Hain CEO: Customer service, innovation key to growth strategy

Hain Celestial CEO Mark Schiller expects the company's new growth strategy to start showing results in the second half of this fiscal year, despite the challenges facing the food industry, he said Monday.

Speaking to a virtual audience via the ICR Conference, Schiller said the company is projecting growth of about $150 million a year under its Hain 3.0 plan, which was unveiled at September's Investor Day.

The recent acquisition of ParmCrisps and Thinsters weren't included in that growth estimate, Schiller said, but they put Hain in new, growing categories.

"There's a lot of segments of snacking that we're not in. Snack mix is one of them, and ParmCrisps has a great snack mix segment that's doing exceptionally well," he said. "Because it's a high-protein, low-carb snack—it sources from beef jerky and protein bars and things that our current portfolio doesn't source from—it really fits nicely with our growth strategy and being a bigger player in the fast-growing healthy food space."

Already in this fiscal year, which started July 1, consumption of Hain products has outpaced supply, and the company is working to replenish inventory to boost sales in the second half of the year. New products are coming, as well, as retailers reset their shelves.

Related:Hain meets industry challenges with price increases, higher wages

A new yogurt product will be coming in June or July, Schiller said, without giving any hints about it.

"With continued innovation and the expectation that we're going to both improve distribution and average items per store through the next set of resets, I expect that you're going to see that growth projection start to materialize," Schiller said. "The pipeline is strong and the things that we've launched are doing well, such that we're getting more things on top of that as opposed to replacing things that didn't perform well."

Supply chain disruptions continue

The food industry, of course, continues to suffer disruptions along the supply chain because of labor problems and the quick spread of the latest COVID-19 variant, omicron.

Because Hain doesn't have "billion-dollar brands," it is focusing on service to the retailers over controlling costs, Schiller said.

"The retailer can live without some of our products. We've got to keep fighting for space. We have to prove to them that we're hungry and we want it, and we're going to be reliable," he said.

Hain is keeping its internal operations going but dealing with external issues such as trucking and staffing at co-manufacturers have demanded attention and money—especially when something happens on short notice, he said. One supplier suffered a cyber attack, while a distribution partner saw half of its staff leave, he noted.

Related:Monitor: The natural products industry has a supply chain problem, and at least 1 solution

"The solution to all that is we just have to keep nimble and scrappy," Schiller said. "We're still servicing the business in the low 90s; we're used to servicing the business in the high 90s. The fact that we're still in the 90s in North America feels really good."

Although the company budgeted $25 million for inflation in its current plan, that doesn't include the unexpected costs he mentioned or additional omicron-related absenteeism.

"I don't think anybody anticipated the magnitude of the supply chain disruption that we're all facing," Schiller said. "We did a good job in building inventory and trying to prepare ourselves for whatever this pandemic would bring, but today it feels like every other day, there's another shoe drop somewhere."