Hain Celestial Group, the natural foods and organic personal care enterprise, just reported less than stellar results. This is not the first financial quarter that disappointed management, investors and Wall Street. There have been performance issues since 2016.
This is a shame.
Hain Celestial Group parents some well-known brands including iconic Celestial Seasonings with its true 1960s cred. Red Zinger tea is on the same nostalgic pedestal as a Day-Glo painted VW bus, bellbottom jeans, Macrobiotic diets and tie-dyed clothing. Sleepytime Tea is a serene favorite.
Although the business press indicates that Hain Celestial Group is in Year 1 of its turnaround plan, this is actually not the case.
Since 2016, Hain Celestial Group has been executing a turnaround plan, Project Terra. “Project Terra” was defined as a multi-year turnaround plan focused on simplifying the business and reducing costs with a focus on Hain Celestial Group’s core, high-growth brands. Hain Celestial Group designed Project Terra as part of an enterprise-wide transformation strategy to reverse the organization’s sluggish and depressed sales as well as address Hain Celestial Group’s operational complexity following years of global acquisitions.
This article is part of Branding Strategy Insider’s newsletter. You can sign up here to get thought pieces like this sent to your inbox.
How long should a turnaround plan take before reassessing the actions and executions of those actions? Most business journals and gurus suggest 3 years. The 2003 McDonald’s turnaround took 1 year for positive results and a second year for amazing stock valuation. By year 3, McDonald’s was implementing a growth strategy.
How long will Celestial Seasonings ask Wall Street to wait?
Last year, Hain Celestial Group stated the following to The Wall Street Journal:
“(Hain Celestial Group) has struggled in recent years with lagging and uneven sales growth, largely because of underinvestment in the company’s best-known brands, said Lee Boyce, the company’s chief financial officer. The root cause: strain from years of acquisitions with little focus on integration, leaving the company with costly production and overlapping vendor relationships.”
That 2024 article from The Wall Street Journal also reported:
“Hain Celestial said a year ago that it would restructure its operations in a three-year turnaround effort, with a goal of freeing up cash for innovation, marketing and debt reduction through better working-capital management and lower production costs. The company has made progress on its targets—for instance, unlocking over a third of its target $165 million in working-capital improvements over the past year, Boyce said.
“In the year ahead, the company will face a test to prove that the turnaround is working, with investors looking for improved gross margins and organic sales growth, analysts said. ‘This year is really going to be the proof point to show: How much can they extract out of the gross margin line?’ said Jim Salera, an analyst at the investment firm Stephens. “
Since 2024, Hain Celestial Group’s stock is down 80%.
With these poor performance numbers, Hain Celestial Group is now indicating that the enterprise is moving into a cost reduction strategy of major proportions. Hain Celestial Group will be eliminating a lot of its “global infrastructure,” eliminating employee expenses, eliminating under-performing-extraneous offerings and eliminating operations. Additionally, the number of brand varieties will be pared. The goal is now “speed, simplicity and impact.”
Again, the rules of thumb are that after a year if things are still going in the wrong direction, a reset is probably necessary.
The one-year goals of the Celestial Seasonings turnaround were not met. The goals of the 2016 over-arching strategic turnaround plan have not been met either. True, there is now a new CEO. But, C-suite turnover is not the same as constructive turnaround.
A turnaround strategy is a business approach for a brand that is going in the wrong direction at an accelerating pace. A turnaround strategy is a plan of thinking and action that immediately moves to stop a deteriorating situation. A turnaround strategy is short-term, focusing on what is strong and how to reinforce these strengths. What is working? Why? How can it be improved? What is not working? Why? What do we need to do differently?
The goal of a turnaround plan is to focus on the immediate requirements of the business. For a troubled brand business, an aggressive turnaround plan is not an option. It is an imperative.
It is not a long-term plan. A turnaround strategy is a short-term plan for business revival. It has specific short-term objectives. It has specific actions designed to achieve those specific objectives. It has a specific timeline.
Achieving a successful, turnaround is not easy. A deteriorating brand situation does not improve with time. It only gets worse. A bad situation becomes more difficult the longer the wait. Change is not an option. Unless an enterprise does things differently, it is ridiculous to expect different results. Whatever is being implemented at Celestial Seasonings has not, to date, improved the deteriorating situation.
Turn Your Brand Around with The Blake Project.
Turnaround experts agree that the most immediate “must-do” action is to “Stop the bleeding.” Stop the financial bleeding and stop the bleeding of the customer base. The immediate goals are business survival and brand revival. Stopping the bleeding requires a set of quick, decisive decisions. A 90-day plan for resuscitation. Not 2016 plans that are almost 10 years old.
Hain Celestial Group is now, after a year, committed to executing a “stop the bleeding” plan of action. But, Hain’s executives make this plan sound like a long process. So far, there is little good news. What is Hain Celestial Group’s 90-day crisis plan? Hain Celestial Group says that it will reduce allocations on expenditures and refocus resources behind programs that pay. The goal: restore positive cash flow.
What is happening immediately?
To stop the bleeding, however, is only step 1 for Hain Celestial Seasonings.
Hain Celestial Group must Achieve Cultural Alignment. This means:
· Create a galvanizing purpose and promise
· Create a consistent, coherent brand message platform
· Communicate internally and externally. Be consistent.
· Focus on employee alignment.
· Focus on reinforcing the brand with loyalist and potential loyalists
· Build on brand strengths
· Defend the core enduring brand truths
· Focus on immediate behavior change
Hain Celestial Group needs to galvanize the organization around a relevant, differentiated brand promise. Especially when a brand a is spread over multiple, global brands, alignment is an absolute must-do.
Third, Hain Celestial Group must Focus on the core. Right now, the statements to the press do not appear to include anything about the individual brands. The Hain Celestial Group brands are what create value. Without customers perceiving brand value, there is no shareholder value. Simultaneously grow a meaningful corporate culture and enhance stakeholder value, not just shareholder value.
The main core businesses must be protected and cultivated and they must have the same goal: attract and maintain loyal customers.
Focus energies on communicating, implementing, nurturing, developing, enhancing and reinforcing the core purpose of the businesses. Be the best at something relevant and differentiated. Never compromise quality in the name of efficiency or availability.
Fourth, have SMART objectives.
Here is where there seems to be a serious lag with Hain Celestial Group’s strategic turnaround plan.
A turnaround plan must have a clear, measurable time-dependent objective. Vague visions, vague goals, vague hopes and vague promises will not accomplish what needs to be accomplished to turnaround the enterprise. Vague promises of vague objectives lead to vague strategies with vague commitment to vague outcomes.
For organizational alignment and commitment, Hain Celestial Group must Be SMART. Have the following:
· Specific brand purpose and brand promise
· Measurable objectives
· Ambitious and achievable
· Relevant, clearly defined action plan
· Time-dependent
It is critical that Hain Celestial Group “get on the right track.” It has actually been almost 10 years since the inception of Project Terra. Where is Hain Celestial Group headed?
If you do not know where you are going, any road will take you there.
Last, but not least, Hain Celestial Group needs a Plan to Win. Without knowing the details of Hain Celestial Group’s past decade’s worth of strategic realignment, from an outside perspective, there does seem to be a sense of haphazardness. Look into Project Terra. All indications are that Project Terra had the same goals as last year’s and this year’s stated strategic actions.
The purpose of the Plan to Win is to achieve consistency, alignment and focus. A Plan to Win puts the Purpose, the Promise, the Actions, and the Performance metrics on a single page so that everyone can be on the same page.
Without a cohesive Plan to Win, actions seem to be purposeless, haphazard and sometimes illogical.
The Plan to Win begins with defining Hain Celestial Group’s Brand Purpose and Brand Promise. This means answering these questions: 1) what are we trying to achieve, and 2) what is the promised experience for our customers?
Once Purpose and Promise are defined, what are the actions for delivering the Brand Promise to achieve the Brand Purpose? Effectiveness of a Brand Purpose and Promise is not determined by good intentions. Effectiveness is achieved by actions taken. The Five Action Ps are: People, Products, Place, Price and Promotion. The Five Action Ps define how the organization will deliver the Brand Promise to yield more customers, more often, more brand loyal, more profit.
Brand revitalization means reinvention across all Five Action Ps.
People: Employees are the most important assets of any business. They are the frontline when it comes to customer relationships, especially in a service business. Internal brand pride is a critical success factor affecting external brand attitudes. Where is the plan for Hain Celestial Group’s alignment?
Product (and Service): The tangible evidence of the truth of the Brand Promise. Hain Celestial Group and each of its brands must be relevantly differentiated, delivering superior customer-perceived value. Continuous renovation and innovation are imperative for success. Product and service renovation and innovation are keys to sustainable profitable growth.
Place: This refers to any location where the customer interacts with the brand. It can be a physical location as well as a virtual one on any device possible. Wherever and whatever it is, place is the face of the brand.
Price: Price is not value. It is a component of the customer’s perceived value equation. Value is determined by the total branded experience a customer expects (functional, emotional, and social benefits) multiplied by trust for the costs spent (in terms of time, money [price], and effort).
Promotion: This is about creating an integrated approach to raising awareness, familiarity, and preference of the brand. Promotion includes every communication on behalf of the brand.
The final P is Performance: the measurable milestones. These metrics will be used to evaluate progress toward the achievement of the brand purpose and promise through implementation of the activities of the Five Action P’s. As of this last reporting, and relative to its previous performance, Hain Celestial Group is not making progress.
Hain Celestial Group has a huge challenge. Whatever the current strategy, Hain Celestial Group should follow the turnaround plan strategy of :
- Stop the bleeding
- Clarify and define the Hain Celestial Group purpose and promise, including purpose and promise for each of its brands
- Achieve cultural alignment
- Define an immediate 90-day plan:
Be Bold
Define the new focus
Create the single page Plan to Win
Dramatize internally
Dramatize externally
Reallocate resources
- Implement the Plan to Win
- Define the SMART objectives
Hain Celestial Group has an astronomical challenge. They need an urgent turnaround strategy with a Plan to Win in order to generate stellar performance.
Contributed to Branding Strategy Insider by: Joan Kiddon, Partner, The Blake Project, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I
At The Blake Project, we help clients worldwide, in all stages of development, define and articulate what makes them competitive and valuable at pivotal moments of change. Please email us to learn how we can help you compete differently.
Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth, and Brand Education
Post Views: 27
