Hain Celestial has completed the sale of its two North American non-dairy beverage brands, Dream and Westsoy, to SunOpta for $33 million, the company announced yesterday.
In pivoting away from plant-based beverages, Hain Celestial continues its years-long process of cutting costs and realigning its CPG portfolio around its highest-performing core brands. That process has seen the publicly traded company jettison brands like premium cold-pressed juice maker BluePrint and sell off others like Tilda, Arrowhead Mills and Rudi’s Bakery. During a call with analysts in February, Hain Celestial president and CEO Mark L. Schiller said the cuts had generated $430 million in proceeds thus far, a portion of which has been used to reduce the company’s debt. Meanwhile, the company’s dairy yogurt brand, Greek Gods, has been one of its growth drivers, helping push the company to a 1% increase in net sales in Q4 2020.
In a press release yesterday, Schiller called the sale of Dream and Westsoy an “example of what has been an ongoing transformation of our brand portfolio.”
“We considered this business to be non-core within our North American business, and as such, this divestiture fully aligns with both our portfolio simplification process and prioritization efforts of our Get Bigger brands,” he said. “Additionally, this transaction improves our growth profile without impacting the profit margin for the remaining Hain Celestial business, providing us with increased confidence in our ability to continue to enhance shareholder returns over the long-term.”
Within that Hain’s product mix, Dream and Westsoy had slightly different positions. The former, launched in 1982, offers plant-based “milks” (almond, soy, oat, rice and coconut) in shelf-stable cartons, with multiple flavors under each banner, as well as a rice-based RTD horchata. According to a press release, Dream is the number two brand of shelf-stable plant-based milks. Meanwhile, Westsoy is the only branded shelf-stable soy beverage with a USDA organic certification and the American Heart Association certification of a heart-healthy product, the company said.
For SunOpta, adding Dream and Westsoy to its portfolio allows the company to deepen its presence in the $7 billion plant-based category with minimal overhaul; the Toronto-based manufacturer currently produces around 50% of Dream’s portfolio and 100% of Westsoy’s products. The two brands, along with the recently launched oat-based creamer line SOWN, fit with SunOpta CEO Joseph D. Ennen’s stated goal of adding $100 million in plant-based revenue in the next two years (and doubling the business over the next five years). The company has also done some divesting of its own — selling off its minerals, corn, soy and, most recently, global ingredients divisions — and reinvesting funds in its plant-based business.
“This transaction is very consistent with our previously stated objective of pursuing strong organic and inorganic growth in our plant-based business,” said Ennen yesterday in a press release. “As previously communicated, our interest in brands is to allow the acceleration of innovation by giving us platforms to pursue emerging or niche opportunities.
He added that Dream and Westsoy were “an obvious fit” because of the companies’ existing relationship, calling them both “niche brands that complement, but do not directly compete with” SunOpta’s co-packing clients.
“These leading brands will receive the appropriate attention within SunOpta, along with an objective of developing growth opportunities for each of the Dream and WestSoy branded product,” Ennen said.
The company’s approach has begun to yield results: SunOpta’s Plant-Based Foods and Beverages division now represents around 75% of the company’s total gross profit, the company said, and generated $415 million for the full year 2020, a year-over-year increase of 15%. To support its further growth ambitions, in February the manufacturer announced new capacity expansion at its Allentown, Pennsylvania facility that, when added to broadening its extraction and packaging capabilities during Q4 2020, “provides ample runway to support our plant-based growth plan through 2022.” That includes capability for producing oat milk-based ice cream and yogurt, as well as other applications.
Speaking during an earnings call in March, Ennen said the company wants to “surgically use SunOpta-owned brands as a vehicle to bring innovation to market faster,” citing the launch of SOWN as an example of the company attacking a white space in the market. Outside of plant-based, the company introduced arbor, a line of fruit snacking bars, in August.
He added that, while seeing owned brands “as augmenting our current customer focus,” the company remains committed to co-packing and private label as its “primary business.”