Natural Foods Merchandiser

The Hain Celestial Group of Melville, N.Y., has purchased San Francisco-based Zia Natural Skincare, stepping up its commitment to the booming natural personal care industry.

Terms of the deal, announced Tuesday, were not disclosed, but Hain said Zia's annual sales are less than $10 million.

Scott Van Winkle, managing director of Boston-based investment bank Adam Harkness Inc., expects that figure is about what Hain paid.

Hain jumped into the natural personal care business when it bought Jason Natural Cosmetics last June, and it aims to provide a broad range of body, hair and facial care products, including cosmetics.

"When we acquired Jason, we talked about it being a platform for growth," said Mary Anthes, Hain vice president of investor relations. Hain also owns the Shaman Earthly Organics and Orjene Organics personal care lines, both divisions of Jason.

"I think if you look across the natural products channel, probably the most exciting product category is natural personal care," Van Winkle said. Not only are sales increasing, but natural body care products are moving into conventional retail channels, he said.

"It's a natural progression of natural products," he said. "You start with food. You touch consumers where it most impacts them. Then [they] will ask, 'Where else do you put chemicals in your body or on your body?'"

Van Winkle also said gross margins are higher for natural body care products than for Hain's core food brands.

Natural supermarkets logged $302.9 million in sales of body care products in 2004, nearly double 1999 sales of $155.2 million, according to San Francisco-based SPINS, which tracks the natural products sector.

Like Jason and Hain's three dozen other natural and organic brands, Zia will retain its name, and Hain plans to make the most of Zia's high-end brand. "Zia is a premium-priced product," Anthes said.

She said Hain foresees co-branding opportunities with Zia, much as it has done with other products. Last month Hain unveiled a baby skin care line, Earth's Best Baby Body Care by Jason, leveraging one brand's reputation in baby food and the other's in skin care.

While Jason carries an everyday lineup of products, including shampoo, toothpaste and skin lotion, Zia is focused on facial care, including masks, aging treatments and cosmetics—a new area for Hain.

The company will be folded into Hain's Culver City, Calif., personal care division. Zia co-founder and president Fran Strachan joins Hain as vice president of business development, personal care.

Zia was founded in 1984.

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