Mo Siegel started Celestial Seasonings in 1969 by hand-picking wild herbs in the mountains of Boulder, Colorado. He turned the herbs into tea, then sold his blends to local health food stores. Quickly the Celestial brand gained traction. It became known as the “tea that’s good for people and the planet.” This unique branding attracted national attention and soon became a household name in stores across the country. As Celestial’s brand loyalty grew, so did their product line. Eventually, they expanded into markets like green, chai, wellness, and iced. Each addition increased the value of their company. So much so, that in 2000 they struck a deal with Hain Food Group to be acquired for approximately $390 million.
Celestial Seasonings is one example of how brand expansion can skyrocket a company’s value. The process was slow but strategic, resulting in steady revenue growth and a multi-million-dollar partnership. Here’s how they did it.
3 Ways to Leverage Your Brand to Increase Your Company Value:
1. Create Brand Loyalty and Trust
A brand is the company’s identity. It’s the product or service delivered plus the emotional benefit offered. Brands create customer loyalty which in return dictates growth rates, margins, and risk. Learn how a strong brand can influence company valuation here.
It took Celestial 26-years to expand their product line. During this time, they built fierce brand loyalty through consistent delivery of goods consumers could trust. When it came time to grow, they already had name recognition and a competitive position in the market.
2. Strategic Brand Expansion
Established brands are better equipped to branch out and add variety. They can take greater calculated risk because of their pre-established reputation. It gives them the freedom to try new strategies that attract niche enthusiasts. A riskier market indeed, but offers the potential for higher margins.
When adding products, though, a few key factors must be considered:
- How does this product align with the mission?
- How much will it cost to add a new product line?
- How will the product be used? Is it an addition or replacement?
- How will the new product increase profit?
Answer these questions first, then start the developmental process.
Celestial started their expansion with green tea. From there, they added new brands approximately every four years – often setting market trends. By 2009 their popularity had grown so much that the demand had them introducing new flavors each year.
3. Branding Partnerships
Strategic alliances help brands penetrate new markets. Together, they’re more likely to endure greater risk and command superior pricing. A combined package and trademark communicates higher value to consumers and investors. Plus, it symbolizes longevity.
In 2013, Celestial leadership took their creativity and innovation to the next level by partnering with Whole Foods, Trader Joe’s, and Sprouts. They developed product lines exclusively for these big-name brands. Their alignment created new cash flow streams on top of current sales. Thus, increasing their bottom-line and company value.
Value, growth, and partnership are all important parts of a strategic valuation. All three should be defined in a business plan, making it easy for investors to see the potential for high returns. Celestial Seasons was able to do this by understanding the value of a strong brand. They set their foundation early and crafted it over time. So, when it came time to leverage their value, investors were willing to pay top dollar – knowing the return would be significant for all parties involved.
Want to know the value of your brand? Colorado-based Quist Valuation has 35-years’ experience with strategic valuations. We’ve helped countless businesses, within all industries, understand the strength of their brands. Our team of experts can walk you through the process and help you determine the true value of your business.
Schedule a consultation with Quist here.