This chapter is about a firm’s business-level strategy, and what it takes to be successful in
creating a strategy that allows a firm to compete successfully in a particular industry or industry
segment. Hain Celestial Group is an example of a differentiation strategy at the business level.
Differentiation is a business-level strategy that will be defined more clearly in this chapter. Brief-
ly, it allows a firm to be differentiated from its competitors and allows it to build a loyal follow-
ing of customers. As indicated in Chapter 2, consumers often follow social trends. Hain Celestial
Group has built strong capabilities in producing natural and organic foods, and it has built its
strategy to take advantage of this changing consumer trend in the food business across a
number of related industries: consumer food producers, grocery stores, and restaurants.
Hain Celestial’s CEO, Irwin Simon, founded the company in 1983 and it went public in 1993.
The company grew through a series of acquisitions of small organic and natural foods producers.
These acquisitions, as
Simon’s puts it, are “not GE
or Heinz or Campbells’ ....
Growth is coming from
companies like Ell’s and
BluePrint—entrepreneurial
start-ups.” The largest ac-
quisition to date was Ce-
lestial Seasonings which
is a supplier of teas and
juices. The effect of these
acquisitions has allowed
Hain Celestial to become
the largest supplier to
natural food retailer
Whole Foods Markets.
BluePrint, the company
noted above, is focused
on natural juices market-
ed to consumers to ‘clean’
their bodies. Brands like Terra vegetable chips, Dream nondairy milk, and Celestial Seasonings
tea are household names for the health-oriented shopper and these brands have made
Hain Celestial the largest natural foods company in the world.
The natural food trend has allowed Hain Celestial to sell their branded products to tradi-
tional grocery store chains, which account for about 60 percent of its U.S. sales. Its brands are
also having an impact on sales outside of the United States, representing approximately
40 percent of total revenues in 2014. Their successful acquisition strategy has focused on
“buying brands started by someone else” and then “figure out how to grow them from there.”
Meanwhile, large branded food firms that have not focused as intensely on this natural
segment have experienced earning “indigestion.” Branded packaged food producers such
as Kellogg’s Company (maker of breakfast cereals and foods including Frosted Flakes and
Pop-Tarts), Kraft Foods Group (maker of Oscar Meyer deli meats, Maxwell House coffee, and
Velveeta cheese), Campbell Soup Company (Campbell’s Soup, Pepperidge Farm, and Goldfish
snacks), ConAgra Foods, Inc. (maker of Chef Boyardee ravioli, Hunt’s ketchup, Marie Callender’s
pies and snacks, Orville Redenbacher’s popcorn, PAM nonstick cooking spray, and Peter Pan
peanut butter), J.M. Smucker Company (makers of Smucker’s jams and jellies, Pillsbury baking
mixes, Crisco shortening, Jif peanut butter, and Folgers coffee), and Mondelēz International,
Inc. (maker of Oreo cookies and Cadbury chocolate) only have a peripheral focus on this seg-
ment. Their earnings have stalled in part because their brands are not focused on the natural
and organic trend desired by consumers as much as Hain Celestial, whose earnings and stock
price has climbed much higher on a relative basis. Of course, U.S. main-line brand firms such as
those mentioned above have experienced a downturn in earning from the increased value of
the dollar, but Hain Celestial also has substantial foreign exposure, as noted above.
HAIN CELESTIAL GROUP: A FIRM FOCUSED
ON “ORGANIC” DIFFERENTIATIONBob Kreisel/Alamy