Hain Celestial Group reported fourth-quarter earnings this week, with net sales of $222.8 million and net income of $6.7 million. For the full fiscal year ended June 30, Hain earned $28.6 million on $917 million in sales. Irwin Simon, Hain’s President and CEO, attributed the company’s strong performance to sales momentum in North America and Europe, and improving consumption trends for healthy foods overall. According to company statements, Hain generated $18 million in sales from new products at Hain Celestial U.S., and recent acquisitions (Sensible Portions, Greek Gods Yogurt) position the company in high-growth categories with natural products complementary to core product offerings.

Wall Street responded favorably to the news, sending Hain’s stock up about 4%. Analysts also responded favorably to improved guidance from Hain for FY2011 by raising their estimates for sales and earnings per share. Hain upped its revenue guidance for FY2011 to $1.025-$1.05 billion, and earnings per share guidance to $1.24-$1.31.

NBJ spoke to Simon a few weeks ago in reporting our current issue on the finance & investment climate for nutrition companies. When asked about his company’s strategic response to the economic downturn, Simon said: “When the turndown hit a year and a half ago, we saw the consumer trading down and buying private label, so we knew we had to take our products to other classes of trade. Our model shifted to go out to more and more of the mass market. At the same time, we continued to work closely with Whole Foods on innovation, new products, and pricing to make sure there was value there. Whole Foods is our biggest retail customer today, so that was clearly important. There’s good growth among the mass market, good growth among club stores, and we are absolutely seeing growth come back in certain retail supermarkets.”

Two industry analysts would concur with this optimistic outlook. Scott Van Winkle of Canaccord Genuity sees reaccelerating growth for Hain. “I’m expecting much better sales and earnings performance over the next 12 months,” said Van Winkle. Andy Wolf of BB&T Capital Markets thinks the company’s recent moves in the U.K. will turn that business around to at least break-even status. “Hain is really well positioned to have a good turnaround in the next couple of years,” said Wolf. “The stock performance has lagged, but we think it could play catchup.”

Wolf also sees the investment in Hain by Carl Icahn—Icahn owns about 5.65 million shares representing about 14% of the company—as a way to bring more financial acumen to an already well-run company. We asked Simon about that investment from Icahn. “I think Carl Icahn is a smart guy,” said Simon. “He likes what we’re doing and likes our brands. I look at him as an opportunistic investor. This is one of his first forays into this category. I think he walked around Whole Foods, saw our presence there, and that’s what got him excited.”

NBJ tackles consumer research in our next issue, slated for publication in September. We’ll focus our critical eye on the modern wellness consumer, and strategies to best utilize research to meet a complex array of global consumer demands.

Related NBJ links:

The Hain Celestial Group’s Irwin Simon Talks Acquisitions with NBJ

2010 Healthy Foods Report

2010 Nutrition Industry Overview Archived Web Seminar

NBJ tackles the complex topic of finance & investment in the nutrition industry with our next issue, now on its way to the printer. As we digest all of the research and trending that surfaced in the reporting of that issue, expect some discussion in the coming weeks on the blog about such topics as holistic investing, moving upstream through the murky waters of deal flow, and the modern challenges of being a nutrition entrepreneur. Today, though, let’s talk about the equity markets.

I spoke to Scott Van Winkle of Canaccord Genuity and, on a separate call, Andy Wolf of BB&T Capital Markets to gain some visibility into smart money’s opinion of the road ahead for nutrition stocks. Excerpts from those conversations follow below.

NBJ: Let’s look at the major industry categories in nutrition and talk about year-to-date performance. How about natural & organic foods?

Scott Van Winkle: In general, healthy-living stocks have outperformed the market this year. Natural & organic has the best sector performance, up about 12%. These stocks didn’t start to come back until later in the cycle, but now they are beginning to reflect improved growth in the category.

Andy Wolf: Natural & organic is about 80-90% recovered, in terms of underlying growth trends. It’s really come back as a category. You can see it in the industry numbers and in the company numbers. There’s been a little bit of channel play, and you can still see some slack in demand at conventional stores, but that too is starting to show a rebound. The demand never went away for natural & organic, but in the recession, even dedicated users were worried about finances. Now most of them have made the budget allocation and returned to the category.

NBJ: And supplements?

SVW: Supplements are down about 12%, but the 40% move in NBTY improves that number dramatically. Supplements performed well last year with strong industry trends, and those trends persist, but investors lack faith. Strong category growth brings increased competition, and as we anniversary the jump in sales from swine flu, people expect a slow down. Vitamins were up 18% in October/November 2009. That kind of growth was obviously driven by the cold and flu season, in turn driven by swine flu.

AW: Supplements have had a multi-year run as consumers adopt these healthy lifestyle choices. People want to live better and feel better. Supplements also enjoy a countercyclical demand. As unemployment goes up and consumers lose more health-care benefits, more people use supplements as a substitute for doctor visits—which are down, by the way. It’s a prophylactic approach. Demand looks robust to me across all sales channels for supplements.

NBJ: What are you seeing for multi-level marketers (MLM) and ingredient suppliers?

SVW: Ingredients are up about 3% through the end of July. Last year, the farther down the supply chain you were from the consumer, the likelier you were to see your customers deload or reduce inventory. Ingredient suppliers had a tough time in 2009. There weren’t a lot of new product launches, and customers were cleaning out their inventories. There are signs of more aggressive ordering now, so the fundamental businesses are stronger than they were coming out of last year.

As for MLMs, they’re up about 5%. These stocks outperformed early, because their business was stronger on a relative basis. With weak economics, everybody buys less, but there’s more unemployment and more people looking for part-time work. In a weak economic cycle, more new distributors come online, even though their average sales level drops. Net-net, MLMs were less impacted by global economic issues.

NBJ: What about functional foods?

AW: Functional foods have really lagged. Why? Mix. Most functional products are sold through conventional stores, and demand hasn’t picked up as well in the mass market. I don’t see a real recovery for functional foods until the broader economic recovery is more firmly entrenched sometime in 2011.

NBJ: Looking ahead, where do you see the best performance and the biggest challenges?

AW: The big issue for 2011 is converts. For 20 years now, consumers have been moving, in one way or another, from conventional to organic. The demand curve is still there, but all of the core customers have already come back. Whole Foods Market and other retailers are seeing new customers come into the channel, but for that to continue, well, the economy will have something to say about that as well.

SVW: Retailers are in a very good position in general. They are demanding price concessions from suppliers, and suppliers are giving them. Whole Foods Market and Vitamin Shoppe are in good position, thanks to this competitive advantage over suppliers. Over the next six to 12 months, I think the MLM sector is going to perform quite well. Natural foods will perform well. Supplements will tread water due to Wall Street’s impression of decelerating growth.

Related links:

Quick Take on NBTY Acquisition

2010 Healthy Foods Report

2010 Direct-to-Consumer Selling in the Nutrition Industry Report

Despite good intentions and a deepening understanding of nutrition and wellness, I know I’m not as healthy as I could be. As it turns out, I’m not alone. According to a new report published by Delicious Living and iVillage, most women in the United States see themselves as being only “somewhat” healthy—or worse.

“Although it may not be literally true that these women are ‘unhealthy,’ it is certain that the vast majority see room for improvement,” write the authors of the report, For Women, Healthy Is Not What You Think. “Thus, healthy food is not only intended to help maintain health; it needs to move them ‘in the right direction’ relative to their current states. This is true of younger women as well as older women.”

Published in April, the report is based on the findings from a survey of nearly 5,000 U.S. consumers—91% of them women—conducted in February 2010. The survey was designed to gauge the health attitudes, beliefs, priorities and purchasing behavior of U.S. women of all ages. From this research emerged many interesting findings about how female consumers define health and wellness; what drives them to pursue healthier choices at different points in their lives; and how these definitions and motivations affect their interpretations of label claims and ingredient attributes and purchases of specific products and brands.

Not surprisingly, U.S. women view consuming healthy food as the most important way they can support their own health and the health of their families. As a result, the majority of women say they avoid food products that contain trans fats, saturated fats, high fructose corn syrup and MSG. A smaller, but still significant, percentage of women say they avoid genetically modified foods. When evaluating label claims, the survey found that products labeled as “high fiber” are most sought out by women, followed by “reduced fat or fat free” and “low sodium.” These three claims and numerous others were ranked higher than both “organic” and “natural” by women of all ages in the survey.

Although I learned a great deal about how age and health conditions affect the beliefs, attitudes and behaviors of U.S. women from reading For Women, Healthy Is Not What You Think, perhaps the most eye-opening findings from the report had to do with perceptions surrounding natural and organic. For example, 67% of the survey respondents said they believe “natural foods are better for me,” while only 57% reported believing that “organic foods are better for me.” That said, those women who purchase organic products are more active and informed consumers and generally feel better about their health than other consumers.

Nutrition Business Journal will present a deeper dive into this and other consumer research related to nutrition, health and wellness, natural & organic products, and dietary supplements in our September 2010 issue. If you’re not yet an NBJ subscriber, visit our website to learn more.

You can also purchase or read the table of contents and executive summary of For Women, Healthy Is Not What You Think via the NBJ site.

Related NBJ links:

March 2010: Organic Foods, Beverages and Personal Care

2009 Healthy Kids’ Market Report: Breaking the Entry Barrier

Marketing to Busy Moms Requires an Integrated Approach

Processed food has become synonymous with the Western diet—and, although their products are generally healthier than the conventional potato chips and toaster pastries sold to Americans, natural & organic food companies are playing a part in enabling U.S. consumers to easily choose packaged options laden with fat, sugar and salt over healthier fresh foods.

According to an April 4 New York Times article, Americans consume 31% more packaged food than fresh food and much more processed food than people from nearly every other country in the world. The average American eats a total of 787 pounds of packaged foods, such as frozen meals, condiments, soups and baked goods, while consuming only 602 pounds of fresh vegetables, fruits, eggs, nuts, beans, meat, poultry and fish. On average, Spain, France and Mexico also each consume more packaged than fresh food per capita. In comparison, the average Chinese citizen eats 1,034 pounds of fresh foods and 116 pounds of packaged foods.

Of course, eating a diet made up predominantly of what celebrity chef Jamie Oliver has termed “processed crap” often leads to obesity and a cascade of serious, long-term health maladies, including cardiovascular disease and diabetes. “Processed foods contain large amounts of fat, salt and sugar, and Americans have become addicted to them,” T. Colin Campbell, a nutritionist at Cornell University, told the New York Times. “There is a lot of money tied up in the [packaged food] industry because it is profitable for companies to make these foods.” Americans also gravitate toward processed food because it is convenient and fits into a non-stop lifestyle that is spent in the car or in front of the computer or TV.

If you attended this year’s Natural Products Expo West tradeshow, you know the natural & organic food industry—like the overall U.S. food industry—is all about packaged convenience. I was amazed at the number of products designed to help people consume more antioxidants and other nutrients associated with fruits and vegetables without having to actually eat a fresh fruit or vegetable.

Although most of the natural & organic products sold in the United States are much healthier than their conventional counterparts, the industry is still guilty of peddling food and beverage products that are contributing to—rather than helping to prevent—America’s health crisis. This was a point Whole Foods Market CEO John Mackey lamented last summer when he acknowledged that his company now sells “a bunch of junk”—or in other words, food that, while natural or organic, is still loaded with fat, sugar and salt.

Whole Foods’ new campaign to “Retake Our Plates!”—which is devoted to encouraging food system reform and educating consumers on how to make healthier food choices—is certainly a step in the right direction. But this and other natural food retailers and really the entire natural & organic industry must do more to clean up the products they are selling to American consumers. And, at some point, rather than spending oodles of money to position highly processed food as being more nutritious, wouldn’t it be better to simply encourage people to enjoy the taste and goodness of fresh food?

As more consumers wise up to the fact that they are what they eat, those companies and retailers that can provide truly healthy alternatives that incorporate fresh over processed whenever possible will be in a good position to boost their bottom lines while helping the United States cope with its ballooning health crisis.

Related NBJ links:

March 2010: Organic Foods, Beverages and Personal Care

Much Work Remains in U.S. Diabesity War, Author Says

2010 Functional Food and Beverage Web Seminar

Renegade Lunch Lady Takes on School Lunch Programs

The National Institutes of Health (NIH), an agency of the U.S. Department of Health and Human Services, announced the results of a 2007 survey that showed Americans spent $33.9 billion on integrative medicine, or complementary & alternative medicine (CAM) as it is commonly referred to, over the previous 12 months. That represents nearly 1.5% of total healthcare expenditures and 11.2% of total out-of-pocket healthcare expenditures in the United States. The CAM portion of the 2007 National Health Interview Survey (NHIS) was sponsored by the National Center for Complementary and Alternative Medicine (NCCAM) and concluded that approximately 38% of adults use some form of integrative medicine.

U.S. adults spent $11.9 billion on 354 million visits to practitioners. Approximately $15 billion or 44% of all integrative medicine out-of-pocket expenses were spent on non-vitamin, non-mineral, natural products such as fish oil, glucosamine and echinacea, according to NIH and NCCAM. The survey asked participants about 45 dietary supplements, including androstenedione, carnitine, creatine, DHEA, fish oils, glucosamine, lutein, lycopene, melatonin, omega fatty acids, prebiotics or probiotics and SAM-e, but not vitamins or minerals. “With so many Americans using and spending money on CAM therapies, it is extremely important to know whether the products and practices they use are safe and effective,” said Josephine Briggs, MD, director of NCCAM. “This underscores the importance of conducting rigorous research and providing evidence-based information on CAM so that health care providers and the public can make well-informed decisions.”

More than 1.3 billion integrative medicine healthcare practitioners operate in the United States, according to Nutrition Business Journal estimates. The total number of practitioners grew 3.8% in 2007, indicating a growing acceptance of alternative therapies and treatment options in the country. Medical doctors and nurses represent the largest portion of integrative medicine practitioners, with more than 700,000 now offering some form of integrative therapy or treatment, according to NBJ research. NBJ forecasts indicate that the number of U.S. integrative medicine practitioners could expand by more than 40% over the next 10 years.

NBJ offers a 10-year historical analysis of the U.S. integrative medicine market, including supplement sales and therapy revenues by healthcare practitioner type in the 2009 Integrative Medicine Report. It can be of value to health care professionals, business planners, investors, product developers, ingredient suppliers and others requiring an accurate snapshot, a reliable forecast and a comprehensive reference on the integrative medicine business.

Related Links:

If the Science is There, Obama Says He Will Back Complementary & Alternative Therapies

Briggs: Supplement Use Is Being Influenced by Science

The Inclusion of CAM in the Classroom is changing the Face of Medical Education