Read the short end-of-chapter case on Hain Celestial Group on page 135 ch. 4 and answer questions in the following areas. 1. Evaluate Hain Celestials strategy and what would you have done differently to implement it? Detailed solutions please..

Mini-Case Hain Celestial Group: A Firm Focused on Organic Differentiation

Business-level strategy, this chapters focus, details actions a firm takes to compete successfully in a particular industry or industry segment by using its resources, capabilities, and core competencies to create a competitive advantage. Hain Celestial Group uses a differentiation strategy to compete against its rivals. As explained in this chapter, the differentiation strategy is one through which the firm seeks to differentiate itself from competitors in ways that create value for which target customers are willing to pay. By developing and using capabilities and competencies to produce and distribute unique types of natural and organic foods, Hain differentiates itself from competitors. Hains strategy takes advantage of a newly evolving preference among some consumers in terms of the types of food products they buy. This consumer preference change, which in essence is a preference for food that is healthier and in some cases more responsive to environmental challenges, affects a number of firms including those growing food products, grocery stores that sell those products, and restaurants in which people consume the products.

Irwin Simon is Hain Celestials founder and CEO. At the time of founding, Simon said that he knew that the choice to eat more wholesome foods and live a healthier lifestyle wasnt a fad or a trend. Its a transformation people want to make for the long term. The company grew through a series of acquisitions of small organic and natural foods producers. These acquisitions, as Simon puts it, are not GE or Heinz or Campbells . Growth is coming from companies like Ells and BluePrintentrepreneurial start-ups. The largest acquisition to date was Celestial Seasonings, a supplier of teas and juices. The firms successful acquisition strategy has focused on buying brands started by someone else and then figuring out how to grow them from there.

Through these acquisitions and the products associated with them and because of effective marketing programs, Hain is the largest supplier to natural food retailer Whole Foods Markets (now owned by Amazon). BluePrint, the company mentioned above, focuses on natural juices marketed to consumers to cleanse their bodies. Brands such as Terra vegetable chips, Dream non-dairy milk, and Celestial Seasonings tea are household names for the health-oriented shopper. Sales of Hains portfolio of products result in Hain Celestial being the worlds largest natural foods company.

The demand for natural food in general and for Hains products in particular finds Hain selling its branded products to traditional grocery store chains; these sales account for about 60 percent of the firms U.S. sales. In 2014, sales outside the United States accounted for the remaining 40 percent of Hains revenue.

Meanwhile, large branded food firms without as intense of a focus on natural food products are experiencing revenue and earnings challenges. Kraft Foods, Campbell Soup Company, and J.M. Smucker Company are examples of these firms. For these and similar firms, earnings have stalled in part because their brands do not focus on the natural and organic items that appeal to some of today customers, at least not to the degree that is the case for Hain Celestial. Partially because of this, Hains earnings and stock price have climbed much higher on a relative basis.

To deal with the slump in revenue and earnings, large branded firm companies are implementing different strategies. Smuckers, for example, acquired Big Heart Pet Foods (maker of Milk-Bone dog treats and Meow Mix cat food) as a means of entering the pet food market quickly. Others, such as Nestl (maker of Crunch and Butterfinger candy bars and other chocolates), are removing artificial ingredients such as colors and dyes from candy and chocolate. Hershey Company and Mars, Inc., which collectively account for approximately 65 percent of the global market share in packaged candy, are reducing the amount of high fructose corn syrup in their food items. Mondelz is seeking to reduce saturated fats and sodium in its snacks by 10 percent. However, these changes do not allow these firms to overcome the problem of rapidly changing consumer tastes toward organic and natural foods.

Grocery stores, such as Kroger, Safeway, and Walmart, are also seeking to enter the natural or organic segment. Given its commitment to using the cost leadership strategy, Walmarts decision to introduce low-priced organic foods is not surprising. Walmart is joining Wild Oats Marketplace (an independent producer in the natural food segment) to place about 100 organic products into its store and the Wild Oats line will be priced 25 percent lower than competing national organic brands. Competition from a firm with success using the cost leadership strategy (such as Walmart) will challenge Hain Celestial to emphasize the value of differentiated products to customers wanting to purchase natural or organic.

The trend toward organic foods is occurring in restaurants as well. Chipotle Mexican Grill, Inc., for example, commits to providing customers with Food with Integrity. For Chipotle, this means serving foods made with local, sustainably produced organic products and using meats from naturally raisednot factory farmanimals.

To address what had become somewhat unimpressive sales growth beginning in 2016, Hain Celestial contemplated the possibility of selling its organic meat businesses in mid-2018. Instead of meats, executives evaluated the possibility of expanding the firms efforts to provide protein options to customers through some of its other products such as an array of organic nuts.

Sources: 2018, Founders message, Hain Celestial Homepage, www.hain.com, February 28; 2018, Hain Celestial reports second quarter fiscal year 2018 financial results, Hain Celestial Homepage, www.hain.com, February 7; A. Gasparro & A. Hufford, 2018, Hain looks to sell meat business as U.S. sales fall, Wall Street Journal, www.wsj.com, February 7; J. Bacon, 2015, Brands capitalize on health-driven resolutions, Marketing Week, www.marketingweek.com, January 29; A. Chen & A. Gasparro, 2015, Smuckers latest food firm hurt by changing tastes, Wall Street Journal, February 1415, B4; A. Gasparro, 2015, Indigestion hits food giants, Wall Street Journal, February 13, B1; A. Gasparro, 2015, Nestl bars artificial color, flavors, Wall Street Journal, February 18, B6; M. Esterl, 2015, PepsiCo earnings, revenue drop on foreign-exchange impact, Wall Street Journal, www.wsj.com, February 12; L. Light, 2015, How to revive McDonalds, Wall Street Journal, www.wsj.com, February 11; M. Alva, 2014, Organic growth comes naturally to Hain Celestial Group, Investors Business Daily, July 24, A5; A. Kingston, 2014, Juice junkies, Macleans, June 30, 6466; SCTWeek, 2014, Walmart to sell low-price organic food, 2014, SCTWeek, April 11, 4.