The just-food interview – David Arrow, Hain Celestial
The organic and natural food sector is clearly a growth area, led by specialists such as US-based Hain Celestial, and attracting investment from mainstream food producers. In the first of a new monthly series of interviews with key industry figures, Dean Best met David Arrow, managing director of Hain Celestial’s UK operations, to discuss the company’s plans for the UK.
Health and wellbeing, food provenance, ethical consumerism: all terms thrown around by marketers to describe the changing consumer landscape in the UK food industry. While the extent of change can be over-stated, there is little doubt that more consumers want to eat healthier and have an eye on how their consumption is affecting the environment.
A year after entering the UK, Hain Celestial, the US-based organic and natural foods producer, believes now is the time for the company truly to make its mark this side of the pond. That’s the message from David Arrow, the managing director of Hain Celestial’s UK operations.
“The UK is a natural fit for Hain Celestial. The consumer trends in terms of natural and organic are there,” Arrow tells just-food at the company’s UK base in Luton. “I can only see the UK market moving closer to Hain Celestial’s core values. With the continued sophistication of consumers, they will be constantly more discerning and more demanding of the products they’ve purchased – and that’s good for us.”
Hain Celestial’s entry into the UK last year was the latest stage in its rapid expansion. Since its birth in 1993, the group has acquired a raft of companies in the US and Europe, growing its turnover to US$740m, 80% of which is in the US. While Hain Celestial has been operating in Europe since 2001, it has recently ramped up its presence in the UK, acquiring three businesses and building what Arrow describes as “a meaningful presence” in the country.
Arrow has spent 20 years in the UK food industry, working for vegetarian and organic specialist Cauldron Foods before it was sold to Premier Foods in 2005. He joined Hain Celestial as it was looking to enter the UK and the effusive Liverpudlian is optimistic about the company’s prospects in the UK
“There’s lot of potential. Consumers are becoming more sophisticated,” Arrow insists. “We’re looking to clearly establish Hain Celestial as a credible supplier into the UK market and utilise some of the hero brands from the US that are appropriate for the UK. We’ve got some market-leading brands in the US, the likes of Earth’s Best, Spectrum, Arrowhead Mills. Some of those will translate into the UK, some of them won’t, and we’re doing some strategic mapping at the moment to see where the best fit is.”
The new-look Linda McCartney range
Arrow has great belief in one brand which has something of a chequered history in the UK – the Linda McCartney range of frozen meat-free products. The brand has undergone something of a radical makeover since Hain Celestial acquired it last year. Arrow admits the brand needed refreshing to revive its consumer appeal. “It has a more relevant brand message now,” he says. “The packaging is more about food rather than a manufactured product. The recipes are healthier, they’ve got more natural ingredients and they’re more upmarket.”
Arrow admits, however, that a lot of work needs to be done to attract consumers back to the frozen foods category. Frozen foods have something of a bad press in the UK: they are perceived as low-quality products and inferior to their counterparts in the chilled category in terms of taste and health credentials. Innovation, Arrow argues, will be vital in breathing life back into the sector.
“There’s been a lack of innovation. Frozen food has got the perception of being a deal category where high volume is sold on promotion,” Arrow says. “It takes time to change the mindset of the consumer and it’s only innovation that will change that and bring people back.”
Arrow praises the likes of Birds Eye and Young’s for trying to convince consumers that frozen foods can be healthy and of high quality. “Big branded players are bringing innovation back into frozen foods and that’s what it needs. I genuinely think that the vast majority of people are frozen friendly; they’ve just fallen out of love with certain categories.”
However, Arrow’s admiration for Hain Celestial’s larger rivals does not readily extend across the whole of the company’s business. Hain Celestial has been at the forefront of the growth of natural and organic foods in the US and is looking to be a pioneer in the UK too. But where there’s rapid growth, interest from bigger food companies will follow.
Like most canny executives, Arrow initially maintains he would welcome competition from those with perhaps more marketing muscle than Hain Celestial. “Any trade spend in the categories that we operate in – and which brings consumers into the category – has got to be good news,” he says. But Arrow warns that consumers may become cynical of attempts by some larger food companies to tap into growing demand for more natural and organic products. Consumers, he believes, are wary of brand-owners, renowned for operating in less healthy categories, suddenly climbing on the band-wagon.
Hain Celestial, Arrow argues, is not carrying that kind of baggage. “Hain Celestial has its core values in health, in natural and in organic. The business grew from that platform. It didn’t react to a market trend or a fad; it actually drove a lot of those consumer trends in the US.”
But judging the strength of consumer interest in natural and organic in the UK is problematic. It could be that consumers are holding back from switching to – or at least buying more – natural and organic products because of the higher prices they command. If so, it’s hard to judge the potential either for the sector or for Hain Celestial in the UK.
Arrow acknowledges that those with more disposable income are more likely to buy organic. He cites a survey from last year, which claimed that while 65% of consumers perceived organic foods to be healthier, only 9% were regular consumers of organic products.
“Why do three-quarters of consumers perceive organic to be healthy but only one in ten shop the fixture?” Arrow wonders. “You can’t get away from the fact that price has got to be one of the key barriers.”
However, when asked if Hain Celestial would tackle this directly by being more flexible on price, Arrow gives a cagey answer. “Where we can, we’re willing to invest in organic because we believe in it and we see it as a long-term play,” he says. “If you’re pricing consumers who want to come in out of the market, they’ll stay out of the market.”
Moreover, with organic food production more expensive than conventional manufacturing, it would be difficult for Hain Celestial to be too accommodating on price. Rather, Arrow says, the company wants to give organic consumers more “added-value” products, including soups and ready meals.
“Over 50% of organic sales come through fruit, vegetables and dairy, which are primarily commodity and unbranded,” Arrow says. “As the market develops and evolves, consumers will be looking for convenient, healthy, added-value alternatives to standard products. We’re looking at that next plane. We’ve demonstrated we can deliver it in the US.”
And Arrow promises the work won’t stop there. Hain Celestial is already eyeing its next acquisition targets in the UK and Europe. “Hain is looking to have a global presence,” he says. “Over the next two to three years, we're looking at at least another two to three acquisitions, which are either stand-alone or bolt-on and which would be complementary to what we're doing here.” He is, however, tight-lipped on the company's intentions. “There are certain businesses we've got a focus on. Whether they are available, time will tell.”
Nevertheless, just a year after entering the UK, Hain Celestial – and Arrow – seem on target for big things.
The organic and natural food sector is clearly a growth area, led by specialists such as US-based Hain Celestial, and attracting investment from mainstream food producers. In the first of a new monthl...
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