Natural Products Mega-Brand Hain Celestial Group Buys Avalon Natural Products Inc

Hain Celestial Group, famous for Celestial Seasonings, Arrowhead Mills, and WestSoy natural food products, is building its personal care potential by adding Avalon Natural Products to its lines. Avalon makes not only its Avalon Organics line, but also the popular Alba Botanica range as well. Avalon is a leader in the natural products category in the areas of skin care, hair care, bath and body, and sun care.

"The acquisition of the Avalon Organics and Alba Botanica brands will strengthen Hain Celestial as one of the leading natural and organic personal care products companies in a category that is experiencing double-digit growth," said Irwin D. Simon, president and CEO, The Hain Celestial Group. "With this acquisition, Hain Celestial will have a strong foundation in the personal care market with sales of $125 million."

"We expect that the combination of these brands will bring meaningful improvements to our business, including double-digit personal care revenue growth and overall gross margin and operating income margin enhancements. Our transformed personal care unit will be a stronger contributor to our future success as we move toward achieving our operating goals. We believe that with the growth in the category and these brands, that after we achieve the synergies we anticipate, particularly in the supply chain, the EBITDA performance of the acquired brands will be in line with our traditional acquisition multiples," said Simon. Avalon's management team, led by Chief Executive Gil Pritchard will be joining forces with Hain Celestial Group to further the success of its personal care lines.

Avalon Organics has recovered from some controversy stirred by its claim "70% Organic" on product labels and advertising. Though Avalon has removed the claim from packaging now being distributed, ads in Vegetarian Times, Natural Food Advertiser and Lotus Light continued to carry the claim for some time afterward. Organic Consumers Association (OCA) issued a letter questioning the practice and received a rather tepid response about Avalon wanting to boost sales to sell through products with the old packaging. Avalon has since complied with the request to be more accurate in their claims, but their credibility took quite a hit in the natural personal care market.

Everyone wants a piece of the (all-natural) pie

"Natural & organic is the fastest growing sector of the European personal care products industry, expanding by over 20% a year. Consumers are turning to natural products because of concern about chemicals in cosmetics & toiletries and the quality of natural & organic ingredients," according to Organic Monitor (MarketResearch.com).

Heavy hitters like L'Oreal (who just bought The Body Shop), Estee Lauder (owners of Aveda and Origins), and Colgate (acquired Tom's of Maine) are making "natural personal care" an increasingly tough field in which to compete. Though there are still a number of independent natural product producers, like Burt's Bees, they are becoming the exception rather than the rule.

The prestige market is waiting to see how Stella McCartney's all-natural line, Care (license-holder YSL Beaute), fairs with their consumers. Care will launch in limited doors February, 2007. Another line, Gorgeous from Australia, has debuted at www.alchemistsapprentice.com and features a luxurious cream called "Gorgeous Over Thirty Bunches Of Real Roses In A Jar Double Blended Cream®" - for $160.

Another niche market making its presence known is the men's personal care market. Natural ingredients strike a chord with male consumers, and lines like Aubrey Organics, Weleda, and "J/A/S/O/N", that make high quality, effective products for men, see strong brand loyalty from those consumers. Jackie Chan has launched his own skin care line which may hit it big by combining luxury organic ingredients with a male fan base. His line can be found at www.jackiechan.com.