Hain Celestial sells Thinsters to J&J Snacks, downplays further divestitures

10-Apr-2024 - Last updated on 10-Apr-2024 at 16:24 GMT

Image Credit: Getty Images - Kwangmoozaa

Hain Celestial sold cookie brand Thinsters to J&J Snack Foods for an undisclosed amount in an all-cash deal announced this week as part of the its overarching growth strategy.

In 2021, Hain Celestial purchased Thinsters and ParmCrisps maker That’s How We Roll for $259m with the intent of focusing on the ParmCrisps brands and eventually spinning off Thinsters, Hain Celestial CEO Wendy Davidson told FoodNavigator-USA.

“As we looked at the snacking portfolio, Thinsters as a brand — and certainly the category of cookies — really did not fit into our better-for-you-snacking portfolio for us to take forward. So, we found a great home with J&J. The brand is actually a great fit for their portfolio around sweet snacking ... and it allows us to then focus our team's efforts around driving growth from our core.”

‘I would not say that M&A is a core part of the strategy’

In September 2023, Hain Celestial rolled out an aggressive multi-year growth strategy — Hain Reimagined — which focused on four key pillars: focus, grow, build, and fuel. As part of that plan, Hain Celestial will also focus on its five core businesses, including snacks, beverages, baby and kids food, meal preparation, and personal care.

This divestiture is part of its 'focus' pillar, where the company is rationalizing its product portfolio, Davidson said. Hain Celestial will use the proceeds from the sale, “and as much free cash as possible ... to pay down debt,” she added.

Recently, the company posted its Q2 fiscal year 2024 results, ending Dec. 31, 2023, which saw the company reduce its debt quarter-over-quarter, going from $815m in Q1 2024 to $809.2m in Q2 2024. Free cash flow also increased to $14.8m for the quarter, compared to a negative cash flow of $4.4m in the same period for the previous year. As of press time, the company's stock is trading at or near a five-year low.

The divestiture also allows Hain Celestial to cut operational costs by “reducing some distribution centers and a co-manufacturer” associated with Thinsters, Davidson said. Recently, the company made a series of other operational consolidations, including moving from two meat-free plants in Canada to one and shrinking its UK office space, she added.

Davidson downplayed the importance of further divestitures, but did not rule them out entirely.

“I would not say that M&A is a core part of the strategy, but it will be an enabler of the strategy. So, as we look at those five categories of focus, are the brands we have in those categories all the right brands that allow us to be able to really punch above our weight? Are they relevant and compelling to our retail partners? And can we drive scale and reach with those brands? I feel very good about the portfolio we have, but you may see some shaping here and there, but I would say it is not core to the strategy.”

Playing in better-for-you: ‘This is everything that we do’

When it comes to the other prongs of its Reimagined strategy, Hain Celestial is well positioned to capitalize on the macro-trends around better-for-you foods and beverages, Davidson noted. The global better-for-you-snack market was estimated to be worth $38.372bn in 2023 and is expected to reach a valuation of $53.18bn, growing by a 3.3% CAGR between 2023-2033, according to a Future Market Insights report.

“Our ethos is around healthier living. We do not have a couple of brands that play in better-for-you — this is everything that we do. And so, I think we can speak with credibility and authenticity to the consumer and help our retail partners to have those products available in multiple areas of the store and brings in that shopper more often, and we can speak with a really relevant voice.”

While better-for-you, natural, and organic typically have a price premium associated with them, Hain Celestial products are still affordable and have the "permissible taste and indulgence that does not force [consumers] to sacrifice good product ingredients and attributes," she said.

Recently, Hain Celestial launched its gluten-free Garden Veggie Flavor Burst tortilla chip — available in Nacho Cheese and Zesty Ranch flavors — which is formulated with no artificial flavor or preservatives. The tortilla chip is “an example of ... [not having] to sacrifice my willingness to snack for feeling good about what I eat,” Davidson said.

“We happen to be in the entry price point to premium but not super premium, which makes us an affordable, healthier option rather than ... either financially sacrificing taste or in the product attributes. So, I feel really good about the space that we are in — the right categories and the right potential in our business.”