We are streamlining the SKUs and the categories that we’re in by brand. You’ll see a chunk of that flow through in quarter 4. And then it will begin to really play out in quarter 1 and quarter 2 as we really get that to be a rightsized portfolio. All of those decisions help us get to an improvement of 11 margin points on the Personal Care business, but more importantly, puts us in position to make some decisions about that business, but also to better manage that business because it will be a much simpler portfolio. There are some strong brands in that portfolio, but we’ve not allowed them to actually really be able to be successful because they were really buried in lots of subcategories that we really shouldn’t be in. So I think we’ll be in better position to make some decisions.
But our — but to your question around distraction of management’s time, there is a dedicated team focused on personal care. So — and it is the smallest portfolio, so it really doesn’t take a lot of everybody’s time.
Jon Andersen: That’s super helpful. Switching to, I guess, your largest business, meal prep, could you talk Wendy a little bit about what you’re seeing in that business? I think that grew last quarter. It was down a little bit this quarter. What maybe has changed over the past few months there? And what your expectations or focus areas are for that part of the business going forward?
Wendy Davidson: Yes. The meal prep category actually took a bit of a step down, really driven by the plant-based meat-free category. And that’s not unlike what others are seeing in the space with a lot of the industry consolidation taking place. So it really was driven by meat free in the U.K. with the Linda McCartney’s brand and in Canada with the Yves brand. ironically, because the category is consolidating, we’re actually gaining share. In fact, we gained share with the Yves brand in Canada. So we are declining less than the category and picking up distribution and gaining share, but we are still seeing some of that category contraction. In the U.K. business, we made a bit of an aggressive move in really rightsizing both what our manufacturing capacity was but also rightsizing the SKU mix that we have in the Linda McCartney’s brand to get to the hardest working core.
And so you see some of that SKU reduction playing into the meal prep data in the quarter, but that — but I feel like we will have a much more productive overall mix there. offsetting that in meal prep is the continued strength of the soup category that’s just on fire, and it’s actually in both regions. So the Reimagined soup business in the U.S. grew double digits in the quarter. And in the U.K. and Ireland, we have the number one, number two and number three soup brands with Cully & Sully, Yorkshire Provender and New Covent Garden and are by far the share leader, especially in the refrigerated soups category. So feel really good about the soup part of the portfolio. In Greek Gods Yogurt, you would have heard us talk about that as growth in the past.
We’ve done some reset of our retailer relationships and the assortment on shelf. And so you will see the Greek Gods business return into growth as we go forward, and we feel very good about that brand.
Operator: Our next question comes from Michael Lavery with Piper Sandler.
Michael Lavery: Just want to come back to the portfolio and you promoted formula. You touched on that just a minute ago, but also promoted the non-dairy beverages to maintain and touch on some of the execution improvement there. But I guess a couple of things. Is that a reflection of a definitive commitment to it? You’ve characterized stabilize is a little bit of a get it fixed and figured it out, at least, obviously, for personal care. Does it reflect stronger consumer demand? What are all the right pieces of the context there to understand how that shift took place?
Wendy Davidson: Yes. That’s a great question. When we look at what’s in stabilized, we actually ask ourselves a bit wider of a question. Is it a category that is large and growing? Is it a space where we have a brand that can compete? Do we have capabilities that make us unique and distinctive? Is it the right place to be? And can we make money at it? So can we grow and can we make money at it? When we look at the non-dairy beverage category in the markets where we play, it is a very large and growing category. We have a wonderful position in both private label and brand, but the issues that we had in the past were because we were highly concentrated with a particular partner. So our manufacturing capacity was eaten up in that way.
We weren’t running the plants in a normal 5-day work week. We were running a lot of overtime. So they were inefficient in our operations. And we weren’t really investing behind the brands with a core assortment to be able to win in the markets we were in. So when you check the boxes of is it a category we want to be in, is it a category that’s large and growing, are we unique and distinctive, can we compete and when? All of those check the boxes. So then it became an internal end-to-end fix. How do we need to rightsize our operations, how do we make sure that they’re well run, how do we make sure we’re investing around the right brands. You would have heard us, I think, in the last quarter, talk about the SKU portfolio work that we did in nondairy beverage where we reduced about 50% of the SKUs in one of the brands and got to a much harder working core that grew velocities double digits.
So driving right assortment in the brand on shelf with better productivity for us and for retail partners. So all those things combined now is delivering a business that quarter-on-quarter is up double digits and driving great margin. So it’s a place where we want to be.
Lee Boyce: Yes. And we’ve had three straight quarters of growth on that business. And as Wendy said, I mean we’ve had improving profitability, positive outlook for the growing category. So it fits in all the criteria.
Wendy Davidson: But to your question on baby formulas, the reason why we set that into stabilize is, again, we look at the same criteria. Yes, we want to be in baby formula because of how we recruit consumers into our Earth’s Best brand. Yes, it is a category that is large and growing, especially in the organic baby food category. So those all check the box. But the challenge we have is stable and reliable, consistent, high-quality supply, and that’s what needs to be stabilized. So it doesn’t mean that the business necessarily is an area where we feel the need to stabilize, but we definitely need to acknowledge that we’ve got to have a much more available supply of baby formula.
Michael Lavery: That’s great color. And just a little bit of a follow-up for the brands that aren’t on the page for, I think, it’s Slide 12, for example. How do we think about those? They’re almost all quite small. There’s 10 maybe at least I can come up with that aren’t listed. What’s their future look like? And is there a buyer for any of those? Is there just brand discontinuations that makes sense? How do they fit in?
Wendy Davidson: Oh, in the ones that we have mapped out on grow, maintain and stabilize?
Michael Lavery: The ones that aren’t shown yes, like a Farmhouse Fair or a Hollywood or Health Valley or Lima or any of those that are just a bit smaller, obviously, quite a lot smaller, I think.
Wendy Davidson: Yes. I would tell you that those — the things that aren’t on this slide are what I would refer to as sort of bits and bobs in the portfolio. And doesn’t necessarily mean anything other than they don’t require a substantial amount of investment or time and they don’t represent a large percentage of the sales. Pretty common in most of the companies I worked, there are some brands that just don’t really ever pop to the top, but I wouldn’t read anything into it other than that.
Michael Lavery: So just as you’re looking at things like SKU rationalizations, there wouldn’t be a risk of sort of a cleaning house where there’s a hit from those getting reconfigured somehow?
Wendy Davidson: I would say that our view of portfolio simplification in the focus pillar will always include a review of brands, categories, SKUs, footprint, all of those things. So I wouldn’t put it off the table that we’re not taking a hard look at every brand to make sure that they are a brand that is worth us spending both time and resources against.
Operator: Next with Andrew Wolf with CL King.
Andrew Wolf : I’d like to start with kind of a top line question for you. Did the business kind of pivot to growth if you exclude personal care and baby infant formula?
Wendy Davidson: Well, certainly, as we said in the prepared remarks —
Andrew Wolf : Also, less than expected, that’s what I’m really getting at.
Lee Boyce: So the one thing we — I mean, we did say, and that’s how we broke out the portfolio, 85% of the portfolio on a year-to-date basis was up over 3%. And if you go back to Hain Reimagined, the 3% was our long-term algorithm. So — that’s why we kind of isolated the two pieces. But yes, 85% of the portfolio year-to-date was up over 3%.
Andrew Wolf : And we’re the attendant profit expectations reasonably close to what you would have expected? Or were some of the supply chain issues impacting that as well or to get to
Lee Boyce: No, I would say they were in line with what we’ve expected. I mean one of the big things as part of the Hain Reimagined was fuel, as we looked at our supply chain initiatives, and not necessarily just on the P&L and on the cash flow side in terms of net working capital delivery, both of them being positive ahead of our expectations.
