<PAGE>
                                                                 
                         UNITED  STATES
              SECURITIES  AND  EXCHANGE  COMMISSION
                     Washington, D.C.  20549
                                                                 
                           FORM  10-Q



     [x]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

          For the quarterly period ended March 31, 1997

                               OR

     [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

     For the transition period from __________ to __________

                 Commission file number 0-22018

                  CELESTIAL  SEASONINGS,  INC.
     (Exact name of Registrant as specified in its charter)


              DELAWARE                         84-1097571
   (State or other jurisdiction of          (I.R.S. Employer
   incorporation or organization)         Identification No.)
                                                    

          4600 SLEEPYTIME DRIVE, BOULDER CO  80301-3292
  (Address of principal executive offices, including zip code)

                         (303) 530-5300
      (Registrant's telephone number, including area code)


Indicate  by check mark whether the Registrant (1) has filed  all
reports  required  to be filed by Section 13 or  15  (d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the Registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.

                     Yes [X]          No [ ]

As  of  April  30, 1997  the Registrant had 4,053,601  shares  of
Common  Stock, $0.01 Par Value, outstanding. This report on  Form
10-Q contains 15 pages.



<PAGE>

                  CELESTIAL  SEASONINGS,  INC.


                              INDEX
                              -----

PART I - FINANCIAL INFORMATION
------------------------------

                                                            PAGE(S)
                                                            -------
     ITEM 1.   FINANCIAL STATEMENTS

            Unaudited consolidated income statements           3
            
            Unaudited consolidated balance sheets              4
            
            Unaudited consolidated statements of cash flows    5
            
            Notes  to unaudited consolidated financial
            statements                                        6-7


     ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS  8-11


PART II - OTHER INFORMATION
---------------------------

     ITEM 1.   LEGAL PROCEEDINGS                              12

     ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY
               HOLDERS                                        12

     Item 6.   EXHIBITS AND REPORTS ON FORM 8-K               12

     SIGNATURES                                               13


                                PAGE 2

<PAGE>

                       CELESTIAL SEASONINGS, INC.
                     CONSOLIDATED INCOME STATEMENTS
                (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                              (UNAUDITED)
<TABLE>
<CAPTION>
                                      Three Months Ended      Six Months Ended
                                          March 31,                March 31,
                                      ------------------      ----------------
                                        1997      1996          1997    1996
                                      --------  --------      ------- --------
<S>                                   <C>       <C>          <C>      <C>
Case volume                              1,491     1,437        2,930    2,859

Net sales                             $ 25,861  $ 23,950     $ 51,534 $ 47,582
Cost of goods sold                       8,867     8,755       17,941   17,505
                                      --------  --------     -------- --------
     Gross profit                       16,994    15,195       33,593   30,077

Operating expenses:
     Selling and marketing              10,565     8,757       22,280   18,907
     General and administrative          1,139     1,153        2,119    2,205
     Amortization of intangibles           321       356          647      742
                                      --------  --------     -------- -------- 
          Total operating expenses      12,025    10,266       25,046   21,854

Operating income                         4,969     4,929        8,547    8,223
Interest expense                            96       215          277      471
                                      --------  --------     -------- --------
Income before income taxes               4,873     4,714        8,270    7,752
Income taxes                             1,866     1,873        3,225    3,059
                                      --------  --------     -------- --------
Net income                            $  3,007  $  2,841     $  5,045 $  4,693
                                      ========  ========     ======== ========
Net income per common share           $   0.73  $   0.69     $   1.22 $   1.14
                                      ========  ========     ======== ========
Weighted average common shares           4,133     4,126        4,129    4,109
                                      ========  ========     ======== ========
</TABLE>

    See accompanying notes to unaudited consolidated financial statemants.

                                   PAGE 3


<PAGE>
                         CELESTIAL  SEASONINGS,  INC.
                        CONSOLIDATED  BALANCE  SHEETS
                              (IN THOUSANDS)
                               (UNAUDITED)

                                 ASSETS
<TABLE>
<CAPTION>
      
                                               March 31,      September 30,
                                                 1997             1996
                                               --------       ------------
<S>                                            <C>              <C>  
Current assets:
  Cash and cash equivalents                    $  4,512         $    204
  Accounts receivable, net of allowance
    (Mar. - $204 Sept. - $148)                    9,720            8,133
  Inventory                                       7,362            6,808
  Deferred income taxes                              78                7
  Prepaid income taxes                                -              470
  Prepaid expenses                                  499              889
                                               --------         --------
     Total current assets                        22,171           16,511

Property, plant and equipment, net               16,748           16,871
Intangible assets, net                           13,357           13,514
Goodwill, net                                     6,290            6,430
Deferred income taxes                               377              287
Other assets                                      1,047            1,290
                                               --------         --------
Total assets                                   $ 59,990         $ 54,903
                                               ========         ========

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                             $  4,693         $  3,754
  Accrued liabilities and wages                   4,978            4,462
  Accrued income taxes                            1,373                -
  Accrued interest payable                           29               52
  Current portion of long-term debt                 347              361
                                               --------         --------
     Total current liabilities                   11,420            8,629

Long-term debt                                    6,274            9,057

Commitments

Stockholders' equity:
  Common stock, $.01 par value -
    authorized 15,000,000 shares;
    Mar. - issued 4,056,475 shares,
      outstanding 4,051,475 shares
    Sept. - issued 4,054,472 shares,
      outstanding 4,049,472 shares                   41              41
  Capital surplus                                33,324          33,290
  Retained earnings                               9,026           3,981
  Treasury stock, 5,000 shares of common
    stock at cost                                   (95)            (95)
                                               --------        --------
     Total stockholders' equity                  42,296          37,217
                                               --------        --------
Total liabilities and stockholders' equity     $ 59,990        $ 54,903
                                               ========        ========
</TABLE>

   See accompanying notes to unaudited consolidated financial statements.

                                  PAGE 4


<PAGE>

                         CELESTIAL SEASONINGS, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (IN THOUSANDS)
                                 (UNAUDITED)
<TABLE>
<CAPTION>
                                
                                                        Six Months Ended
                                                            March 31,
                                                      --------------------
                                                        1997        1996
                                                      --------    --------
<S>                                                   <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                            $  5,045    $  4,693
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation                                           509         519
    Amortization of intangibles                            647         742
    Amortization of financing fees                          98         112
    Deferred income taxes                                 (161)        367
  Changes in operating assets and liabilities:
    Accounts receivable                                 (1,587)     (3,806)
    Inventory                                             (554)        (20)
    Prepaid expenses                                       390         256
    Accounts payable                                       939       1,141
    Accrued liabilities and wages                          516         737
    Accrued income taxes                                 1,843         369
    Accrued interest payable                               (23)          3
                                                      --------    --------  
Net cash provided by operating activities                7,662       5,113
                                                      --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                    (386)       (586)
  Increase in intangible assets                           (350)       (325)
  Decrease in other assets                                 145          76
                                                      --------    --------
Net cash used in investing activities                     (591)       (835)
                                                      --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from common stock issuance                       34         116
  Increase in long-term debt                             2,285       5,470
  Reduction in long-term debt                           (5,082)     (9,967)
                                                      --------    --------
Net cash used in financing activities                   (2,763)     (4,381)
                                                      --------    --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     4,308        (103)
                                
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD           204         375
                                                      --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD            $  4,512    $    272
                                                      ========    ========
CASH PAID FOR INTEREST                                $    196    $    338
CASH PAID FOR INCOME TAXES                            $  1,543    $  2,323

</TABLE>
                                
    See accompanying notes to unaudited consolidated financial statements.     

                                   PAGE 5


<PAGE>
                                
                        CELESTIAL  SEASONINGS,  INC.
          NOTES  TO  UNAUDITED  CONSOLIDATED  FINANCIAL  STATEMENTS

1.   GENERAL

      Basis  of Presentation - Each fiscal quarter  includes
thirteen weeks. The Company's second fiscal quarter ends  on
the  last  Saturday  of  March. For  presentation  purposes,
however,  the second fiscal quarter is presented  as  if  it
ended on March 31.

     The unaudited consolidated financial statements include
the   accounts   of   the  Company  and  its   subsidiaries.
Intercompany balances have been eliminated in consolidation.

       Interim   Financial  Information  -   The   financial
information  contained herein is unaudited but includes  all
normal  and  recurring adjustments which, in the opinion  of
management,  are necessary to present fairly the information
set  forth.  The unaudited consolidated financial statements
should   be   read  in  conjunction  with  the  consolidated
financial  statements which are included  in  the  Company's
Annual Report on Form 10-K for the year ended September  30,
1996. The Company's business is seasonal; therefore, results
for  interim  periods  are  not  necessarily  indicative  of
results  to  be expected for the fiscal year of the  Company
ending  September  30, 1997. The Company believes  that  the
report filed on Form 10-Q is representative of its financial
position,  its results of operations and its cash flows  for
the periods ended March 31, 1997 and 1996 covered thereby.

       Earnings  Per  Share  -  During  February  1997,  the
Financial  Accounting Standards Board  issued  Statement  of
Financial   Accounting  Standards  No.  128  ("SFAS   128"),
"Earnings  per  Share." SFAS 128 establishes  standards  for
computing  and  presenting earnings  per  share  (EPS),  and
supersedes Accounting Principles Board Opinion No. 15  ("APB
15")  and  its  related  interpretations.  It  replaces  the
presentation  of  primary EPS with a presentation  of  basic
EPS, which excludes dilution, and requires dual presentation
of  basic  and  diluted  EPS for all entities  with  complex
capital  structures.  Diluted EPS is computed  similarly  to
fully  diluted EPS pursuant to APB 15. SFAS 128 is effective
for  periods  ending  after  December  15,  1997,  including
interim  periods, and will require restatement of all  prior
period  EPS  data  presented;  earlier  application  is  not
permitted. The following table sets forth pro forma earnings
per  share in accordance with the requirements of  SFAS  128
(in thousands, except per share amounts):

<TABLE>
<CAPTION>
                              
                                  Three Months Ended      Six Months Ended
                                       March 31,             March 31,
                                  ------------------     ------------------
                                    1997      1996         1997      1996
                                  --------  --------     --------  --------
<S>                               <C>       <C>          <C>       <C> 
Basic earnings per share
  Net income per common share     $   0.74  $   0.70     $   1.25  $   1.16
                                  ========  ========     ========  ========
  Weighted average common shares     4,051     4,040        4,051     4,039
                                  ========  ========     ========  ========     
Diluted earnings per share
  Net income per common share     $   0.73  $   0.69     $   1.22  $   1.14
                                  ========  ========     ========  ========
  Weighted average common shares     4,133     4,126        4,129     4,109
                                  ========  ========     ========  ========
</TABLE>
                                     PAGE 6

<PAGE>

2.   DETAIL OF INVENTORY ACCOUNTS

<TABLE>
<CAPTION>
                                            March 31,      September 30,
                                              1997             1996
                                            --------       ------------
<S>                                        <C>              <C>
Raw materials and supplies                 $  4,254         $  4,486
Work in process                               1,210              888
Finished goods                                2,373            1,665
                                           --------         --------
                                              7,837            7,039
Less inventory reserves                         475              231
                                           --------         --------
Total                                      $  7,362         $  6,808
                                           ========         ========
</TABLE>


3.   LEGAL  PROCEEDINGS

      On May 5, 1995, a purported stockholder of the Company
filed a lawsuit, Schwartz v. Celestial Seasonings, Inc.  et. al.,
                 -----------------------------------------------
in the United States District Court for the District of
Colorado  (Civil Action Number:  95-K-1045),  in  connection
with  disclosures  by the Company concerning  the  Company's
license agreement with Perrier Group of America, Inc.  which
was  terminated  on  January 1, 1995.  In  addition  to  the
Company,  the complaint names as defendants certain  of  the
Company's   present  and  former  directors  and   officers,
PaineWebber,  Inc.,  Shearson/Lehman  Brothers,  Inc.,   and
Vestar/Celestial   Investment   Limited   Partnership.   The
complaint,  which was pled as a class action  on  behalf  of
persons  who acquired the Company's common stock  from  July
12, 1993 through May 18, 1994, sought money damages from the
Company and the other defendants for the class in the amount
of  their  loss on their investment in the Company's  common
stock,  punitive damages, costs and expenses of the  action,
and such other relief as the court may order.

     On November 6, 1995, the federal district court granted
a  motion by the Company and the other defendants to dismiss
the  case.  The court's order became final on  December  11,
1995,  after  the  plaintiff failed to amend  the  complaint
within  the  time  permitted  by  the  district  court.  The
plaintiff has appealed the district court's decision to  the
United States Court of Appeals for the Tenth Circuit. Due to
the  uncertainties inherent in the litigation  process,  the
Company is unable to predict the outcome of this matter.

                              PAGE 7

<PAGE>

                    CELESTIAL  SEASONINGS,  INC.
       MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
               CONDITION  AND  RESULTS  OF OPERATIONS

SEASONALITY

      The Company's business is seasonal and its quarterly results of
operations reflect the results of increased demand for the  Company's
hot  tea  products  in the cooler months of the year.  The  following
table  sets forth selected unaudited quarterly consolidated financial
and operational data for the six most recent quarters.

<TABLE>
<CAPTION>
                                                Quarter Ended
                  -------------------------------------------------------------
                      Fiscal 1997                      Fiscal 1996
                  -------------------- -----------------------------------------
                   Mar. 31   Dec. 31    Sept. 30  June 30  Mar. 31  Dec. 31
                  --------  ---------   --------- -------- -------- --------  
                                         (in thousands)
<S>                <C>       <C>          <C>      <C>      <C>      <C>
Case sales           1,491     1,439          832      647    1,437    1,422
Net sales          $25,861   $25,673      $14,587  $10,829  $23,950  $23,632
Gross profit        16,994    16,599        8,536    5,840   15,195   14,882
Operating income
  (loss)             4,969     3,578          906     (139)   4,929    3,294
Operating margin      19.2%     13.9%         6.2%    (1.3)%   20.6%    13.9%
Net income (loss)  $ 3,007   $ 2,038      $   466  $  (136) $ 2,841  $ 1,852
Percent of fiscal
 year net sales        N/A       N/A         20.0%    14.8%    32.8%    32.4%

</TABLE>
                                                                  

      The Company  has experienced quarterly fluctuations in sales  volume
and operating results when compared to previous years due to a number  of
factors,  including the timing of trade promotions,  advertising  and
consumer promotional expenditures. The Company, as is common  in  the
tea  industry,  offers trade promotions for limited time  periods  on
specific  items in order to provide incentives for the  purchase  and
promotion of products. The impact on case sales from period to period
due  to  the  timing  and  extent of such  trade  promotions  can  be
significant.

RESULTS OF OPERATIONS

      The  following  table is derived from the  Company's  unaudited
consolidated income statements for the periods indicated and presents
(i)  the results of operations as a percentage of net sales and  (ii)
the  percentage change in the dollar amounts of each  item  from  the
prior period.

<TABLE>
<CAPTION>
                                                         Period-to-Period
                        Percentage of Net Sales    Percentage Increase/(Decrease)
                       -------------------------  --------------------------------
                      Three Months     Six Months  Three Months     Six Months
                         Ended           Ended        Ended           Ended
                       March 31,       March 31,    March 31,       March 31,
                     1997     1996   1997   1996   1997 to 1996    1997 to 1996
                    ------   ------ ------ ------ --------------  -------------- 
<S>                  <C>      <C>    <C>    <C>         <C>            <C>
Net sales            100.0%   100.0% 100.0% 100.0%      8.0%           8.3%
Cost of goods sold    34.3     36.6   34.8   36.8       1.3            2.5
                     -----    -----  -----  -----      
Gross profit          65.7     63.4   65.2   63.2      11.8           11.7
Selling and marketing 40.9     36.5   43.2   39.7      20.6           17.8
General and
 administrative        4.4      4.8    4.1    4.6      (1.2)          (3.9)
Amortization of
 intangibles           1.2      1.5    1.3    1.6      (9.8)         (12.8)
                     -----    -----  -----  -----
Operating income      19.2     20.6   16.6   17.3       0.8            3.9
Interest expense       0.4      0.9    0.5    1.0     (55.3)         (41.2)
                     -----    -----  -----  -----
Income before income
 taxes                18.8     19.7   16.1   16.3       3.4            6.7
Income taxes           7.2      7.8    6.3    6.4      (0.4)           5.4
                     -----    -----  -----  -----
Net income            11.6%    11.9%   9.8%   9.9%      5.8%           7.5%
                     =====    =====  =====  =====

</TABLE>
                                    PAGE 8


<PAGE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1996

      Net  sales. Net sales for the three months ended March 31, 1997
increased 8.0% to $25.9 million from $24.0 million for the comparable
period  in fiscal 1996. Case sales increased 3.8% to 1,491,000  cases
from  1,437,000 cases. Case sales growth was the result of  increased
sales  of the Company's herb and specialty black hot tea products  in
the  Company's  traditional  channels of  distribution,  as  well  as
expansion  in  international markets. Fiscal 1997 net  sales  of  the
Company's  dry  tea  products  reflect a  price  increase  which  was
implemented  during the third quarter of fiscal 1996.  The  Company's
nutraceutical  products contributed net sales of  over  $0.9  million
during  the  second  quarter of fiscal 1997, a  61.9%  increase  from
fiscal 1996.

      Gross profit. Gross profit for the three months ended March 31,
1997  increased  11.8% to $17.0 million from $15.2  million  for  the
comparable  period in fiscal 1996. The Company's gross profit  margin
increased  to 65.7% from 63.4% for the comparable prior year  period.
The  increase in gross margin is primarily due to increased sales  of
the  company's higher margin hot herb tea products. In addition,  the
Company's nutraceutical products realized higher gross margins during
fiscal 1997, as compared to fiscal 1996, due to greater efficiencies.

      Selling  and marketing expenses. Selling and marketing expenses
for  the  three months ended March 31, 1997 increased 20.6% to  $10.6
million  from $8.8 million for the comparable period in fiscal  1996,
and  increased as a percentage of net sales to 40.9% from 36.5%.  The
increase  in  selling  and marketing expenses primarily  was  due  to
increased trade and consumer promotion and advertising expenses.

      General and administrative expenses. General and administrative
expenses   for  the  three  months  ended  March  31,  1997  remained
relatively unchanged from the comparable period in fiscal  1996,  and
decreased as a percentage of net sales to 4.4% from 4.8%.

       Amortization  of  intangibles.  Amortization  of  intangibles,
including  amortization of goodwill and other intangible assets,  for
the  three  months  ended March 31, 1997 decreased 9.8%  from  fiscal
1996.  Amortization  of intangibles was lower  for  fiscal  1997,  as
compared  to  fiscal 1996, as certain intangible assets became  fully
amortized or were written off. These reductions were partially offset
by  increases in amortization on new additions to artwork and  plates
resulting  from the Company's continued development of  new  products
and improved packaging.

      Operating  income. Operating income for the three months  ended
March  31,  1997 increased 0.8% from the comparable period in  fiscal
1996.  Operating  income as a percentage of net  sales  decreased  to
19.2%  from  20.6% primarily due to increased selling  and  marketing
expenses.

      Interest  expense. Interest expense for the three months  ended
March  31,  1997 declined 55.3% from the comparable period in  fiscal
1996  as  a  result  of reduced outstanding borrowings.  The  Company
extinguished  its bank debt during the first quarter of fiscal  1997.
Interest  expense for the three months ended March 31, 1997 primarily
relates  to  Industrial  Revenue  Bonds  which  are  secured  by  the
Company's facility and fees relating to continued availability of the
Company's bank credit facility.

      Income  taxes.  Income tax expense for the three  months  ended
March  31,  1997 decreased 0.4% from the comparable period in  fiscal
1996. This decrease was primarily due to a reduction in the Company's
estimated  effective  tax rate during the second  quarter  of  fiscal
1997.  This  decrease was partially offset by an increase in  pre-tax
income.

                                 PAGE 9

<PAGE>

SIX MONTHS ENDED MARCH 31, 1997 COMPARED TO THE SIX MONTHS ENDED
MARCH 31, 1996

      Net  sales. Net sales for the six months ended March  31,  1997
increased 8.3% to $51.5 million from $47.6 million for the comparable
period  in fiscal 1996. Case sales increased 2.5% to 2,930,000  cases
from  2,859,000 cases. Case sales growth was the result of  increased
sales  of the Company's herb and specialty black hot tea products  in
the  Company's  traditional  channels of  distribution,  as  well  as
expansion  in  international markets. Fiscal 1997 net  sales  of  the
Company's  dry  tea  products  reflect a  price  increase  which  was
implemented  during the third quarter of fiscal 1996.  The  Company's
nutraceutical products contributed net sales of over $1.6 million for
the  six  months  ended  March 31, 1997, a 66.6%  increase  from  the
comparable period in fiscal 1996.

      Gross  profit. Gross profit for the six months ended March  31,
1997  increased  11.7% to $33.6 million from $30.1  million  for  the
comparable  period in fiscal 1996. The Company's gross profit  margin
increased  to 65.2% from 63.2% for the comparable prior year  period.
The  increase in gross margin is primarily due to increased sales  of
the  Company's higher margin hot herb tea products. In addition,  the
Company's nutraceutical products realized higher gross margins during
fiscal 1997, as compared to fiscal 1996, due to greater efficiencies.

      Selling  and marketing expenses. Selling and marketing expenses
for  the  six  months ended March 31, 1997 increased 17.8%  to  $22.3
million from $18.9 million for the comparable period in fiscal  1996,
and  increased as a percentage of net sales to 43.2% from 39.7%.  The
increase  in  selling  and marketing expenses primarily  was  due  to
increased   trade  promotion,  advertising  and  consumer   promotion
expenses.

      General and administrative expenses. General and administrative
expenses for the six months ended March 31, 1997 decreased 3.9%  from
the  comparable period in fiscal 1996, and decreased as a  percentage
of  net  sales  to 4.1% from 4.6% for the same period  of  the  prior
fiscal  year.  The  decrease is primarily due to   spending  controls
implemented  by  the  Company which resulted in reduced  expenses  in
several areas.

       Amortization  of  intangibles.  Amortization  of  intangibles,
including  amortization of goodwill and other intangible assets,  for
the six months ended March 31, 1997 decreased 12.8% from fiscal 1996.
Amortization of intangibles was lower for fiscal 1997, as compared to
fiscal  1996, as certain intangible assets became fully amortized  or
were written off. These reductions were partially offset by increases
in amortization on new additions to artwork and plates resulting from
the  Company's  continued development of new  products  and  improved
packaging.

      Operating  income. Operating income for the  six  months  ended
March  31,  1997 increased 3.9% from the comparable period in  fiscal
1996,  primarily due to increased net sales. Operating  income  as  a
percentage  of net sales decreased to 16.6% from 17.3% primarily  due
to increased selling and marketing expenses.

      Interest  expense. Interest expense for the  six  months  ended
March  31,  1997 declined 41.2% from the comparable period in  fiscal
1996  as  a  result  of reduced outstanding borrowings.  The  Company
extinguished  its bank debt during the first quarter of fiscal  1997.
Interest  expense for the six months ended March 31,  1997  primarily
relates  to  Industrial  Revenue  Bonds  which  are  secured  by  the
Company's facility and fees relating to continued availability of the
Company's bank credit facility.

      Income taxes. Income tax expense for the six months ended March
31,  1997  increased 5.4% from the comparable period in fiscal  1996.
The increase in income tax expense primarily was due to increased pre-
tax income.

                                  PAGE 10

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     The operations of the Company historically have been funded with
a  combination of internally generated funds and external borrowings.
Purchases  of  inventory,  marketing  expenditures  and  support   of
accounts  receivable  have historically been,  and  are  expected  to
remain,  the  Company's principal recurring uses  of  funds  for  the
foreseeable  future. The Company's other principal uses of  funds  in
the  future  will  be  the development of new  or  existing  tea  and
nutraceutical  products,  and  the possible  acquisition  of  brands,
product  lines  or  other  assets. The Company  expects  its  primary
sources of financing for its future business activities will be funds
from  operations  plus  borrowings under  the  credit  facility.  The
Company  currently  believes that funds  from  operations  and  funds
expected  to  be  available under the Company's credit  facility  are
likely  to  be  sufficient to meet operating and capital requirements
unless  a significant acquisition is made. On February 13, 1997,  the
Company announced that its Board of Directors authorized up to a  $12
million program to repurchase shares of its common stock. The buyback
program  does not include specific price targets and may be suspended
at  any  time.  The Company initiated a stock repurchase  transaction
after the conclusion of the quarter, which was deemed immaterial.

      Cash and cash equivalents increased by $4.3 million for the six
months  ended  March 31, 1997. Cash provided by operating  activities
was  $7.7  million  for  the six months ended  March  31,  1997.  The
Company's investing activities used cash of $0.6 million for the  six
months ended March 31, 1997. Financing activities of the Company used
cash  of  $2.8  million  for the six months  ended  March  31,  1997,
principally for the extinguishment of bank debt.

      The  Company  incurred  capital expenditures  of  approximately
$736,000  during  the  six  months ended March  31,  1997,  including
$386,000  primarily for factory and computer equipment  and  $350,000
for  the design and development of new packaging artwork. The Company
anticipates  making  capital expenditures of approximately  $1.75  to
$2.0 million in fiscal 1997.

OTHER DEVELOPMENTS

      The  Company incurred legal expenses of approximately  $647,000
during  the six months ended March 31, 1997 associated with a lawsuit
against a competitor relating to trade dress infringements and unfair
competition claims. On January 13, 1997, judgment was entered in  the
United  States  District  Court for the District  of  Colorado  which
absolved  the  competitor of any claims, and there were  no  monetary
damages assessed. The Company believes that no additional legal costs
associated with this lawsuit will be incurred.

      The  statements contained in this Quarterly Report on Form 10-Q
which  are  not  historical facts, including,  but  not  limited  to,
statements   found  under  the  captions  "Results  of   Operations,"
"Liquidity  and  Capital Resources" and "Other Developments,"  above,
are  forward-looking statements that involve a number  of  risks  and
uncertainties. The actual results of the future events  described  in
such  forward-looking statements could differ materially  from  those
stated  in  such forward-looking statements. Among the  factors  that
could  cause  actual results to differ materially are the  risks  and
uncertainties discussed in this Quarterly Report, including,  without
limitation,   the  portions  of  such  reports  under  the   captions
referenced above, and the uncertainties set forth from time  to  time
in the Company's filings with the Securities and Exchange Commission,
and  other  public statements. Such risks and uncertainties  include,
without  limitation, seasonality, interest in the Company's products,
general  economic conditions, consumer trends, costs and availability
of   raw  materials,  competition  and  the  effect  of  governmental
regulation.

                                  PAGE 11

<PAGE>

PART II   OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS
--------------------------

The  information  in  Note 3 to the Unaudited Consolidated  Financial
Statements included in Part I is incorporated herein.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

The  annual  meeting  of  stockholders of the  Company  was  held  on
February 13, 1997. The following matters were submitted to a vote  of
the stockholders:

(a)  Election of directors - Two Class III directors were elected  to
     serve until the 2000 annual meeting of stockholders and until
     successors are elected.


                   Total Votes            Total Votes
                       For                 Withheld
                   -----------            -----------
Mo Siegel           3,593,377               18,269
James P. Kelley     3,600,185               11,461

Incumbent  Class I directors with terms expiring in 1998 are  Leonard
Lieberman  and Marina Hahn. Incumbent Class II directors  with  terms
expiring in 1999 are Ronald V. Davis and John D. Howard.

(b)  Appointment of independent auditors - The proposal to ratify the
     appointment of Deloitte & Touche LLP as the Company's certified
     public accountants for the fiscal year ending September 30, 1997
     was approved by a vote of 3,597,454 shares in favor, 10,400 shares
     against, and 3,792 shares abstaining.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------                                  
(a)  Exhibits
     --------
Exhibit No.                       Description
-----------                       -----------   
 23.1   - Report   of  Deloitte  &  Touche  LLP  on  consolidated
          financial statements
        
(b)  Reports on Form 8-K
     -------------------
     There were no reports on Form 8-K for the quarter ended March
     31, 1997.

                                PAGE 12


<PAGE>

SIGNATURES
                                  
                                  
                                  
      Pursuant to the requirements of the Securities Exchange Act  of
1934, the Registrant has duly caused this report to be signed on  its
behalf by the undersigned thereunto duly authorized.



                    CELESTIAL SEASONINGS, INC.
                    (Registrant)


     May 9, 1997    By:  /s/  Darrell F. Askey
                        ----------------------
                         Darrell F. Askey
                         Vice  President  - Finance,  Secretary  and
                         Treasurer
                         (Principal Financial Officer)


                                   PAGE 13

<PAGE>

                          INDEX TO EXHIBITS
                                  
                                  
The following exhibits are filed pursuant to Item 601 of Regulation S-K.

                                                  Sequentially
Exhibit                                             Numbered
  No.                  Description                   Pages
-------                -----------                ------------
  23.1    - Report of Deloitte & Touche LLP on        
            consolidated financial statements          15
                                                      
                              PAGE 14