Hain Celestial has implemented the differentiation strategy by focusing on several competitive dimensions. First are the product features-related choices – the company is specialized in selling a diverse product portfolio of natural and organic foods. This is followed by Hain Celestial’s distribution-related choices – the company sells its products through both the online platform and in red-brick stores. With regards to the online platform, Hain is the largest supplier to natural food retailer, Wholesome Foods Markets, which is owned by Amazon.
Therefore, by partnering with Amazon, the world’s largest online retailer, Hain can significantly maximize the sales of its products. Hain Celestial also sells its products in traditional grocery chain stores. Third is its innovation-related choices. By acquiring small organic and natural food producers, such as Ell’s, Blueprint, and Celestial Seasonings, Hain Celestial has been able to expand its product portfolio, thus, making it the world’s largest natural foods company. Lastly, there are branding-related features, whereby the company is popular for its natural and organic foods.
Hain Celestial’s business-level strategy, the differentiation strategy, was based on consumers’ changing perception and consumption patterns in the sphere of natural and organic foods. Irwin Simon, Hain Celestial’s Founder and CEO, observed that inclination to eat wholesome foods and lead a healthier lifestyle was not a trend, and instead, it was long-term. Moreover, the targeted consumers were willing to pay for the value of these natural and organic foods.
Many companies are shifting towards the natural or organic segment. This may have a significant adverse effect on Hain Celestial differentiation strategy, especially considering that the entrants are providing natural or organic products at reduced costs. As a result, consumers might think that the price difference between Hain Celestial’s products and the differentiator’s product (Walmart) is too large. Second, although with a minimal adverse impact, already large branded food firms, such as Nestle, Hershey Company and Mars, Inc., are shifting from using artificial to natural ingredients, therefore, this might affect the sale of Hain Celestial’s products, which fall in a similar niche.
Hain Celestial should consider growing through strategic alliances. In the course of formulating a strategic alliance, Hain Celestial should identify potential partners who are willing to both complement and supplement their strengths and weaknesses, respectively. Strategic alliances have an advantage over mergers on the basis that most often, mergers result in the complete absorption or even disappearance of one party rather than a joining of equals.
Hain Celestial’s means of differentiation might stop providing value for which targeted customers are willing to pay. This is because there will be several other large branded firms that will start targeting the organic food-consumer segment. For instance, it is probable that in the next ten years, Walmart will become popular for selling low-priced organic foods. Therefore, to mitigate this revenue and earning challenge, Hain Celestial will have to embrace an integrated cost-differentiation strategy.
Moreover, the experience might narrow the customers’ perception of the value of the natural and organic products sold by Hain Celestial. Customers are attracted to the “healthy living notion” that is perceived to be driven by eating natural or organic foods. After ten years of continuously eating Hain Celestial’s food products, customers will be able to evaluate their impact on their overall health. Therefore, if they have witnessed no change or limited impact on their overall health, they might shift to eating non-organic foods. The company can hence reduce the effect of this shift by diversifying its portfolio, for instance, by introducing high-quality non-organic foods.