved nearly 3.8% over the prior year, to 24.6%. While Hain has been exercising its new growth strategy and has improved its market share in key areas, according to a transcript of Schiller’s call with investors, the pandemic has driven sales increases for most CPG food and drink companies.

SunOpta, which was once primarily an ingredients company, is also seeing big changes in its business. It divested its global ingredients division early this year, with the goal of becoming more focused on the plant-based food and drink space. Considering that the company already had a significant portion of Hain Celestial’s plant-based dairy manufacturing, Dream and WestSoy’s milk are natural fits to its business. And because plant-based dairy is likely to continue to grow, SunOpta now has well recognized brands to innovate with and solidify its footprint in the space.

This divestment does more to help Hain Celestial keep its focus on other categories where it’s seen innovation potential, including its namesake Celestial Seasonings tea and snacks including Veggie Straws. And as consumers move beyond their pandemic pantry-stocking mindset, this sale will help to show if Hain Celestial can achieve its objective of becoming more profitable by being smaller.

Source link