Hain Celestial has secured a listing at Tesco for UK soup brand New Covent Garden 12 months after the retail giant dropped the brand in a range review.
President and CEO Irwin Simon said the delisting last autumn had led to “a crappy year” for the company’s UK soup business. New Covent Garden soup would be back on Tesco shelves in October, which would help the company’s wider business in the UK.
“We had a crappy soup season in the UK last year and that hurt us. Having a much better soup season, we’ll change a lot of the dynamics in the UK,” Simon said. “Together with Tesco, we’ve agreed on a business plan to grow our soup category in the retailer.”
Hain Celestial, which yesterday (21 August) reported its annual results, saw its UK sales and profits jump in the year to the end of June on the back of its recent acquisitions in the country. In the last 12 months, it has snapped up businesses including Premier Foods plc brands like Hartley’s jam and Sun-Pat peanut butter, as well as baby food business Ella’s Kitchen, which the company snapped up in May.
Rob Burnett, CEO of Hain Celestial’s UK arm Hain Daniels, said the company planned to relaunch Hartley’s and Sun-Pat and add new lines to the brands’ portfolios. The company had, for example, secured listings with the UK’s Big Four grocers for its new one fruit portion products sold under its Hartley’s brand.
Burnett said Hain Celestial had also managed to boost parts of its own-label business, citing a larger jam contract with Sainsbury’s.
He added: “The UK ended fiscal year 2013 in an improved position, reflecting the positive efforts of our integration and restructuring, which we discussed and updated you on throughout the fiscal year. We now have strong momentum leading into fiscal year 2014 to help us achieve accelerated sales and profitable growth long term.”
Nevertheless, Hain Celestial’s UK margins lag its margins in the US. Speaking to the company’s management on a conference call to discuss its fourth-quarter and full-year results, Citi analyst Greg Badishkanian said UK margins were “around 9.3%” in the fourth quarter compared to approximately 15% in the US.
Asked if Hain Celestial’s UK business could get closer to the margin levels in the US, Simon said the company would benefit as it further integrated recent acquisitions in the country. He also said the renewed New Covent Garden soup listing in Tesco would help. “Do I think we will get to the US margins? We’ve got some work to do. But do I think the margins will improve dramatically in the UK. Yes, they will.”