If you are a person of a certain age, you remember that a food revolution took hold in the late 1960’s. Put aside the visions of bell-bottom jeans, sandals, intentional communities, patchouli, macramé, jugs of California wine, beads, peace, love, rock n’ roll, and the 1969 NY Mets. Think brown rice, tofu, beans, seaweed, herbs, tahini, hummus, alfalfa sprouts, tempeh, miso, nut loaf, lentils, sesame and sunflower seeds.
One of the most iconic products of this food revolution was Red Zinger tea from Mo Siegel and Wyck Hay. Introduced in 1972, Red Zinger and its very popular sibling, Sleepytime, became the basis for Celestial Seasonings, a brand offering herbal teas, eventually adding other black, white, green, and chai teas as the brand grew. According to its website, Red Zinger tea combines hibiscus leaves, peppermint, orange, lemongrass, and wild cherry bark.
For a healthy brand, Celestial Seasonings has a rather hellish history. Over decades, the Celestial Seasonings brand suffered from being a pawn in a less than edenic, serpentine financial engineering game.
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Celestial Seasonings went public in in 1983. In 1984, Kraft Foods purchased Celestial Seasonings. Whatever the financial benefits of this sale, for serious, long-time drinkers of Red Zinger, it was a negative. The taste of Red Zinger changed.
Kraft Foods put Celestial Seasonings up for sale in 1986 intending to off-load Celestial Seasonings to Lipton Tea. Bigelow Tea stopped the Lipton purchase, appealing to US antitrust laws. In 1988, Kraft Foods eventually sold Celestial Seasonings to a venture capital firm.
The taste of Red Zinger returned to its roots (literally and figuratively) in 1991 when original founder Mo Siegel returned as CEO and Chairman.
The firm owning Celestial Seasonings merged Celestial Seasonings with Hain Food Group in 2000. Hain Food Group, founded in 1993, was an international food and personal care company. At the merger, the Hain Food Group company name changed to Hain Celestial.
Hain Food is another example of a company suffering from the poison of financial engineering.
Founded in 1993, Hain Food Group went public that year. In 1999, Heinz acquired close to 20% of Hain Food, but the brand in 2005. (During the interim, in 2000, Hain purchased Celestial Seasonings for just under $400 million, changing its corporate name to Hain Celestial.) Later in 2012, there were some financial discrepancies and Hain Celestial restated some numbers. At the same time, Hain Celestial was part of a class action suit in California. Hain Celestial apparently, and allegedly, mislabeled its personal care offerings violating California laws. Settled out of court, this was an expensive, millions-of-dollars experience for the company.
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(It is fascinating to notice that both Kraft Foods and HJ Heinz were both complicit in the financial shenanigans of both Celestial Seasonings and Hain Food Group. When these two massive food companies became Kraft Heinz, the owners instituted zero-based budgeting that basically disintegrated the iconic American brands in the combined portfolio. It took years, before management woke up to the fact that were no other places to cut costs. Some of the brands have not recovered to their glory days pre-merger due to incredible brand mismanagement.)
As reported in The Wall Street Journal, Hain Celestial now recognizes that years of financial engineering, redundancies in suppliers, divestitures, accumulation of debt, lack of resources for necessary brand building and multiple acquisitions (39 brands at last count) has created shareholder unrest due to underperformance.
The Hain Celestial CFO admitted this, “When you’re going through and doing all of these acquisitions and then divestitures, you’re not focusing necessarily on things like innovation. You’re not focusing on marketing.”
Investors, analysts and Wall Street want “improved margins and organic sales growth.” As one analyst stated to The Wall Street Journal, “ How much can they (Hain Celestial) extract out of the gross margin line?”
A focus on brand building, defined by Hain Celestial as innovation, distribution and marketing, is good news for the Hain Celestial portfolio. However, there is a sense from the public reporting that marketing means advertising. Innovation, distribution and advertising are not going to save the Celestial Seasonings brand.
Hopefully, Hain Celestial will focus on revitalizing the Celestial Seasonings brand. Adding melatonin or biotin to Sleepytime tea sounds interesting. But, first, work needs to happen on modernizing, contemporizing and rejuvenating the Celestial Seasonings brand which now sits on shelves laden with medicinal, wellness and body-health teas.
Here are three critical factors for high quality revenue growth. Yes, Hain Celestial is under pressure to focus on growth. But, there is high quality growth and there is low-quality growth. Low-quality growth can actually destroy a brand’s value even while revenues increase.
1. Restore Celestial Seasonings’ Brand Relevance
Remaining relevant in a changing world is critical to a brand’s health. Relevance is a key driver of purchase intent. Relevance means the brand is up-to-date and current in customers’ minds. Relevance means customers and potential customers see the brand as addressing their current needs. Relevance, along with differentiation, is necessary for defining brand value. “Is the branded experience I receive or expect to receive relevant and differentiated relative to other brands?”
Restoring relevance means knowing Celestial Seasonings’ market and articulating the relevant, differentiated, compelling brand promise. A brand promise describes what the brand is intended to stand for in the mind of a specific group of customers or prospective customers.
Why should a customer buy Celestial Seasonings? How is Celestial Seasonings relevant and differentiated from Yogi, Lipton, Bigelow, Stash, Traditional Medicinals, Tazo, Twining, Pukka brands? Why Sleepytime with Melatonin when there is Traditional Medicinals Nighty Night Extra with Valerian Root?
2. Reinvent The Celestial Seasonings Total Brand Experience
A brand’s total brand experience combines the brand’s functional benefits, emotional and social rewards, the values of its customer and the brand’s personality relative to the brand’s combined total costs of price, time and effort. In other words, “Buy this brand. Get this experience.”
Once there is articulation and agreement to the brand promise, focus on innovation, renovation, marketing, generation of trustworthy and fair brand value. Innovation and renovation are customer-based. That is, you begin with the customer needs or problems. Remember that marketing is all about profitably satisfying customer needs (problems). And, do this in a relevant, differentiated manner.
Again, relative to competition, Celestial Seasonings’ total brand experience probably needs to be re-articulated and communicated, internally and externally.
3. Rebuild Celestial Seasonings’ Brand Trust
Building trust as a source of organizational wealth is an important driver for enduring, profitable growth. A powerful brand is more than a trademark; it is a trustmark. Trust is an important prerequisite for building long-term brand loyalty. Without trust, there can be no brand loyalty. When you trust a brand, you become committed to it. Trust is the most important pre-requisite for building long-term brand loyalty. It facilitates persuasion and the acceptance of new information. Trust is a relationship criterion more than a transaction criterion.
An important contribution is Celestial Seasonings’ brand provenance. Celestial Seasonings’ provenance is its consistent, motivating, relevant, distinctive heritage, based on its past theme. The power of provenance is not about preserving everything from the past; it is about preserving the best of the past for the present and the future.
Provenance acts as a foundational source of confidence. Powerful brand relationships derive strength from provenance, connecting with a brand’s heritage and history.
A strong and relevant heritage helps to build credibility. Credibility builds trust. A brand’s history and heritage provides customers with richer, authoritative information, giving credence to a brand’s message. Provenance provides continuity and consistency across all platforms.
Provenance answers this customer question, “Why should I believe the promise you are making to me?” Why should I believe in Celestial Seasonings?
Provenance is not just theoretical. Provenance helps make money. There is a virtuous provenance chain. Provenance influences perceived value, contributing to increased brand preference, which generates Trust Capital – a leading form of organizational wealth based on the confidence stakeholders have in the goodwill of an organization to consistently deliver promises of value – leading to high quality revenue growth.
Hain Celestial has a responsibility to Celestial Seasonings. The new, publicized remit to focus on brand building should actually build brands rather than merely satisfy shareholders, analysts and Wall Street. There are not that many “food revolution” brands from the 1960’s. Celestial Seasonings should be revitalized. The three critical actions listed above are a great start.
Contributed to Branding Strategy Insider by: Joan Kiddon, Partner, The Blake Project, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I
At The Blake Project, we help clients worldwide, in all stages of development, define or redefine and articulate what makes them competitive at critical moments of change, including co-creating plans to win that propel their businesses and brands forward. Please email us to learn how we can help you compete differently.
Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education
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