With little ad support, sales of Terra vegetable chips and Garden of Eatin' organic tortilla chip brands have grown double-digits over the last year, each to nearly $30 million in mainstream supermarkets. This year, said Adam Levit, VP-snacks marketing, Hain, "the gloves come off."
Hain has signed on Blue Elephant, New York, the first-time agency-of-record for the brands, after a five-month review involving a handful of other agencies, and print and radio campaigns are slated for this fall for Terra and later in the year for Garden of Eatin'.
The healthier-alternative chip brands have long had full distribution in natural foods stores, but Hain has tried to bring the brands mainstream for years. Now, with a new plant for Terra intended to free the brand from production constraints, and a larger ad budget than the previous less-than-$1 million outlay, "we have the product and the funding to do it," Mr. Levit said.
Major chains like Kroger and Safeway have recently made commitments to carrying natural foods, causing grocery distribution for Hain products to soar, with the number of outlets up as high as 30% for Terra over the last year, he said. And, to ensure their place on supermarket shelves, Hain has "made a commitment to do everything we can to supports our brands," Mr. Levit said.
Hain had previously said it planned to extend the limited print campaign it launched in 2000 for Terra from Lotas Minard Patton McIver, New York, (AA, Sept. 18, 2000) pending the development of the new plant. Lotas Minard also handled a print effort in natural foods magazines for Garden of Eatin'.
The campaign for Terra will focus on the visual beauty of the product itself with the tagline, "The extraordinary colors of Terra. "Exact plans for Garden of Eatin', awarded to Blue Elephant shortly after it won the Terra business earlier this month, have not been determined, said Blue Elephant president Richard Ellenson.
finding the funds
The directive from Hain senior management, including Chairman, President and CEO Irwin Simon, has been to spend more to reach consumers, and with Terra especially, Mr. Levit said, that spending is imperative. "Our challenge on Terra is that not enough people know about it, but when they do, they come back and buy a bag," he said.
But finding funding for such spending has proved difficult. Though net sales for the company rose 12% for the nine months ended March 31, largely as a result of growth from Terra, Garden of Eatin' and refrigerated soy milk brand Westsoy, net income at Hain fell 25% to $15.8 million for the same period. The company's stock price fell to a 52-week low of $15.13 last week.
"[Hain] is a company that has gone through some growing pains," said Prudential Securities analyst John McMillin. The company is suffering from "a tea hangover," he said, after a lack of success with the Celestial Seasonings business it bought two years ago, and is just now "trying to get their feet wet in terms of major league marketing." Mr. McMillin said Hain has the potential to turn Terra into close to a $100 million business over the next few years as a result of the new plant, and the latest efforts are intended to "accelerate the growth of their fastest-growing businesses."
Rumors surfaced recently that H.J. Heinz Co., which owns an 18% stake in Hain, was interested in buying out the company. Both companies said the speculation was unfounded.