The Hain Celestial Group, Inc. (HAIN) Earnings Call Transcript & Summary

Thanks, and good afternoon, everybody. Thanks again for joining us at the Evercore ISI Consumer and Retail Conference. I'm honored to be joined in this virtual fireside chat by Mark Schiller, President and CEO; and Chris Bellairs, CFO. Mark took the helm of Hain back in November of 2018 after 25 years in leadership positions across a variety of companies, including most notably senior roles at Pinnacle Foods and PepsiCo. And Chris joined -- he joined Hain this February. So congratulations to him as CFO after holding similar roles at Stone Brewing and Dean Foods. Welcome again, Mark and Chris.

Thanks for having us.

Thank you, David.

So let's get started. Mark, you held your Analyst Day back in September of '21, which feels like ages ago, certainly, COVID had -- certainly put some dog years on everybody. But can you take a step back and reflect on your Hain 3.0 goals and targets in light of what's happening today and certainly what's been an ever-changing environment?

Yes. I mean, you certainly have to discount some of what's going on in the short term that I don't expect we're going to have double-digit inflation 5 years from now, but -- and hopefully, the supply chain challenges work themselves out. But I think if you look at the underlying assumptions in 3.0, which was that we have significant distribution and innovation opportunities that we have a robust productivity pipeline and that we're -- the core of our business is in high-growth categories. I think that vision remains intact. There's a little bit of puts and takes in the short term. Plant-based meat is a little softer than we had expected and baby is a little bit stronger than we had expected. But in aggregate, the categories are behaving about as we thought that they would. Our competitive position continues to be strong, and we're still very bullish on the long-term potential of the brands.

And one of the things that would strike me is quite different is getting the distribution that you had expected as you pushed ahead, you were going to get into growth mode and then getting more points of distribution, you highlighted a $6 million opportunity previously. Can you give us a sense about your ability to go for that in this environment? And how you would imagine that playing out over the next 1 or 2 years? .

Yes. So we said there was about $600 million of potential. And quite frankly, the potential is much higher than that if you assume. You get to 95% distribution everywhere. But there was 3 basic components to distribution. One was just filling out the ACV in the core channels that we're in. And if you think of even our biggest brands like Sensible Portions, Veggie Straws or Celestial Seasonings tea, we're only in about 70% of the ACV. So there's still plenty of opportunity in core channels. The second big opportunity was to get into new channels. How do you get personal care into Walgreens and CVS? How do you get a sunscreen into Surf shops? How do you get snacks into sandwich shops? Those are all still there for the taking, and we're making good progress on those as we speak. And then the third opportunity was geographic expansion. We don't have our powerful snacks portfolio fully embedded in Canada as an example. And so all of that is still there. We're making progress, but certainly in an environment with supply chain disruptions and customers doing less resets than they typically do as they're working through labor shortages and other things. It's a little bit clunky just as it was at the beginning of the pandemic. But we are picking up really good distribution in snacks, in yogurt, on Alba, particularly in SunCare. And so we feel like we've got the momentum that we need. The core items are moving well and have earned their space. We're still underspaced relative to shares. So we've got a compelling set of data that would suggest we deserve more, and we're bringing innovation that's incremental to the category. So still very bullish there and believe that, that runway is very much in our grasp graph.

I mean how much innovation -- I think you cited almost $0.5 billion opportunity there. Could you speak to your ability to get new products out there in this environment?

Yes. So that number implies about 7.5%, 8% of our sales each year come from inflation. We were at about 2% when I started. We're at about 6.5% now. So it's certainly a doable number. And our innovation strategy is pretty simple. We just take things that people already eat and love and we make a healthier version of it, which means that our success rate is going to be well above average because we're not creating new to the world types of foods. We're just looking at where people are buying today. And we fundamentally believe if we can make something that's healthier, it still tastes great and is affordable and available that they're going to migrate to our category. So our stickiness on innovation has been very good. The incrementality of our innovation has been very high. We've got a great pipeline of ideas coming. We're launching peanut butter and jelly bites under Earth's Best, which is one of the best products I think we've ever made. We've got more innovation coming on tea, we've got more innovation coming on snacks, on personal care, and it's being very well received. Now again, in this environment with labor shortages and supply challenges, not every retailer is resetting like they normally would, but it has worked for us throughout the pandemic. If I just get a core handful of retailers to take it and can use the consumption data to make my case to the other retailers. That's a lot more powerful than concept data where you have to trust me that I talk to 100 consumers, and they said this is a good idea. And so we think our aggressiveness on innovation is the right strategy and certainly further justification for additional space.

More I look at -- even these questions, I just think about everything that I'm asking about from the original plan just feels harder than it would -- you would have thought back then. For example, in the productivity savings, you talked about getting $100 million per annum. I would imagine that a lot of that stuff is harder to get after as you're just scrambling let alone the friction costs themselves that are an offset to the productivity. Could you talk about getting this $100 million in productivity? And are you up to that run rate?

First of all, the $100 million was for 2 years. It was for '22 and '23. That wasn't per annum. So I just want to make sure we're clear on that. But yes, it is challenging in this environment to get all of the productivity because some of it, like automation, is reliant on equipment coming in. Equipment lead times are much longer than they were before. We used to be able to get certain things in 6 months that may now be taking 18 months. So some of it is getting elongated. But I would also say we're accelerating other things that we have more control over, like reformulations. We don't need to wait on a piece of equipment to get that kind of productivity filling up trucks we've talked about before, where the acquisition of that's how we roll, as an example, they can ride on our trucks for free, and we can eliminate virtually all of their distribution costs because our trucks are not going out full. And so there's still a lot of opportunity there. It is definitely harder in this environment because anything that you don't have complete control over just takes longer and is more at risk. But the pipeline of ideas is full, and we've been doing a good job of continuing to generate productivity. And we're using that productivity right now to offset all these supply disruptions. And 3 points out of the assumption was we price to cover inflation, and we use the productivity, reinvest in the brands. Instead, we're using it to offset these disruptions. But the good news is because our distribution and service has been so good during this period of time, we're getting a ton of trial from consumers who go to the shelf and find that our products are there when somebody else's isn't. So while I haven't invested in marketing per se, I have invested in service and that service is yielding the same kind of benefit in terms of new people coming into our brands.

I guess, putting together some of those elements of the growth plan, what are your thoughts about the potential to get to those goals that you were talking about, the 6% to 9% organic sales growth and the 8% to 11% EBITDA growth target, I think, in fiscal '24. What are your thoughts there?

Yes. So that was a '25 target. And what I would tell you is, obviously, we've taken a step back on margins this year. So getting those margins back up to what we had originally assumed for '25 may take a little bit longer. But we're already kind of at the high end of our top line range in North America. We've just got to get the international business growing mid- to high single digits as well on the top line. So we're still bullish. We're in the right categories that consumers gravitating towards health and wellness. The pandemic accelerated people's thought processes on eating healthier because this really was a health and wellness crisis, we're in high-growth categories, and we have leading share brands. And so all of the tailwinds for us to be a high-growth business are there. In the short term, we're getting that high growth more through pricing than anything else. But at the end of the day, the fact that we're seeing unit increases in the face of double-digit price increases is again encouraging to us that consumers are staying with our brands even as we raise prices, which just reinforces that we're in the right spaces and doing the right thing. So we're pretty optimistic. Again, it will take a while given some of the headwinds that we've got and some of the macro challenges, but nothing's really changed in terms of our fundamental belief in the growth potential of this business.

And in the past, you talked about a gross margin target getting closer to 30% over time from maybe roughly 24% I think, is where we are today. It seems like a long journey. It's tougher, it seems tougher than ever. Do you think that's still in play that 30% type gross margin? Or do you feel like this is something like you've been set back a year or 2 on getting to something like that? .

We've definitely been set back in this environment, but I still believe that, that's there. If you look at average CPG and then some of the structural differences between our businesses and there is the fact that we go through third-party distributors for the natural channel, and we do more co-packing, that 30% target is still a really good target for us. And again, a lot of what we're doing are things that the big CPGs did 20 years ago, automating your packaging lines as an example. We're not inventing anything new to the world in terms of our productivity agenda. We're just trying to catch up and be a great operating company after many years of being a holding company. So if we just execute things that are already proven ideas in other CPGs, we'll get to that target over time. again, with the step back in the short run from all of these challenges that we have, it might take a little longer than we originally conceived, but the potential is still there and the idea is to generate it are still there.

I want to -- I'll circle back to the U.S. business here in a second, but I wanted to maybe dive into the European operations, in particular, the U.K., which is seemingly been a little bit more of a problem of late. You talked about a little bit of the U.S. -- I mean, the U.K. industry, the traffic being weak relatively as an industry obviously, inflation increasing, perhaps the consumer at some levels, dealing with inflation and consumer confidence issues. So -- but why do you think it is overall so much worse there in the U.K. versus here? What sort of structural differences would you point out?

Well, I would say the war with Russia and the Ukraine is much more tangible to them than it is us, right? They get their natural gas from Russia. And every day, there's a threat that, that pipeline is going to get shut off and their already high inflation is going to get worse. A lot of the transient labor in the U.K. comes from the Ukraine. There's nobody coming from the Ukraine today. A lot of the materials that they get wheat and sunflower oil comes from Russia and the Ukraine. And again, those are in short supply in this environment. So while we watch it on TV and we're appalled by what we see, they're living it, right? They see Russia threatening, Finland and other countries that say they're going to join NATO. And so they're concerned and it's hitting them pretty hard in the pocket book. While we're seeing $5 gas prices, the cost for them to heat their homes this winter was 10x what it was last year. So here a middle-income family making $40,000, $50,000 a year, you just spend $8,000 heating your home for the winter. That's just a massive percentage of your total income, whereas last year it would have been $800, this year it's $8,000. So they're making changes and trade-offs at a much faster clip than we are here. And so you -- that, coupled with kind of the COVID overlap because last year, they were in complete lockdown and now they're completely open. Some of the eating occasions have migrated out of the home as well. So short term, it's a headwind. The entire grocery store in the U.K. was down 7% in the third quarter. We said that will get better in the fourth quarter. We saw May was better than April, still down but getting better. And I expect that it will normalize over time because people have to eat, and they're going to give up eating out before they give up eating at home. And so I think over time, it will stabilize, but it will take a few quarters for that to take effect.

And when it comes to a profit recovery path in that market, what additional considerations would you offer there?

Yes. So the good news there is we almost self-manufacture everything there, whereas here, it's only about 55% to 60%. So we have much greater control of our destiny in terms of labor and manufacturing output and efficiency and productivity, which bodes well for our ability to get that margin back. A lot of the margin degradation you saw in third quarter was really deleverage of our plants. When you stop shipping for a month, as you're going through some of the pricing things we talked about or you lose a major customer in your co-pack private label business in Continental Europe. We deleveraged our facilities, and that cut into margins pretty significantly. So as we fill those plants back up, the margins will return. And we have pricing power. We tend to be the opening branded price point in many of our categories. And with the inflation that we're seeing, we have room to take pricing. We just have to work with the retailers to get it done. And in fact, we just took an increase on our baby food business there, Ella's Kitchen, which is a #1 share brand, got the pricing through, no problems. Completely accepted and done. So again, a little bit of volatility in Q3. I expect, given the Russia-Ukraine war, it will be -- always a negotiation, but we will have a high likelihood of getting that pricing through that we're negotiating now for Q1. And you fill up the plants, you get the pricing and the margins will start to return.

Pricing in markets like the U.K. always scares me more than the U.S., maybe it's a legacy of Robinson-Patman Act. And it just seems to be much more of a negotiation by retailer. And then on top of that, you have a retailer branded business over there. So could you -- are there any other -- you mentioned -- I think it was Ella's Kitchen, you might have mentioned that had a good pricing flow through, but if you could talk about maybe are there instances where it's not going quickly, like you would typically see here in the U.S. And then how can you -- I think maybe 1/4 of your business over there might be retailer branded, you correct me if I'm wrong on that. But how does the pricing work for something like that?

Yes. So we're mostly branded in the U.K. and almost exclusively private label co-manned in Continental Europe. The negotiations are, in fact, that, it's a negotiation, whereas here, you take pricing and you either get it in or you don't. There -- you have to give something to get something. And part of the challenge we had in Q3 when we took pricing was we were taking pricing on private label, which can be 35% or 40% of the category and very important to the retailer. And when you're breaking into the middle of a contract to try and change your pricing, that's going to be a more contentious conversation then if you're taking your branded products up. And so Ella's Kitchen, which is branded, we took an increase. We got it through, done. As we're looking at first quarter pricing, we're leaning much more heavily on pricing on the branded side than the private label side, which I think gives us higher likelihood of success. But as I said, it's always a negotiation. You may have to add some trade events, you may have to invest in shopper marketing. You're going to have to do something to get something because it's such a concentrated retail environment. But again, we have strong brands. We have good retailer relationships. I'm optimistic we'll get it through. And obviously, we've got some work to do between now and the end of July to get that done. But so far, I have no indication from my team there that it's not going to be achieved. So we're optimistic that we'll get it done.

In terms of the U.S. versus if you had to illustrate a price versus input picture, that there might be a lag in the U.K. or overall, the European market. Is there a lag that's going to last well into fiscal '23 there because of things like the private label business and the negotiations that happen that is greater than here in the U.S.?

Yes. So there's always a lag because you have to give retailers 90 days' notice your -- and you need another 30 days to just put together the facts to demonstrate that your costs have gone up. So you really -- it's really about 4 months from the time you see the inflation to the time you actually get it passed on. In the case of private label contracts, to your point, in some cases, there are annual contracts and you have to wait for the contracts to expire. So there may be more of a delay in Europe versus where it is here. Again, it just depends on the nature of the contract and who the retailer is, right? With smaller customers, it's easier to get the pricing through with bigger customers where you have a contract, you have to wait until the contracts expire. And we learned that in Q3 when we -- we did get the pricing in, but it came at a price in terms of us not shipping for a period of time. So there might be a little bit more of a lag in Europe.

And then can you remind us again how we should be thinking about the organic sales growth and operating margin opportunity for that overseas segment longer term?

So when we put together the 3.0 algorithm, we expected high single-digit top line growth in North America, more mid-single-digit top line growth in Europe, which was about what we were achieving during Hain 2.0, quite frankly, when you tease out the divestitures and the SKU rationalization. The net was we were growing around 5%. But the margin opportunity is there on both sides because remember, we took the North America productivity playbook and applied it to international 2 years after we started it here. So they're a little bit further behind in terms of getting all of that low-hanging fruit that we mentioned. And so I expect that you'll see robust margin improvement in both businesses over time. Again, we got to get through the short-term macro challenges that we're facing. But the productivity initiatives are plenty. And again, there's no shortage of ideas for either side. So I expect you'll see good margin expansion in both places.

That's great. And circling back to the U.S., it certainly looks like the data that we see, which I know is not everything, but the measured channels looks like you're getting 13% sales growth and your pricing has been really ramping up there. So that's great. It looks like Earth's Best has been a big helper there. Could you talk about Earth's Best? What's going on there? What is going right there?

Sure. So -- the first thing I would tell you, when we did 2.0, remember that earth's best had a 2% EBITDA margin, and we exited 25% of the business proactively and got it up to a high teens EBITDA margin. And part of the way we got it up to a high teens EBITDA margin was by switching the mix. We got out of things that were unprofitable, and we doubled down on things like snacks for toddlers that's very profitable. That Snacks business has doubled in the last year and is on fire. So that is a major part of the growth there. And as I mentioned, we're launching peanut butter and jelly bites under the Sesame Street logo as we speak. It's co-branded with Earth's Best, and it's a phenomenal product. I'm very optimistic about how well that will do. And we've taken a lot of the things that we have on sensible portions the straws and the pumps and launched a more toddler friendly version of that, which is a great way to leverage our manufacturing facilities, our R&D capabilities and just bring an existing product to a different consumer under a different brand. So that part is working great. Obviously, there's been a shortage on formula. We're a beneficiary of some of the challenges that one of the big players in the category had. But candidly, there's no possible way we're going to be able to supply the demand that we're seeing because when a leader who has 1/3 of the market goes out of business, it's not like the rest of the industry has the capacity to pick up that kind of volume, particularly in a category that's been relatively stable over time. Birth rates are not exploding. It's a pretty stable business. So the good news is we've seen a surge in orders. We're certainly shipping more than we would have normally, that's a benefit. And that's good for us because, again, once we get them in with formula, we trade them over to pouches and jars and we trade them over to the snacks. And so getting new consumers in from infant stage is a win for us over multiple years by getting them in the franchise. Those have been 2 of the big tailwinds. And then the other headwind we've had which is pouches. There's been a worldwide shortage of pouches, which -- we sell baby food and pouches. We are just now, after about 9 months able to -- we've qualified 2 additional pouches suppliers and we have additional pouches coming in that again should be a tailwind for us going forward as we recoup much of the volume that we weren't able to fully supply over the balance of this fiscal year. So I'm very bullish on that business. And the Ella's Kitchen business in the U.K., which is a B Corp certified business has grown market share 15 years in a row. And it just continues to perform unbelievably well. I think it's up about 25% this year. So the Baby business is -- has a lot of tailwinds behind it right now, which we feel great about.

I wonder what we'll give there with the Infant Nutrition business. I mean you have a major player that's down, you're going to be struggling to get more supply. I mean, do you see -- and then of course, you mentioned that you're trying to recruit those consumers to more of your categories. So I wonder what the legacy of this is going to be, how long this will last with your competitor? I mean, do you have a sense of the path from here.

Well, at some point, they're going to turn their manufacturing facility back on. And like any business that has a recall. Consumers -- we'll come back to the brand. But what's interesting about infants is they've lost the whole series of infants that they'll never get back, right? Once you're infant has picked Earth's Best as the brand because their favorite brand is not there. Mom's not going to switch back if their infant is thriving on the brand and that they're on. So we'll keep those consumers for the long haul. But as the next babies are born, as those brands come back online, I expect that they'll recoup their share over time. And that's okay because they're only in the infant business, and we've been successful over time attracting those consumers to our pouches and jars and snacks. But it's a lot easier if you get them in at the infant stage and just keep them in. So short term, we picked up a bunch of consumers. Longer term, we'll probably go back to business as usual, which is fine because again, we were doing quite well. And what's also interesting right now is there's a baby boomlet happening because a lot of people didn't want to get pregnant during the pandemic, could be in the hospital, giving birth and a lot of marriages were delayed. So I actually expect the next 3 to 4 years, you're going to see a much higher birth rate than we've seen normally, which again bodes very well for the near-term prospects for Baby's boomlet. That's great.

Just wrapping it all together, particularly in light of the pricing that we're seeing right now, I wonder how you would think about a sustained organic sales growth, 6% to 9% look like such a stretch a minute ago. now with something double-digit pricing levels. But how do you think about organic sales growth in the U.S. in light of the fact that we have much more inflation and pricing going on?

Yes. I mean short term, we're going to achieve those numbers. We did last quarter in the U.S., and we're having a similar kind of quarter in Q4 on the top line. And to your point, a lot of it is coming through pricing. But again, go back to our 3.0 strategy. We expect we'll cover low inflation with pricing and we have to drive brand growth, unit growth through marketing and expansion. And so it's our biggest brand, which is sensible portions, veggie straws, has less than 10% household penetration. It's up 70% over the last 2 years, and it still has less than 10% household penetration. So there's a huge amount of consumers that have not discovered our products yet that if we just do our job, get the distribution, build great innovation, attract them with great marketing, there's no reason that we shouldn't be able to be a high-growth business for many, many years to come.

When we're looking at some of the price elasticity levels across our companies, your business is a portfolio in the U.S. that is -- and this is within measured, it looked to be relatively low even among very low price elasticity phase that we're in. I'm sure there's some bright light areas where you have very, very, very low price elasticity, but some others that it's not as quite as low. And I'm sure you have some views about how this is going to play out from here. So what observations have you made? And what are your -- what's your thinking about price elasticity going forward?

Yes. So the first thing I would tell you is every brand is different, and we very closely watch relative price gaps versus our direct competitors. We look at price thresholds, we watch velocity and how it changes when we take pricing. And in some cases, we didn't take enough and in other cases, we took too much. And so there's a lot of adjustments going on post price increase where -- if I took an increase in others didn't, and now my price gap has widened, and I see that impacting velocities, I've got to go spend some money back to get back within that normal range of pricing. And similarly, if others took a 15% increase, and I only took 7%. When I take the next round, I'm going to take a lot more than I did the last time. And so it is a dynamic environment in terms of how much pricing can you actually pass on. And look, I would tell you, in categories that are more commoditized, the consumer is going to be more elastic. Brands that are more value-added they're going to be less elastic. And we've seen that kind of play out across our portfolio. In terms of the consumer willingness to continue to accept these increases, as long as everybody is going up, they really don't have a lot of choice other than to trade down. And what's great about health and wellness is, number one, have a much more affluent consumer who is going to be much less elastic, right, like gas prices are way up. But if you're making $100,000 plus a year, you're probably not driving any less. Even though you're appalled by the increases, you've still got to drive, and you still have to eat -- that's number one. Number two, there really isn't a lot of private label in the health and illness segments. If you think about it, a retailer is going to go after the $1 billion brands, not the $100 million brands because there's just a lot more volume to be had with the mega brands. And so we tend to be more insulated from private label trade down. We tend to be more insulated from just the affluence of the consumer. And again, we are well positioned in many of these categories where we may be the opening price point in that Health and Wellness segment. Earth's Best is the opening price point of organic baby food. Now it's still organic, but that's a lifestyle choice. You're probably not going to switch from organic to nonorganic. So if there is switching to be done, they actually switched to us because we're the opening price point. We're the opening price point in herbal tea, we're the opening price point in jams and marmalade over in the U.K. And so to the extent that people do trade down, we actually may be a beneficiary in some cases. And so -- we're just watching the marketplace seeing what the consumer reaction is and seeing if our competitors are continuing to go up. And as long as we all go up together, the consumer at the end of the day is going to have to make choices among what's in the store. If you go up and nobody else does, then you're taking more risk. And so we watch that really closely.

And one brand that I've just been amazed at over long term is sensible portions. It just seems to be the brand and the gift that keeps on giving 25% plus growth could you give a sense of your confidence in the ability to sustain the type of growth that you've been getting out of this brand and what your plans are with it?

Yes. So back to -- we still have less than 10% household penetration. We still only have 70% ACV. We're still not in sandwich shops or convenience and gas and lots of places where people buy snacks. And our innovation like the screen and hot sensible portions of veggie straws that brought males into the category or the puffs that we've just launched that's bringing other consumers in, we just feel like this can be a mega brand and I look forward to standing up on one of these calls in the not-too-distant future saying, hey, we just had $0.5 billion. I think this brand has that potential to be a much bigger business. Challenge for us candidly right now is keeping up with demand. So we are building capacity because 2 years ago, if I told my Board, we were going to grow 70% over the next 2 years. They would have left me out of the room. Well, we did. And now we're building infrastructure. And in this environment, again, capital takes longer to bring in. And so keeping up with the demand is the biggest challenge we have, quite frankly, not creating the demand.

I want to squeeze 2 more questions in, in our last few minutes. But you just mentioned sensible portions that your plans there and your innovation pipeline still is robust. Anything else from an innovation standpoint that you're excited about or distribution opportunities, anything growth that you'd highlight that we're going to see over the next 12 months?

So on all our SunCare business is absolutely just rocking up like 50% versus a year ago. And it started when -- again, there was a benzene scare and some manufacturers were pulled off the shelf. We got huge opportunities to take that space and have performed so well that we're getting that distribution in permanently. And we're getting into surf shops in places we've never been before, which we're very excited about. Great innovation coming on Baby Snacks, as I mentioned, these peanut butter and jelly bites are just to die for. I'm going to create an adult version of it because they're -- anybody that I've ever given it to most through the entire bag. We've got great innovation on tea that we've had over the last several years that TeaWell business that we launched is growing about 45% and is still only in 27% of the ACV. So we've got big distribution expansion opportunities there. Greek Gods, we're launching a Sesame Street yogurt as we speak, to try and get after the kids market with a Greek yogurt. We're excited about that. So there's a lot left for us to bet on and be excited about. And again, our problem is not coming up with growth ideas. Our challenge is really the ability to execute it in a very challenging environment.

So I want to wrap up with just a question on M&A. You've really used divestitures, in particular, and it's a great way to increase your growth and focus. I think your latest thoughts around divesting -- divestitures and simplifying was that you had a portfolio -- a simplified portfolio, 8% of sales, 7% of EBITDA as of that Analyst Day. Could you talk about the ability to get these divestitures done in the environment? And to what degree are you also focusing on acquisitions?

Chris, do you want to take that one?

The environment is more complicated, as you can imagine, David. But we are still having conversations. There's still interest in the brands that we've identified as things that long term may not fit into the portfolio. So that's still underway. And then really no change to our expectations there. On the acquisition side, before I got here, I think over the last couple of years, before pulling the trigger on that's how we roll, I think the company had looked at maybe as much as 20 to 25 different targets. So the company has done an excellent job of being disciplined, making sure that as we look at acquisitions, we're checking the boxes that are important to us. And I think -- that's how we roll is the perfect case study for checking all of those boxes to really get a brand -- a brand that has the ability to build a powerhouse brand for us and really incrementally grow our stacks business.

And one -- I know I should be wrapping up here. But 1 area that you talked about in the past was meat alternatives plant-based and to some degree, have watched that category, particularly in the meat alternatives. It seems to have slowed. I do wonder about how you guys try to tease out long-term trend versus FAD when it comes to wellness.

Yes. So as we look at the data -- no question is slowed by the way. We look at the data -- the people that were heavy users before the pandemic are still there and even heavier than they were before. What happened at the beginning of the pandemic when you couldn't get animal protein was a lot of people tried this because they went to the store and they couldn't get what they wanted and they say, "Oh, here's plant-based. I keep hearing about it. Let me try it." And a lot of them left when the animal proteins came back. So I think some of this is just kind of boom flat a little bit. But look, it's our job as a manufacturer is to give people products that they're going to enjoy to do it at an affordable price point. And in fact, you're seeing right now that the price of plant-based products is coming down even in this inflationary environment, and we're getting closer to mainstream protein prices, which I think bodes well for the future. So we're still optimistic on plant-based meat. It may not be the double-digit growth category it was before, but we still expect it to be growing. And plant-based beverages are still growing high single digit, low double digit around the world. So we're still bullish. But short term, we've got some of that headwind as people kind of try and go back to their normal behaviors.

Great conversation. Mark, Chris, thank you very much. I appreciate you joining us today and meetings today as well. Thanks again.

Thanks for having us. Take care.

Thank you.