Hain Celestial Group Inc (HAIN) 2008 Q1 法說會逐字稿

Welcome to the first-quarter 2008 Hain Celestial Group earnings conference call. My name is Bill and I will be your conference facilitator for today. At this time all participants are in any listen-only mode. We will be conducting a question-and-answer session towards the end of today's presentation. (OPERATOR INSTRUCTIONS). As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's conference call, Ms. Mary Anthes, Vice President of Investor Relations. Please proceed, ma'am.

Good afternoon, everyone. I'm pleased to be with you today to introduce our first-quarter fiscal year 2008 earnings conference call to discuss our financial results which were issued after the close of the market today. We have several members of our management team here with us to discuss our results including Irwin Simon, President and Chief Executive Officer; Ira Lamel, Executive Vice President and Chief Financial Officer; and John Carroll, Executive Vice President.

The Company has continued during the past quarter a review of past practices in connection with grants of stock options in response to the notice it received from the SEC that it was conducting an inquiry into the Company's stock options practices. This review is being conducted with outside legal counsel at the direction of a group of independent directors. While counsel's review is substantially complete the Company is not yet in a position to file its annual report on Form 10-K for the year ended June 30, 2007 or its quarterly report on Form 10-Q for the quarter ended September 30, 2007.

The financial information disclosed today remains unaudited and certain items on the balance sheet, such as stockholders equity and deferred tax accounts, are subject to the conclusion of the review. Pending completion of counsel's review we will be unable to respond to further questions about stock options on today's call.

As expected on September 14, 2007 the Company received a NASDAQ staff determination letter which indicated that the Company is not in compliance with the filing requirements for continued listing set forth in NASDAQ's marketplace rules due to the fact that it did not file timely its Form 10-K for the fiscal year ended June 30, 2007. In response to the letter the Company met yesterday with the NASDAQ listing qualifications panel pursuant to the Company's request for a hearing and continued listing. Pending a decision by the panel Hain Celestial's shares will remain listed on the NASDAQ global select market.

Our discussion today will include forward-looking statements which are current as of today's date. We do not undertake any obligation to update forward-looking statements either as a result of new information, future events or otherwise. Our actual results may differ materially from those projected and some of the factors which may cause results to defer are listed in our publicly filed documents including our 2006 Form 10-K filed with the SEC.

This conference call is being webcast and an archive of the webcast will be available on our website at www.Hain-Celestial.com under Investor Relations. Our call will be limited to approximately one hour, so please limit yourself to one question and a follow-up question. If time allows me will take additional questions and management will be available after the call for additional follow-up. Now let me turn the call over to Irwin Simon, our President and Chief Executive Officer. Irwin?

Thank you, Mary. Hopefully most of you have had an opportunity to look at our release that came out around 4:00. Our sales were up 13% for the quarter; our margins were up a full point and I go good about where our margins are. As we said in our fourth quarter, our objective is to see our margins hit 30% and seeing 29% -- and in the quarter we had $6 million of input costs across the Company that we had to make up and as we had higher costs coming in -- I'll talk about price increase in a little while, but it's great to see our gross margins up a full point.

Net income for the quarter, $10.8 million versus $8.8 million, up 22.4%; adjusted net income $11.9 million versus $9.7 million, of 23%. Let me talk about the quarter. Ira will take you through a lot more financials in a little while.

So you heard me talk about costs, costs were up overall. Diesel fuel just one item, an important item, up 25% for us in the quarter. We have in place a major cost initiative, many productivity opportunities under way. And I've got to tell you, I feel good about the initiatives that we've put in place and the savings that we were able to achieve with that. We've been able to take pricing, which I'll go through in a little while, and multiple categories and multiple of our businesses have put pricing through.

John will take you through his in Melville business, grocery snack and frozen which was up 9% for the quarter and good growth among Terra Chips, Arrowhead Mills, Imagine soups, Health Valley -- good growth, good consumption numbers and feeling pretty good about where our business is going. And I'll talk about seeing a continuation of it moving right into October, so feeling good about where business is.

Let's talk about Celestial as we seem to love to hear about Celestial. A lot of good things going on at Celestial. Even though October was a pretty warm month, our key shipments are up 4% for the quarter. On an overall basis Celestial was up 2%. Last year we shipped a new product called Zingers to Go in the quarter so we're up against that. But key shipments are up 4%, that's pretty good.

With that our big thing is focusing on certain accounts and making sure that on a sales management and category management, how we look at shelf -- part of the problem is you look at Nielsen numbers during promotion dollars, discontinued SKUs, as we discontinued SKUs for new packaging -- as you look at scanner data the category is down and we look a little worse than the category. So but you've got to look at shipments and where we're moving on that.

70% of our new packaging is now into the marketplace and we're getting a good reception. We've started to ship holiday shippers and we shipped a lot more holiday shippers this year than last year, so our holiday shippers are a big hit with the Celestial Group and a big hit among Celestial consumers.

In October we've taken a 3.5% price increase which has gone through and gone through to all our customers. In October we started to ship our new brand calls Saphara by Celestial -- a Journey by Celestial Seasoning, it's our organic fair trade tea, well accepted, well positioned, retail price $5.99 and we feel good about that. It's first entry is into natural food stores and across the natural food trade.

Our coffee began shipping October 15 and, again, first entry is into natural food stores but there's a lot of other multiple chains that have started to take our coffee and actually our coffee -- great product and I see some great things happening.

One of the things that is happening in regards to our business, our business is changing in regards to how we go to market. Today 55% of our business is direct, 45% is distributor and that complete opposite a year ago which means a better price at retail, higher margins, deal money being passed on to the consumer. So that's the way we want to go and actually you'll see some change in the way shipments are but a good way to really see our business moving in that direction.

Our advertising starts now for the season as we move into it and we have some great new ads really breaking for Celestial. So with that we need some cold weather in November and we've talked about that, but feeling good about where our packaging is, feeling good about where our products are, feeling good about the new products that we've launched and we're in the midst right now of launching multiple new products for Valentine's Day and as we move into next year's iced tea season so we've got a lot of things moving on in that direction.

If you look at our European business, without Biomarche, which is a business that we sold at the end of August last year, our business is up 12% in Europe. Europe today is now 18% of our sales, so Europe is a big part of our business. What we've focused on in Europe is consolidating plants. The Newport Pagnell plant which we acquired as part of Haldane we closed in April. We integrated into Fakenham this summer and today the facility and I was just there on Monday, is running smoothly, efficiently. We are looking for about a 5% -- a half a point increase in margins and now that plant is running at a 65% capacity where before it was running at about a 35% capacity.

We had a business that made certain powders for muscle building, certain mixes which we sold off. There was some private-label and some small branded business that came along which we called the [Barrel] business, Barrel facility, we sold that off in October, so now that is out of our numbers. We're looking at our soy milk plant in Manchester and how we consolidate that with our German facility.

So Haldane was a good acquisition, it came along with three plants, we've now gotten rid of two and we're looking at the Manchester one and what you'll see from that is multiple opportunities, cost savings, margin enhancement. Our Luton fresh business continues to be strong, up 17%. And anybody that was in Europe this summer, July and August were pretty rainy months so that does affect us, but our business up at 17%, our fresh business.

The Linda McCartney business, all our new products are out, a lot of great new listings are coming and we see some great new other products in fresh categories and ready to eat categories coming from that area.

The London UK operation has now taken over handling Terra Chips, Celestial Seasoning tea and our us Rice Dream business where before these where managed out of Belgium, were handled as an export productline. So we have our own UK sales group on the ground that are handling these businesses.

In our continental Europe business our Natumi business was up 32%, Rice Dream up 16%, Terra up 8% and Lima up 2%. So our European branded business on continental Europe continues to do well and some good things happening there.

Our Canadian business up 6% and it would have been a lot higher but we did suffer from some out of stocks in Canada which we now have that corrected. Yves business is strong, has an 86% share. The Celestial redesign is in place and being rolled out in the Canadian market, Saphara being rolled out in the Canadian market and some of our other brands -- Casbah, Terra Chips, Earth's Best up 27%, so we're getting good growth among some of our other businesses in the Canadian market.

If you look, some of the advertising and consumer advertising is important, I've talked about that in our last quarterly call or the end of our fiscal '07, we're going Yves national TV in English and French and really focusing on that. We have a good push on Asceptic soups which is a good market in the Canadian market and that was one of the first markets that Campbell's launched their Asceptic soups and we're seeing some good reception on that.

Our protein business, at the end of August we acquired Plainville. So far and if you can't sell turkeys in November/December when can you sell them. So we're pretty busy up there. As a matter of fact we are totally sold out of natural turkeys for this season, demand has just been unbelievable. Feel good about where that business is going and feel good about the opportunities going into value added products, expanding that facility, expanding that plant and expanding the different products that are coming out of there.

Our chicken business, Freebird was up 13.2%, a lot of that comes out of the Freebird branded business. We continue to move into nuggets, wings, burgers, chicken burgers. So we really like where that's going. We're probably at full capacity now on antibiotic free organic chicken and we're going to have to look to see what we need to do there to enhance the capacity. With that we've taken a 9.5% price increase as corn prices continue to go up and you can still see where we're moving on our growth.

So from a cost standpoint we've got tremendous cost containments in place with cost coming at us. We've taken a tea price increase effective October 1. We've taken a Melville price increase on numerous productlines at 4.5% effective December 15th. We will take a JASON price increase, about 5%, effective January 1. And throughout Europe effective January 1 we'll take a 4 to 6% price increase across a lot of our products. So with that we'll see the benefit of the price increase in the second half and we know we're going to have to be able to look for productivity to stave off some of these costs that are coming at us and we feel good about doing them.

We've talked a lot about how we bring the consumer in spending. We are really managing our trade spending and ensuring that gets passed on to the consumer as consumers today are looking at pricing and pricing is important. So it's important that our pricing is competitive and trade promotions get passed on. And there's just been a tremendous amount of discipline put into our whole trade spending program and making sure that we're getting something from it.

At the same time we've really increased our spending to the consumer, our programs to the consumer, our couponing to the consumer and we'll see lots of benefit from that. October sales continue to be -- sales continue to be strong. October sales were quite strong, we're quite happy where October is. So we like what we see out there and even with the weather not cooperating with us we were very happy where October has come in.

What's happening as we see the category -- we continue to see good strong sales. But as we look at the marketplace today and you look at Hain, about 30% of our sales come from the whole foods -- Wild Oats, Trader Joe's -- about 30% of our sales come from the supermarket, 10% come from natural food independents and about 30% comes from mass market and other. And it's amazing the focus that each of these accounts really have on growing the natural organic category. It's amazing that each of these really focused on where the placement is in the store, moving these products over to main aisles of the store and that's something that's happening today.

We look to close the TenderCare acquisition sometime in December and pretty excited about that. We introduced the Earth's Best diaper at the show in Baltimore, the natural food show, and a lot of good comments, a lot of demand and a chlorine free diaper and a flushable wipe seems to have a lot of demand out there. Also at the Baltimore show we introduced numerous new products across the board and I think that's what the interesting and unique thing is.

As I look at this business today there is definitely and the question continuously ask to me is about private-label. But innovation, newness and unique is something that's very important. And I've got to tell you, anybody that was at that show, that's one thing we offered is a lot of new product, unique product and innovation and I think that's just a tremendous strength of ours.

With that I believe on Sunday for China as we continue to look at growing in marketplaces and look at our venture with our Yeo Hiap Seng partner. We're looking at numerous opportunities in the snack category, the Personal Care category as we really look to move into the Asian market. So we're looking at some things there.

So a lot of exciting things happening, a lot of diversification happening here, a lot of cost containment, good growth, good sales growth, good growth continued into October. And what I'd like to do then is turn it over to John and let him take you through all the good things he's got going on in his business. Thank you.

Good afternoon. Today I'll cover the Hain Grocery and Snacks and Personal Care Q1 results as well as provide a brief update on our Personal Care integration. I'll start with Hain Grocery and Snacks where Q1 was a very, very strong quarter. Top-line growth was up 9% and that growth was driven via a combination of consumption increases, alternate channel gains and new product sales. Importantly, we saw growth across the brand portfolio. Some of the brands -- Earth's Best, Sesame Street, Rice Dream, Westbrae, Arrowhead Mills, Casbah, DeBoles, Imagine Soup, Imagine Frozen, Health Valley across the entire line, Hain, Spectrum Naturals, Spectrum Essentials, Garden of Eatin' and Terra.

Two key points to note here. One is the wide breadth of brands that are seeing growth, and the second thing is the continued turnaround of the Terra brand. Q1 was the third quarter in a row that we saw growth in that brand and it's driven by consumption gains in our measured channels. As we move to the middle of the Hain Grocery and Snacks P&L Q1 gross margins were up 200 basis points, as productivity, mix and reduced trade spending as a percent of sales offset continuing rising input costs and fuel costs.

Regarding productivity, the Grocery and Snacks operations group generated almost $2 million in productivity in Q1. This was key to our Q1 gross margin expansion as we, like all other food manufacturers, are being challenged by inflationary pressures. We are seeing continued cost increases for organic corn, soybean, wheat, canola oil, cranberry, dairy, as well as packaging and diesel fuel.

As Irwin mentioned, due to this cost pressure we announced a 4% price increase across the majority of our grocery and frozen productline, which will be effective mid December. We will not see benefit from this price increase until the second half, but this move was required for us to maintain our current margins in this inflationary cost environment.

Our Q1 inventories were higher than year ago, as we are carrying an additional 10 to $12 million in Earth's Best inventory. This is consistent with what we discussed in our Q4 call where we said we would maximize our fresh pack season production, which will run from September to December, to ensure supply for our fastest-growing brand.

In regard to marketing support, as Irwin spoke about, in Q1 we continued to increase our marketing investments against our core brands. This is a key strategy to build our brands in this increasingly competitive environment. This investment is best reflected across three areas -- innovation, multi-brand promotional events and media spending. I just want to give you a few examples in each area.

To start with innovation, as Irwin said, we introduced several impactful new grocery and snack products at Septembers Expo East show. These products included our new Rosetto steam and eat all natural ravioli which is the first frozen pasta that can be steamed to perfection in its bag in your microwave and only 5 minutes.

We also introduced Earth's Best Sesame Street organic Elmo frozen entrees. Two great varieties featuring kid favorite flavors that are organic and fortified with iron, zinc and six B vitamins. And in the area of Imagine we introduced new Imagine low-sodium organic beef broth. Our low-sodium organic chicken broth quickly became a top ten SKU and beef was an obvious extension.

On the side of Terra, we introduced new Krinkled and Kettle hard bite chips with unique chef inspired flavors such as Chesapeake Bay and Beer, Pesto and Smoked Mozzarella, General Chow and Arrabiata. Also on Garden of Eatin' we introduced new extra bold tortilla chips in four exciting flavors including Maui Onion, Three Pepper, Focaccia and Key Lime Jalapeno.

The second example is the strong response that we've seen to our multi-brand promotion. Q1's marketing support included our Eat Right Morning, Noon and Night group promotion which featured our Terra brand, Imagine, Health Valley, Walnut Acres and Ethnic Gourmet and it was anchored with a September 30th national FSI and strong in-store support. These multi-brand events allow us to leverage our scale efficiently to drive stronger retailer support and consumer response than the brands would achieve individually. We continue to see strong response to these events and we will invest behind a multi-brand promotion every quarter in FY '08 which will be an increase of two events versus year ago.

Finally, on the media side we continue to support our Earth's Best brand with a full year national advertising program on PBS' Sesame Street program. In addition, we'll supplement that this year with advertising support across several of our core brands on the new Discovery Planet Green network in the second half of '08.

As I said, increasing marketing investment against these three key levers -- innovation, multi-brand, promotional support and media -- is key to driving our core brands growth. There's a lot of competition out there in the natural and organic arena, particularly with the increasing presence of private-label. We will grow our business in the face of this threat by focusing on our core brands, leveraging our number one or two brand positions in core categories and increasing our marketing support with unique innovation, multi-brand promotions and incremental media support.

So to conclude on Hain Grocery and Snacks Q1, it was a very strong quarter with top line up 9%, gross margin expansion despite COGs inflations, and continued investment across our core brands. We're facing input cost inflation like everyone else in CPG and we have announced a 4% price increase to help, along with productivity, offset these costs, maintain our margins and deliver growth through the balance of FY '08.

And moving on to Personal Care, Q1 saw solid top-line consumption growth for Personal Care driven by our three top brands -- JASON, Alba and Avalon Organics. Gross margin was up driven primarily by a more favorable mix from the Avalon Organic and Alba brands. Just as with our Grocery and Snacks business, Personal Care as also being pressured with cost inflation, especially in the areas of fuel related packaging costs and co-packer costs. To offset this we are announcing, as Irwin mentioned before, a 3 to 5% price increase across both the JASON and Avalon lines which will be effective January 1, 2008.

In Q1 we began to experience the benefits of our consolidation in SG&A. This benefit was not fully realized in the quarter as we absorbed the cost of severance from our August reduction in force as well as some continued headcount duplication while we transitioned functions from our Culver City to Petaluma offices.

Just as with Hain Grocery and Snacks, we continue to support our business with strong innovation, including the following new products that were introduced at September's Expo East show. We introduced new JASON Natural Renewing Body Scrub with three different scrub bases -- rice bran, walnut powder and corn cob -- that give you a recognizable edible ingredient as opposed to some of the other products ingredients you find in these products -- competitive products that would be -- and different levels of scrubbing power to clean and rehydrate your skin.

In addition, capitalizing on the success of our JASON fragrance free body and hair care lunches, we are now expanding the line to include new JASON fragrance free skincare. This line will feature a new twice daily facial cleanser, a daily facial cream, a nightly moisturizer and a mineral based hand and body lotion to care for dry and sensitive skin. The whole fragrance free area is a really strongly growing area and JASON has a real leg up in that area.

On the Alba side we've introduced new Alba moisturizing cream shave to further extend our leadership position in this growing segment. These new hypoallergenic shades come in three exotic flavors -- coconut milk, papaya mango and cocoa butter -- and provide rich moisturizing shaving protection for both men and women. Also on Alba we introduced our new Alba Tropical Hair Care featuring tropical fruit extracts, nourishing plant oils and organic aloe vera to create exotic treatments or soft, healthy, luminous hair.

And finally on the Personal Care side, the launch of our Zia Treatments line featuring improved paraben free formulas and new packaging creates a customized skin regiment perfectly tailored for every skin type. This is a key initiative behind our relaunch of the Zia line.

Turning to integration, we continue to be on schedule in integrating the JASON and Avalon businesses into Hain Personal Care and the following initiatives have been executed -- all back room functions, finance, accounting, customer service and IT have been consolidated into our Petaluma location. Marketing/sales have been integrated into one Hain Personal Care group and we had our first national sales meeting at September's Expo East show.

At that meeting we executed our broker consolidation, picking the best of the best from the two different groups in each territory to carry the entire Hain Personal Care line and now leveraging our scale to achieve a reduced rate versus our previous payment structure. We also migrated to a new IT system, [Navision], for all of Personal Care in October.

We developed a new Hain Personal Care trade promotion program that will be implemented in second half '08 to leverage our scale and reduce inefficient trade spending on a brand-by-brand basis and redeploy against the consumer. And we've made further progress in evaluating aggressive Personal Care SKU rationalization program to reduce business complexity, drive margin enhancement and improved operating efficiency.

So to summarize on Personal Care, we continue to see strong consumption growth on key brands, gross margin improvement and reduction of SG&A from the consolidation of duplicative functions. We're on schedule for integration of the two businesses into Hain Personal Care, the Avalon acquisition is delivering against its target and while we are feeling the effects of cost pressure we will implement a 3 to 5% price increase effective January 1 to offset it.

Overall we continue to be well positioned to take advantage of the continued growth of natural personal care both in the natural channel as well as in new channels such as grocery, drug, mass and club. So with that I'll turn it over to Ira Lamel.

Thanks, John. Our sales in the first quarter year reached $237.2 million, up 13% over the prior year's sales of $209.9 million. Net income was up 22.4% to $10.8 million in the first quarter this year compared with $8.8 million in last year's first quarter. We earned $0.26 per diluted share on a GAAP basis this year versus $0.22 last year. Our diluted share count this quarter was 41,825,000 against 40,023,000 in last year's quarter. Earnings per share increased by 18.2% even with the increase of 4.5% in our share count.

On an adjusted basis we earned $11.9 million or $0.29 per diluted share. These adjustments included the following -- as in past quarters, we continue to mark to market the value of ungranted stock options. This gave us a charge of $420,000. At our Fakenham UK frozen meat free manufacturing facility we consolidated the manufacturing operations of the recently acquired Haldane Newport Pagnell facility.

We acquired Newport Pagnell in December and immediately announced that we would close that facility. We incurred $1,073,000 in start-up costs during the first quarter related to the new lines at Fakenham. These costs were not chargeable to the acquisition purchase accounting of Haldane under accounting rules.

In connection with the inquiry into stock option practices, we incurred legal and other professional fees during the first quarter of $2,300,000 and then in the other direction during the quarter we sold our investment in a rice cake manufacturing joint venture in Belgium and realized a gain of $2 million from that transaction. In total the adjustments aggregated $1.1 million net after-tax and brought our adjusted net income to $11,939,000 or $0.29 a share.

Gross profit for the first quarter this year was 29% as compared to 28% last year. As Irwin mentioned, that's a full point increase. If we adjust both years for the startup costs incurred at different facilities in the first quarter of each year, Fakenham this year and Westchester Frozen last year, gross margins would be 29.5 this year versus 28.6 last year. So the almost 1 point increase holds whether it's GAAP or adjusted and this is in the face of the $6 million of input costs and increases in diesel that Erwin and John mentioned.

Our SG&A in the first quarter this year was 21.3% versus 19.9% in last year's first quarter. If we adjust SG&A for the professional fees we've incurred and the ungranted options, SG&A would come in at 20.2%. That would be a 30 basis point increase from the G&A last year -- SG&A last year and with the added acquisitions where we continue to have duplicative operations while we're going through integration phases, we think that that 30 point increase coupled with all of the cost increases that we've been incurring, particularly in the depreciation and amortization increases from acquisitions we've had over the past year and from increased employee and benefit costs that that 30 basis point increase is a very good result.

Operating income for the quarter was $22.1 million adjusted compared to $18.1 million adjusted last year giving us a 22% improvement. Interest expense this quarter totaled $3.3 million; it includes the cost of the 150 million 10-year notes that we have outstanding as well as the cost of carrying borrowings under our credit facility. Interest expense was offset in part by investment earnings of $600,000 in the quarter bringing us to $2.7 million of net interest expense. Included with interest and other expenses is the gain of $2 million on the rice cake joint venture sale.

Excluding the impact of special items our effective tax rate is 37.6%. This compares to 36.7% for the full year 2007. EBITDA amounted to $25.3 million for the first quarter this year versus $20.4 million last year. Depreciation and amortization in this year's quarter was $4.5 million, an increase of $1.2 million over the prior year $3.3 million. CapEx came in at $5 million. Our balance sheet continues to be very strong; working capital was $210 million at a current ratio of 2.7. Our stockholders' equity is now at $717 million. Debt as a percentage of equity is 30% this year with debt totaling $216 million.

If we reduce our cash of $51 million debt comes down to $265 million -- excuse me, $165 million net. We are at 75 days in the cash conversion cycle and our operating free cash flow in the quarter came in with a usage of $1.8 million this year. That usage comes from the increase in capital expenditures, particularly because of the Fakenham buildout, as well as planned investments that we made in inventory build at Earth's Best and investments in inventory that we made with the restaging of Celestial Seasoning tea along with a build in inventory for Saphara and coffee introductions. With that we'd like to open it up to questions.

(OPERATOR INSTRUCTIONS). Greg Badishkanian, Citigroup.

Thank you. Just a few quick questions here. I'm looking at organic sales growth kind of in the high single-digit range organically, am I kind of in the ballpark?

You're doing the numbers, Greg. I've said before, we would like to be at the high single, low double-digits and I think we heard John talk about some great growth and good growth in Europe, growth among Celestial, so with that we feel we're on our targets.

Great, excellent. And just zeroing in a little bit on October, it sounds like growth was very strong. Any categories or brands that did particularly well in October?

Actually right across the board business was extremely strong in October and the grocery frozen snack business strong. We're seeing Personal Care -- good stuff happening there, good stuff out of Europe. Okay on tea. So, yes, there's nothing that's surprising me, but October -- which is normally a strong month was even stronger than we expected it.

Okay, great. And with respect to coffee, it sounds like a pretty good opportunity for incremental growth. Is that something that if you get some okay size can that be fairly profitable?

It can. Saphara is something also we're pretty excited about. It's an organic fair trade, fully biodegradable. So number one, that is something that's at good margins, good growth. And some of you have seen the coffee, the packaging, the product, the quality is exceptional here. It's organic fair trade, not a lot of flavored coffee out there. We've got some pretty good listings so far. And don't forget, we went out a little late selling this -- a lot of coffee sets, but those that we showed it are inviting us back where we didn't get it for January/February, so some good stuff could happen on coffee too.

And I know we haven't talked about it, but the ready to drink thing is something we're still working on and have got some things moving there. And also, Greg, hearing some real good feedback on our packaging and everybody on the call, I ask you to go look at it on the shelf and I'd love your input back. But some good stuff on our new Celestial packaging also.

Great. And just as we focus in on winter, I think was it two or three years back you had some issues with soup. How are you positioned there in manufacturing and just getting the sourcing and also just how packaging and the branding is positioned?

I'll tell you what, Greg, we've got plenty of soup, plenty of packaging, just bring on the cold weather and we'll be able to fulfill every order that we can get.

Good. Well, a tough challenging environment, you guys did really well. So thanks.

Andrew Wolf, BB&T.

Irwin, I just want to double check what I thought -- did you say that most of -- I forget the exact number, if you could repeat it -- but most of the Celestial that's been repackaged and redesigned has already shipped?

No, 70% of it. All the packaging has been redesigned, Andy, but 70% of it will be in the marketplace today. It may not be in every store, but 70% is shipping out to warehouses and ultimately get out to retail markets. (multiple speakers)

Does that apply to the September quarter? I guess I want to think of it in reference to the quarter.

It would not be the September quarter. It probably would have been 40% by the September quarter.

Thank you. And sort of the same thing for the Saphara and also when you talk about Saphara and the coffee which -- could you just sort of discuss a little bit about why those type of products go into the natural channel first? Is it sort of a traditional thing or is it more just the conventional folks want to kind of wait around and see if it makes sense for them if there's enough movement?

Saphara, number one, is organic, fair trade, biodegradable and the natural channel loved it and took it right away. And the same with coffee as we shipped it into our natural organic distributors as they get it out to the independents and get it out to the marketplace. It takes a little more time in presenting it to the mass market and to the supermarket -- conventional supermarkets where sets were set. So that's why we went there.

And we can usually -- it's interesting because you get a good read there and a lot of people run to natural food stores to see what's new. And it actually helps you get listings in other places.

And just on the Saphara and the Celestial coffee, same question about when it shipped. Was it more in the quarter you just reported?

Both of them shipped in October. Coffee shipped October 15th and Saphara shipped around that time also. So there's none of that in the quarter we just reported.

Okay. And just my last follow up -- I'm sorry I asked a couple more questions. Last question is on the guidance, is that guidance of 138 to 142 -- is that in reference to the $0.29 adjusted EPS or to the $0.26 GAAP?

It would be to the $0.29 adjusted.

Great, thank you.

Scott Mushkin, Banc of America Securities.

So obviously Bert's Bees got taken out.

Not got taken out, had a windfall.

Yes, a windfall. I had two questions revolving around it honestly. Number one is I'm sitting here looking at Celestial, you clearly in what Clorox put out a lot of your brands are very prevalent in their documents. And so would you ever -- I mean how do we look at this from a shareholder perspective? Would you ever consider monetizing some of the Personal Care business to let some of that value out I guess is one?

Then the second question is one of the things that Bert's Bees I think has become is a fairly down -- this is going to sound terrible -- but not a highly regarded natural and organic brand. It's available almost everywhere and that's part of why I think it's recognized so much. But Celestial seems to have suffered a little bit from that where the brand, because it was available so many different places, maybe it isn't quite what it once was at one point.

How do you -- Earth's Best is another one of your great brands. So I guess the question is how do you, A, prevent that from happening, but, B, also make sure the premium brands are getting the billing they deserve?

A couple good questions there. Number one, I think it's great the come back -- what Clorox thought of the multiple that paid for Bert's Bee and time sales and EBITDA I think is great. It comes back and reinforces what we were saying to our investors, to everybody about the Personal Care category and the opportunity there. I think there's a good piece in today's New York Times. So I feel good about that.

Listen, I feel good that a big company like Clorox comes in, will spend money on the category and help bring additional awareness to the category and I think that's great. And I think one of the big things, as we looked around at Bert's Bees, Bert's Bees is in a lot of different places today and it's important to keep its uniqueness. I think that's one of the key things within our Personal Care group today; there's Avalon, Alba and JASON's. And certain brands will stay within natural, certain brands will go into mass-market and certain brands will going to chain drug and they will not become mainstream brands.

At the same time, as you see Bert's Bees or Tom's going mainstream it's going to open up room within natural food stores and other stores for more Alba or more JASON's or more Avalon, so there are opportunities that are tremendous for us. So this is great for the category and I think great for our brands.

To maximize shareholder value, whenever we can do it we'll do it. And I think what John talked about right now, one of the big things we need to do is integrate these businesses, which we're going, integrate the management team, go through the SKUs and see what SKUs make sense, that we keep was SKUs don't make sense. Bring the manufacturing into our plant and really take these brands to a whole other category.

The good news is I would not want to be buying Avalon this year this time because just where Bert's Bees went the price would be a lot different. So I feel good about owning it today and not negotiating because we started to negotiate around this time last year for it.

In regards to Celestial, Scott, again Celestial today is a 30-year-old brand, it started in natural food stores, it went to grocery, it went direct, it went into mass. It's hard to turn the clock back and sort of say I'm only going to become a natural food brand or I'm only going to become a mass-market brand. We've got to accept the cards that were dealt to us there.

And I think what's important, number one, on Celestial is solidify our strength in the trade that we are and make sure we solidify our strength with certain products. And we have a lot of uniqueness with Sleepy Time and Zingers and certain Celestial flavors and make sure we emphasize that. And we've not emphasized wellness teas and black teas the way we have and we've really focused on herbal teas.

Saphara is something that's interesting, loved at natural food stores and I think that's a great opportunity for us and that will only go into natural food stores and that will only go into natural sections within stores, it's not going to go in the mainstream tea aisle. The same with coffee, it will go into the coffee section but will start with natural food stores first.

In regards to brands like Earth's Best, there's a bunch of things we're doing there. As we expand Earth's Best into supermarkets and organic baby food becoming prevalent throughout all supermarkets it's going in the main aisle in a lot of supermarkets today and that's just something that's happening. On the other hand, we're working on premium baby food today that is going to be the next evolution of Earth's Best. And I think that's what -- I challenge our people everyday what's the next Earth's Best within Earth's Best whether it's fresh or frozen, I don't think it's frozen because there are multiple out there, but just come back and think what we've done with Earth's Best now.

We took it as a brand that was a $14 million brand on the roof ready to fall off; we bring new users in every nine months, we now have infant feeding food, we now have toddler food, we are going into diapers which we showed at the Baltimore show which people were pretty excited. So here's a brand that we have to grow by bringing into multiple categories and expand. Celestial tried to do it and I'm not sure they got it right when they tried to do it in other categories. Hopefully that answered your question.

That's great, thank you very much.

Steven Kron, Goldman Sachs.

A couple of questions. One, I just want to reconcile some numbers. I thought last quarter on the call you mentioned that July and August shipments for the Celestial business were up, I thought it was around 12%, and then you indicated here Celestial sales, if I heard you correctly, were up 2% overall. So just wondering if I'm comparing apples to oranges there. Are those numbers comparable and did I hear them right?

Celestial tea sales, I'm saying absolutely just tea shipments because in there there are other products whether it's Zingers to Go, etc. So tea sales were up 4%, overall Celestial business was up 2%.

Did that show a deceleration in the September month because still it seems as though there might have been --

Well September is your biggest month and of July and August it is your biggest month of your quarter. I don't think it showed it -- any of that. It is just the way the month evened out and the way the shipments even out. It is interesting now what's happened is Celestial's shipments have evened out where it is almost like a third, a third, a third so I think some of that is the reason it was up higher against lower shipments a year ago and higher shipments in September a year ago.

Okay. Then Irwin, last quarter you talked a little bit about kind of the environment for M&A deals and it seemed as though there was a sense of enthusiasm that there was a bit of an abatement of nontraditional I guess competitors as it relates to potential deals out there, that being the private equity bid seemed to have abated a bit. Can you kind of assess the environment now what you're seeing in the marketplace for anything that you might be looking at?

Well if I would have did my call Monday before Burt's Bees, I would have said multiples or net were coming down but I think this was -- is something different. We today are out there actively in the marketplace and again focused -- and don't forget we are specialized because we are focusing on the natural organic category and we're looking at three or four real good things out there right now which I think we are competitive in pricing and moving in the right direction with them. And have walked away from two things where expectations were still in the hemisphere as people have not come back and realized there has been a price adjustment here.

So I think they will come back. So the environment out there, Steven, is still good and I think one of the problems is I'm not sure that everybody has totally adjusted their price expectations on some of the properties that are out there but there is some good stuff out there.

I just came back from Europe and saw some good stuff in Europe too and these are stuff and again -- don't let me scare anybody -- these are things that are in 50, $70 million range, not 500 to $1 billion, not $100 million range and right within our sweet spots, our rate within categories we are not in today that can be very helpful within our infrastructure. Good growth, good accretion there.

Okay, that is helpful. Then just one last one. Just to make sure that I understood this correctly, the roughly 3 to 5% price increases that you're taking across your brands on I guess it is a global basis, that seems as though it would be fully realized as we turn the calendar to next year at some point. Given your outlook today for commodity cost, that should be enough to protect margins with all of the efficiency programs that you have in place?

At today's cost, okay.

Yes.

I mean if tomorrow diesel is at $5, I mean we're back taking pricing (multiple speakers) but at today's cost absolutely and I got to tell you we have just tremendous aggressive productivity in the pricing so yes.

Okay, super. Thanks a lot.

Terry Bivens, Bear Stearns.

Good afternoon, everyone. A couple of things. On the tea price, have the competitors followed yet or is it a bit too early there?

It is a bit early yet, Terry. And I think being the leader someone has got to get out there and as of two weeks ago, nobody else had followed. We heard a lot of rumors but -- and you heard me what I said before, our business is shifting more on a direct basis which helps our retail price which a lot of these people that used to buy before through third-party distributors will not even see a price increase at retail.

The other thing is where we have our promotions out there that price is going to get reflected at retail will not see a major price increase but we haven't taken a price increase in Celestial in four years. And hibiscus, chamomile, corrugate and freight have gone up and we just had to take a price increase and we did. So we will see what the competitors do.

Okay. One question that I've gotten quite a bit lately. It wasn't clear the extent to which the grocers knew the tea price was coming and there was some question as to whether there might have been a buy in in the September quarter. Could you just clear that up briefly?

Well, I don't believe that people watch their inventories today and there was a 60-, 90-day notice given on the price increase, Terry.

Okay.

So I don't think there was a buy in for pricing. And today with pricing with inventories, people may buy an extra week or so, but people are not buying in product. The other thing is people are not buying in with the new packaging coming out as everybody is going to want the new packaging and wait for that too. So that's not something I'm concerned with, and that's not something which drove the 4% increase in sales.

Okay. This one is for John Carroll. John, you talked a good in about integration. Is there a number we should be looking at for '08 or perhaps even '09 in terms of how that might hit the P&L?

I think in the last call, Terry, I spoke of being able to realize on an annual basis over $2 million in SG&A costs from the integration of the two businesses.

Per year you mean?

Yes. And we won't recognize all of it this year, but ongoing on an annual basis it will be $2 million.

Okay. And then last thing, I just wanted to make sure my math was --

And Terry, just on that, we think there are additional opportunities and savings and margin opportunities as we look at additional -- not only on the SG&A side but on the whole SKU side and the way we go to market and reducing SKUs and stuff like that. So we're getting close to that and we'll be back. But we think it will be, like we did before, it will be a great margin improvement and a lot of good efficiencies that we're going to see happen here.

Okay. And last thing for me if I might is just acquisitions contribution to sales this quarter. Ira, I was looking somewhere in the neighborhood of $20 million, does that sound reasonable?

No, that's high.

No, that sounds high, Terry. And Terry, what you've got to take out of there also is the divestiture at Biomarche, because we had that for two and a half months last year.

Okay. I'll go over that off-line then.

Basically an offset and everything, it's basically the big acquisition in here is Avalon and Alba, that's a big ones here. Because we discontinued a lot in regards to Haldane and the soy business is small.

Okay.

But very little margin in it so --.

The other thing is the Haldane business had a great slowdown in sales during the quarter because of the integration, so we didn't get a lot from that.

Okay, very good. Thanks.

Christine McCracken, Cleveland Research.

Good afternoon. I just wanted to follow up a little bit more on the pricing outlook, only in that consumers are facing the same price increases from the entire food industry as well as obviously a lot of other economic pressures. At what point do you hit a ceiling in terms of what you can pass through or where you expect to see some demand distruction? Given that this is kind of a premium sector maybe it's a little insulated from that. Can you talk about how you look at that and where you might and might not see any kind of pushback?

I've got to tell you, if I can look into a crystal ball and figure that out I don't know if I should be doing this here. But I would say I think as a come back, if you can't get pricing now you never can. On the other hand, what you've got to make sure is trade dollars, promotional dollars are truly passed on and you're getting the benefits for them. And if you're going to do trade promotions do 15% off less frequently instead of for 10% off because you're going to get it reflected at retail.

The other thing is which we're talking about and we're talking to our customers all the time, how do we ship cheaper to our customers and if it's a 4% price increase it's only two whether it backhauls or they're picking up, etc., etc., etc. So I think between the -- nobody wants to see a slowdown and I've got to tell you, we're working with our distributors, we're working with our customers to make sure we're seeing not full pricing passed on where there are cost savings with our customers and our partners too.

But you're not seeing any trade down right now, right?

Trade down?

Well, are you seeing any specific areas where maybe consumers are going to more private-label or there's any particular areas of weakness?

I don't know how I would absolutely see it. As we track our numbers and I know you're on a call, but October has been a strong month for us and business is good. If anything what I feel in times like this here, people some going out to restaurants and people stop going out to eat and go to Whole Foods, Wild Oats, Trader Joe's and Safeway, Kroger and every other good customer that we have out there and shop and cook at home and stay at home. I think that's the trend that we see.

Okay. And then just as you look at what the comments that we hear out of the trade relative to the weakness in California, is there anything specific? Is that an economic issue or are you seeing that same kind of geographic weakness and maybe you could just comment on that?

I am not sure the comment that you are hearing on the weakness, I did see it in your note though but right now we are not seeing that and I guess absolutely with the fires and that out there. And if anything California is a very, very strong natural organic market for us. Whole Foods has just opened up two more stores in California, one in Arizona so they continue to open up additional stores. But we are not seeing it yet and so not seeing the effect of California.

I will leave it there. Thanks.

Scott Van Winkle, Canaccord Adams.

If you said this I apologize. Did you give us consumption numbers for Celestial? And if they were below the shipments I wonder what you think about the channel inventory?

I didn't give them and our consumption was down. And the reason the category was down -- four and this was 12 weeks, shipments were down, our consumption was down about 14. And just let me add to that because one of the big things, Scott, 30 -- about 35% of our business (technical difficulty) go through Nielsen measured channels, okay? And so that's number one.

Number two, we know some of the reasons our numbers are down, some stuff at Kroger this year versus last year and discontinued SKUs, some of the transition of SKUs, some of the promotional dollars. So as I look at the category of consumption I don't get concerned with these numbers right now on some of the transition and that going on with some of the people waiting for some of the new flavors and that coming into the marketplace. So I didn't give the number, but that's what the number is. That's some of the reasons it doesn't concern me what the numbers are.

So you're not concerned about the consumption trend. But I was just wondering -- there was a question earlier about buying ahead of a price increase and the disparity between the consumption and the shipments. I just want to make sure you're comfortable with what's out there in the market.

You know what, we do not see today, and again on Celestial, where 55% of our business is now going on a direct basis and there is even -- you could say that you lost cases. 55% -- you don't see customers buying in on a price increase today like they used to.

Okay. And I guess for you, you or John, what do you have to do to manage all these price increases across several different divisions and brands over a three-month period? Is that a really tall task to take care of?

Well, just number one, let me step back for a second. I think one of the great things in Hain today as we come back and look at the Company, look at the visibility we have today in measuring -- we just didn't wake up in August and say, oh my God, look at prices, what happened? We started a productivity savings back six, nine months ago and were able to get them and basically prices, whether it's organic fruits and vegetables, one of our co packers that was afflicted upon us. So what I've got to say is we have an incredible group today that's really out there with visibility watching the business, measuring the business and truly watching cost and knowing how we're going to get our cost initiatives.

In regards to John's group, when we take a price increase we're looking at what the competitive price is, what the landscape, we're talking to the retailers and saying how much of this is going to get passed on, how much can we save between each other on our shipping. So from a standpoint here, I mean we really work with our customers on that. Celestial did theirs on their own and that was done back in June/July. John happened last week will be effective December 15, Europe does theirs on their own. Personal Care will be done by John's group, so it's not all one group doing it, it's multiple groups taking it, getting the price lists out, seeing the major customers and out there talking to the major customers.

But the big thing is that we have visibility to the increases and the costs coming out of this, Scott, that I'm not just sitting here on the call today and saying well, we had a $6 million hit today and we couldn't do anything about it. I think really getting out there, doing things about it and offsetting the costs and then taking a price increase just shows a lot for the people here at Hain.

Got you. And then finally, a follow-up to a previous question that was out there. I pulled up a transcript and it did look like we were talking about Celestial's shipments being up 12% in July and August. So you think it's just -- maybe just different numbers we're looking at relative to being up 4% for the quarter?

I think it's just smoothing out for the quarter, that's all it is. July and August, probably there were a lot less shipments last year where August -- or September was a bigger shipping month. And we shipped a lot less in September, we shipped a lot more in July and August.

Got you. Great, thanks.

David Palmer, UBS.

There was a comment, I think maybe you or John were talking about the marketing support being increased. And I assume there's an increase as a percentage of sales. Could you just give us, give me a sense of your marketing support as a percentage of sales in the quarter and what you expect it to be for the year? What is the composition of your marketing spend and with these increases what is the composition of these increases?

David, what I said this year, our trade spend runs in the 12 to 13% and our consumer spend running in the 7 to 9%. And you hear me talk about Yves with TV, I talked about a major consumer program rolling out Celestial (inaudible) with the products, you heard John talk about a lot of advertising on Earth's Best. We're going to spend dollars against our key brands to get the right message across.

So there probably was a couple percent increase in the quarter and we'll continue to increase about another 2% throughout the year. We're looking to continue our FSI for the whole company; we did a major FSI in October with about a $36 million circ. So we continue to advertise in Body & Soul and a lot of other magazines and going on TV with our Yves products as I talked about.

When you're talking about increasing a couple percent, are you talking about that 7 to 9% being 9 to 11%?

No, no, going from 7 to 9.

7 to 9?

Yes.

And of those 2 points, is that more the advertising or is it more of what you -- the trade type of spending that might increase your profile at retail?

No, that is advertising, trade is trade.

And so because you said FSI. I was thinking --

FSI we consider -- that's advertising.

Okay, not related to couponing?

Yes.

The other question I had was with regard to market share and I guess it's related in that. I wonder about your advertising and how you're thinking about the importance of advertising as perhaps the growth shifts away from the natural channels to some degree or gets magnified across traditional channels. But I'm wondering if you could give the low lights and highlights about your market share trends by channel. I mean, was your market share up or down, what channel was going better than others in terms of your market share?

Our consumption has grown across both channels today, natural and grocery. And you heard what I said before -- if you look at our business today or look at the categories -- and not our business, but if you look at the category, 31% of the category goes through about 1,000 stores, the other 30% goes through about 31,000 supermarkets. So you look at the category today, there's a lot of opportunity and that's why we feel we have to invest in the consumer in both the grocery category and the right mass-market category. We feel that we're absolutely doing that right now in the supernatural category.

You don't often really talk of market share and I guess philosophically do you feel like that is just not as important to be talking in terms of market share? Or in other words do you just want to keep your eye on the ball and growing profitably period, and whether that balances out as the losing share in one channel or one category or not, that's not the top of the list for you?

David, this is John Carroll. Just a key point on market share in this business. Given that Whole Foods is no longer in the database for syndicated data, you don't get a good read on market share out of (inaudible) today. So at the end of the day our focus is is our consumption growing across every channel, and that's how we measure this business.

David, on that too, I think a big thing for us today is growing distribution. There's 31,000 supermarkets out there; we have a lot of distribution opportunities to grow. And you come back and look at a growing market share, our top three customers today in Earth's Best are not even measured in the market share data that's out there today. So where we sell today 30 to 40% of our business is not even measured in the market share.

Okay, thanks very much.

Suzanne Price, ThinkEquity.

I wanted to know if you've seen any results -- I know it's only been a short time, but any positive or negative effects of the Whole Foods merger closing.

Absolutely not at all. It's early. I've said this before and it's in my notes. I think it's good for the industry, good for the category. I think I've heard different type stores of the 10 stores or 15 stores, whatever it is, I think Whole Foods will get these stores back growing where they were not under the Wild Oats banner and they were kind of faltering out there. So I think it's going to be good for us. We had anywhere from 1,100 to 1,400 SKUs within Whole Foods, we had a lot less within Wild Oats. And I think Whole Foods will take a good broom to them, clean them up and make them into some good appetizing stores.

Great. And just a kind of detailed question. A lot of the increase in SG&A was legal fees related to the stock option inquiry. Is that something we should expect to carry over into Q2 and potentially then Q3?

I guess I should say unfortunately, but it continues and the bills unfortunately continue. So I think so. I'm going to tell you absolutely.

And this has been talked about a lot, but the 4% number that's been shown around in terms of increase in shipments for Celestial, is that for October or is that for the September quarter?

No, that's July/August/September.

Okay. All right, great. Thanks a lot. All my other questions have been answered.

Pablo Zuanic, JPMorgan.

Good afternoon, everyone. I'm a bit concerned here obviously with your tea numbers. Please explain to me if I'm wrong here, but why would the competition want to follow the price increase when what you're doing in tea is really repositioning your brand? You have this new packaging, you have the marketing coming through now, you are repositioning the product so there's no reason for the competition to follow.

And related to that, shouldn't you have done first all the brand support and created more awareness for the new packaging and then follow through it with a price increase later? And the last question on tea to be honest, I consider myself a tea connoisseur, I think I buy quite a bit of tea, I'm not persuaded by your new packaging and I stand in front of the tea aisle and I look and Bigelow and Twinings jump out at me, (inaudible) and Yogi, the new packaging of Celestial does not. So why would I want to pay a premium on top of that. And I think the consumption numbers telling you 14% down are telling us something. (inaudible) through these, please. Thanks.

Number one, you can't look at the consumption numbers and look at the tea business and say the consumption number is 14% down, number one. As I said, 35% of our business does not go through measured channels. Number two, Pablo, listen -- there's a lot of consumers out there buying tea and everybody has a preference and we just did not come out with our packaging and put it on the shelf, we tested it, we did a tremendous amount of research and got great feedback. And so I feel good about our packaging. We hired a great firm and they did a lot with it. That's number two.

Number three, in regards to a price increase, you can't be afraid to take pricing out there, you've got to take pricing. I can't sit here with hibiscus, transportation, chamomile going up and not take pricing. If I don't take pricing and I need to support the brand at trade, so number one I've got a pricing issue and number two I've got a trade issue -- at least if I've taken pricing I need to support it, I do have margin now, additional margin to support it at trade level.

And number four, listen -- the key category over the last couple years, there's been a lot of entries in there with Tazo and Bigelow, there's a lot of entries in there with multiple others teas. And those that have positions and merchandise at market are going to sell. We weren't effectively doing a lot of category management. There's a new head of sales in there, a gentleman by the name of Jack White that came out of our grocery group. We have met with each of our major accounts and each of our major accounts, Pablo, really want to focus on the category because they want the category growing and it's a good margin category.

The other thing, Pablo, I'm not sure if you missed what I said -- 55% of our business now goes through on a direct basis which helps retail prices and helps margins. And you know what, the other thing is we're spending a lot more on the consumer. Tea is now less than 10% of our sales, so we're able to take our foot off the pedal from the profitability at Celestial and spend more money back towards the consumer.

So I think we have a great plan in place and I think -- I happen to like our packaging. I think we've diversified with Saphara. I think we've diversified with coffee. I think a price increase was definitely warranted with increased costs coming at us. And I think if we need to do roll backs and price promotions, at least we have our price increase covered and ultimately the right way to go.

That's doubtful, I appreciate that. And just a follow up maybe for John on the grocery side. 9% growth there, John, that includes the tofu acquisition or I should really think of it as really an organic growth number?

No, Pablo, that does not include tofu. And that is just -- and there are no acquisitions in there, that is just year-on-year growth on the same brand.

Okay. So (multiple speakers) is not included there?

And tofu is small.

Okay, and bodycare is not included on the 9%?

No, it does not.

And just, if you don't mind, just give us a range for some products. I suppose some products like maybe the non-dairy rice or soy drinks were below the number and what was above -- just a range if you can, what outperformed?

Pablo, in the brands that I spoke to you about, basically we saw most of them between 6 to 10% and with Earth's Best over 20 and Imagine Soups being over 20. But by a large we're seeing solid consumption growth across all those brands I spoke about.

And Pablo, we're seeing brands like Arrowhead Mills, DeBoles not only within our number one tier brands, our number two brands too.

And Pablo, just let me come back on tea for a second. As you look at tea numbers and consumption, and I gave you 12 week consumption, July, August and September are not the months to come back and look at consumption numbers totally on tea either.

No, I agree. The comps get easier also I guess, right?

The comps do get easier, but I think being up 4% shipment this year versus last year is pretty good.

And one last one if I may. Can you give us any color on the Plainville deal in terms of accretion or dollar sales?

We closed that (multiple speakers) a small part of it. And basically what we've said is neutral, maybe accretive by a penny or so. But we're saying it's neutral with higher costs coming on Turkey. But we feel going into '09 great value added products and great opportunity. As a matter of fact, one of the things we saw, the previous owners did not go out there and arrange for additional turkeys for this Thanksgiving, so it will be a flat year for Turkey. But the demand -- the value added products are tremendous there.

And roughly the dollar sales?

I'm sorry, Pablo. It's Ira Lamel. Don't forget that having acquired it at the end of August the month of September is not a heavy shipping month for turkeys. That will come in the next quarter.

Okay. But roughly dollar sales for that business annual? Just -- that's my last question.

It's about $30 million.

Okay, thank you.

Thank you very much, sir. Ladies and gentlemen, that concludes our Q&A for today. I'd like to turn the call back over to our speakers for any closing remarks.

Thank you, everybody. Thank you for listening to today's call. Some good questions and hopefully some good answers. But it's the first quarter of our new year, we've got a lot of good things happening. John talked about a lot of exciting new products, both on Personal Care, grocery, frozen, snacks, he's got good consumption and it's continued into October. And a lot of that, talking about his consumption, does not include new product shipments that have gone out there.

In regards to Celestial, I feel good about Celestial, I feel good about what we have in place. I've got to tell you, going into this year versus last year with the products, with the new packaging, and I feel pretty good about it, the management team out there. And everybody is pretty excited of what can come out of Celestial, we would just like a little bit colder weather out there. Some good things happening in Europe on the consolidation of plants on the McCartney brand and the Luton piece. The rest of our other brands in Europe continue to do well. Our Canadian business continues to do well.

We're focused on margins here and you must have heard me say margins quite a few times, Ira, John. So margins cost containment is something that we're focused on. A lot came up about pricing and we will take pricing, we have to take pricing. And I think for many, many years we suffered through where no one wanted to take pricing. And taking pricing is important, but having the relationships with your partners to see how you can take cost out of the business, and I think that's what Hain has done a magnificent job at is partnering up with its distributors and retailers and get efficiencies out of this business and that's why it makes sense.

On the acquisition trail, you heard me talk about acquisitions. We're looking at our sweet spot and we think there are some things out there and we'll continue to follow them, not at the same multiples that Burt's Bees went for of course, but products that meet our criteria. So with this I probably won't get a chance to talk to most people, have a happy holiday, a safe holiday out there and eat healthy, eat organic and buy Plainville turkeys if they're not sold out. You'd better buy early because my only guess that I can, Christine, that I can't tell you what the consumer is going to do, but I know we will be sold out of turkeys. Thank you.

Thank you very much, ladies and gentlemen, for your participation in today's conference call. This concludes your presentation for the day. You may now disconnect. Have a good day.