Hain Celestial Group

Barbara H. Peterson

Farm Wars

Hain Celestials has been caught mislabeling its “organic” products. Not only that, but Celestial Seasonings tea, which is so popular and “healthy?” Well, hold onto your hats…. It has been found to be laden with pesticides and known carcinogens, well above FDA standards.

So, before you plunk down your hard-earned money on a brand that you think you can trust, such as Earth’s Best “Organic” baby food, please reconsider. This brand is owned by The Hain Celestial Group. While it is not on the list of tested products that were found to be mislabeled or contaminated, that doesn’t mean that it is what the company says it is. After all, if 91% of samples tested from the company’s “natural” tea products were found to be contaminated with high levels of pesticides, and several “organic” products were not exactly “organic,” how many more products that were not tested would fare the same?

Here is the report. Please pay close attention to the “Insider Sales” section:

THE HAIN CELESTIAL GROUP, INC. (“Hain” or the “Company”) is a $3 billion roll-up of disparate food brands that we believe is masquerading as a healthy/organic food company. In this report we present compelling evidence (based on independent lab tests and other due diligence) suggesting that products representing 85% of the Company’s 2012 internal growth are beset by quality control issues and/or deceptive marketing practices. We believe that once the Company’s exaggerated claims are exposed, Hain will revert to its historical internal growth rate of 3% and eventually trade in-line with mature packaged goods companies at a 15.5x forward p/e multiple. As Hain currently trades at 24x forward earnings, this implies downside of 35%.


1. The Sinking Flagship. Celestial Seasonings is Hain’s flagship brand and also one of its most profitable product lines. It is built on the perception that its teas are ‘100% natural’ and healthy. As consumers, we decided to verify such claims by sending eleven of the Company’s popular teas to Eurofins, an accredited and independent lab that is the global leader in drug and food testing. Lab tests showed the following:

a. Tea Samples Violate US Law. 91% of the Celestial Seasonings’ teas we tested violated U.S. pesticide standards (CFR 40 section 180), meaning such teas are ‘adulterated’ under the FDCA and subject to federal regulatory action. All violative samples contained traces of known or possible human arcinogens.

b. Children’s Tea Sample Contained Traces of a Known Carcinogen. Independent lab tests revealed that the Celestial Seasonings’ Sleepytime Kids Goodnight Grape Herbal  Tea sample contained 0.26 ppm of Propachlor, a known carcinogen for which there is no safe harbor limit established under California’s Proposition 65.

c. ‘Wellness Tea’ Samples Also Appear to Violate California Proposition 65. Six other tea samples, including all three teas that we sampled from Hain’s “Wellness Tea” category, contained traces of Propargite, a known carcinogen and developmental toxin for which there is also no safe harbor limit under California’s Proposition 65.

d. Repeat Offender. The FDA has issued two prior Warning Letters to Celestial Seasonings for quality control issues. Given our test results, we expect further regulatory scrutiny.

2. Nectar of the Gods? Hain markets Greek Gods Yogurt (responsible for an estimated 37% of its internal growth in 2012), as an ‘authentic’ Greek-style yogurt. We believe this marketing to be deceptive because Greek Gods contains only one-third of the protein and 400% more fat when compared with ‘authentic’ Greek style-yogurts such as Chobani. Consumers are catching on, and sales growth is sharply decelerating.

3. Sensible Portions Veggie Straws. Sensible Portions accounts for an estimated 40% of Hain’s 2012 internal growth. We believe that these ‘veggie straws’ are another example of deceptive marketing because they are promoted as a healthy snack yet appear to have very little vitamin content. Sales growth has imploded, we believe due to the launch of competing products and increasing consumer awareness of this product’s true nutritional value.

4. DeBoles Organic Pasta. Independent lab tests detected that multiple samples of DeBoles pastas, labeled ‘certified USDA organic,’ contained traces of MGK-264 and piperonyl butoxide, which are EPA Group C Possible Human Carcinogens associated with conventional pesticide use.

5. Deceptively Labeled Face Wash and Shampoo? Hain is currently defending against a class action lawsuit alleging that its personal care brands Jason and Avalon Organics are deceptively mislabeled as ‘organic.’ For example, in one Jason product labeled ‘organic,’ only 1 of 19 ingredients was actually organic.

6. Spectrum Organic – More Deceptive Labeling. In 2010 the FDA warned Hain because it was labeling its Spectrum Organic All Vegetable Shortening as ‘cholesterol free’ when it was not.


7. Non-‘Organic’ Growth Rate. Hain has masked anemic internal growth through serial acquisitions and discontinued operations. If you back out acquisitions and accounting gimmicks, we estimate Hain’s sales averaged 3% internal growth between 2000 and 2011. This compares unfavorably to a 12% average internal growth rate for the U.S. natural and organic food category as a whole.

8. The Party is Over. Hain’s estimated 7% internal growth rate in 2012 was driven primarily by Greek Gods Yogurt and Sensible Portions (Veggie Straws). Sales growth of both products appears to have rapidly decelerated in recent months. Excluding these products and the troubled Celestial Seasonings line, we estimate 2012 internal sales grew by only 1%, which is more comparable to a mature packaged goods company (3%-4% growth) than a leader in organic and natural foods (10%-20% growth).


9. Simon Says, Simon Sells. During the last 21 months, Hain CEO Irwin Simon took advantage of a temporary boost in Hain’s share price to dump $33 million of stock. Worse still, Simon sold his stock in eleven tranches, all of which began within hours to 28 trading days after Simon appeared on CNBC to tout the growth prospects of his Company.

10. Valuation. A likely reversion to Hain’s historical internal growth rate of 3% suggests that the Company’s stock should trade in line with mature packaged food companies with similar growth profiles, not healthy/organic food comps. A 15.5x forward p/e implies a stock price of $38, around 35% below today’s stock price of $58 per share.


©2013 Barbara H. Peterson

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7 Responses to “Hain Celestials – Not so “Organic” or Healthy – High Pesticide Content in Tea”

  1. superf88 says:

    I specifically spent my money on their products b/c of their labeled organic and/or pure marketing.

    Is this information (about the carcinogens and toxins in Hain Celestial Group foods) confirmed to be true? Does anyone know if there has been a reaction to this bombshell by the company, the USDA, FDA or Whole Foods?

    If so, is a class action lawsuit being organized (yet)? If Simon only listens for money then money he ought to hear…

  2. Olive Farmer says:

    Google Olive Farmer Crete for more

  3. Barbara T. says:

    How unfortunate that we can’t trust food companies (especially organic ones) to police themselves. But then we have no “cat” anymore (USDA and FDA)and the mice will play. Celestial Seasonings is anything but. Good to know.
    Great that you are doing this checking. I am sure that there are many more operating under this lax oversight here in the USA.

  4. Vee – The full report from Glaucus Research Group California, LLC is at https://glaucusresearch.com/wp-content/uploads/downloads/2013/02/GlaucusResearch-The_Hain_Celestial_Group_Inc-NasdaqHAIN-Strong_Sell_Febuary_21_2013.pdf.

    The research lab they had conduct the tests is Eurofins at http://www.eurofins.com/en.aspx:

    “We tested eleven Celestial Seasonings teas from the brand’s most popular categories (green tea, wellness tea, sleepy time/kids tea and k-cup). Results showed that many of the teas contained so many pesticides that they violated US regulatory standards. It is important to note that at no time did we take custody of, touch or handle any of the tea samples. Rather, we had the products shipped directly to Eurofins from the Company’s website and other online retailers. We selected Eurofins because it is an ISO/IEC 17025 accredited and independent laboratory, and it is the world leader in food, pharmacological and environmental testing.’

  5. Vee DeMarche says:

    I’m floored…been buying (on sale at Safeway @$1.75 a box) and stocking up on this Sh** for months now and was “enjoying” a cup when I open your mail just now…:((( I can’t believe this, why would a respected company piss on one of their most profitable recognized products… unless like most of the informed elite, they know (or sense) that the whole thing is coming down… they have already have their bags packed and are ready to “evacuate” to that undisclosed island when it does -having stashed the gold and silver they LOOTED from all of us over the years. I owned a very popular natural food store 30 years ago in NY (1975-1985) and sold the Celestial brand before it was sold by the original “hippy” owner to this or some other conglomerate several years ago. I remember reading this in Thailand a getting that “sinking feeling”. I did not drink it for the last 25 years because I lived in Thailand where it cost about $7 a box… then I came back to San Francisco a year ago…and started buying this Sh** again, thinking WOW what a deal!!! I think I will bring back my tea stock (about 30 boxes) to Safeway along with a copy of your research…and demand some satisfaction! Thanks for the Information…could you please publish the tea toxicity reports? This so I can really make my point at Safeway. Thanks V

  6. Victoria says:

    I fuses we have to make everything ourselves. You just can’t do business with a liar no matter who they are. Thanks for the heads up