Hain Celestial Group CEO: Turning Pain To Gain | Mad Money | CNBC

What consumers want today is full disclosure for them to look at a product and say right on the back it says no GMOs, and that's all I ask for. At Hain, 99.9% of our products today are GMO free.

We know that the natural organic trend is here to stay with us. Panera Bread's announcement yesterday of unacceptable ingredients list, but if that's the case, then what the heck's happening with Celestial? Natural and organic food maker behind Celestial Seasonings, Earth's Best, Terra, Garden of Eden, it's good because yogurt, host of other brands. It is one of our long time favorites here on Mad Money. Do you know the stock is up more than 500% since we first interviewed the CEO way back in September 2005 and we said this is the one. Look, over the last few weeks it feels like Hain may have fallen out of favor in the Wall Street fashion show. Stock's down more than 10% since hitting its all-time high late March. Then this morning, Hain Celestial reported what appear to be a pretty solid quarter: in-line earnings, higher than expected revenues rose 18.9% for the year, despite the impact of a strong dollar in the company's sizable business overseas. The one real negative is that Hain's gross margin got squeezed on some raw costs that have gone up. We'll go all over that. Still, management raised the full year forecast for earnings and sales. The stock got slammed down 2.09 to 3.4. The reason, I think, a lot of it has to do with high expectations. We've all gotten so used to Hain Celestial being a serial out-performer. Someone delivers a good quarter that's not totally perfect, stock gets hit. However, Hain has been going up virtually in a straight line for years, and I think you need to look at this recent pullback as a chance to buy a high quality stock at a nice discount. Don't take it from me, let's check in with Irwin Simon. He's the founder, chairman, CEO of Hain Celestial. Hear more about the quarter, where his company's head. Mr Simon, welcome back to Mad Money.

Hey Jim, how are you? Good to see you.

All right, you had a problem this quarter and I want to summarize it as being other than the dollar. Almonds, if almonds had not gone up so quickly in price, wouldn't this have been a gross margin quarter that was pretty good?

So first of all, we had a great quarter. Almost 19% growth, double-digit high single-digit organic growth. We grew across the country and we spent more on advertising, so it affected our gross margin. We had some almonds, we had some organic coconut. But Hain's not about a quarter to quarter. Here's what we are. Listen, we are changing the way the world eats. I started this company 20 years ago when you mentioned the word GMO, you mentioned organic, no one understood it. You walk through a Walmart today, you walk through a Target, you walk through multiple other retailers. There's close to 500 Whole Foods. So it's not quarter to quarter. There's Easter, there's certain promotions. I thought we had a great quarter.

No, look, I think in the transcript, if people would bother to read it, because they tend to make snap judgments. Kroger, big. Now you mentioned Target, Walmart. These are places where they don't really have any choice other than go to you because you have so many units.

Well, there's 93 million Millennials out there. We both have daughters that are Millennials and we see what consumers are eating, how they're changing. No genetically modified foods. You saw Panera, you saw Chipotle. These are restaurants that want more and more ingredients for their consumers. That's what we're looking for. If you come back and look at Hain today, where's our growth coming from? Yogurt is replacing cereal. You look at snacks, it's replacing some of the big company snacks out there. One of the questions asked me on the call today about tea. Millennials are drinking more tea today than coffee. So you come back and say juice. Our BluePrint juice, fresh pressed juices, where were they a couple years ago? So with that, we today have so many products, so many categories. Hain today has no one product, no one category that represents more than 14 or 15% of our sales, and a diverse customer base.

Now tomorrow morning I'm interviewing Walter Robb, co-CEO of Whole Foods. We know after the close they reported a disappointing number. I mean the stock's trading down. People tend to say, 'Hold it, if Whole Foods is doing poorly, Hain must be doing poorly.' It actually may be somewhat the opposite.

So listen, I think the world of Walter and I think the world of Whole Foods. Whole Foods has been out there in front on innovation, GMO foods, etc. The only thing is there's so many other retailers today that are seeing what consumers want. Brian Cornell at Target, Doug McMillan at Walmart. If you ask them what they have to do, they have to have more natural again. I've been with both of them and I've been out there talking to them and seeing where they are changing based on what their consumers are telling them. That's the thing today. If you're in retail, you've got to listen to your consumers, especially Millennials, because if you don't have the product they're looking for, they're going somewhere else. There are so many opportunities to find products today.

But Irwin, I'll tell you something else we're worried about. We've been speaking with a gentleman named Vali Portova, he's an investor in a farm and Farmland LP. Are the farmers getting it? Jack Hartung, CFO at Chipotle, he's been telling us, 'We got to get this food chain to where we can have supply to meet our demand.' Are they getting it?

So Jim, great question. And I think that is one of the assets that's within Hain that no one realized is our procurement of ingredients. Today we're procuring ingredients all around the world. We're setting up infrastructure. I'm in India and the Middle East next week, and part of that is procurement and finding more and more ingredients. 99% of our products are GMO free, right? And if I had to come back and say what is one of the biggest challenges we have out there, it's finding more supply, more ingredients that we can continue to support our growth. And it's not that consumption is growing, it's that consumers are looking for more and more product and converting. On the other side, listen, there's two models out there, Jim. There's organic growth, which is for organic products, or you can take the Heinz-Kraft model. Hope Warren Buffett likes it. Like I said, Cherry Coke. Listen, you can take Heinz and Kraft, two great companies you bring them together. There's been no growth. You're going to get a lot of synergies and you're going to get a lot of... you don't think Millennials are going to get turned on by Velveeta? What are you, like some sort of... it's not like Velveeta. It's come back. Kraft macaroni and cheese. Kraft has come out by 2017, we're taking the food coloring out of Kraft macaroni and cheese. I know, it's just put it in there, and again, 2017. So Jim, for us, that's why I come back. At Hain, it's not about the quarter, it's about the long term. And I got to tell you, it's about where consumers are. As many chemicals as Pringles? Well, this has no chemicals and no GMOs. And today this product will do almost $50 million in Walmart on an exclusive basis. And kale chips? Who did kale chips a few years ago?

People who don't smile, according to Warren Buffett. Anyway, I'm with you. So are my kids. That's Irwin Simon, founder, chairman, president, and CEO of Hain Celestial. Who has more chemicals in the food, PPG or you? I say or Kraft. That's a logical question, Irwin. Thank you so much.

Thank God. That's for sure. Oh yeah.

Jim Cramer here from Mad Money. Thanks for watching CNBC on YouTube. Click here to subscribe and get the jump on my exclusives with CEOs, plus market news, investing advice, and a whole lot more.