<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 June 30, 1998

                               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 July 31, 1998 the Registrant had 4,150,471 shares of Common
Stock,  $0.01  Par Value, outstanding. This report on  Form  10-Q
contains 16 pages.

<PAGE>
                  CELESTIAL  SEASONINGS,  INC.



                              INDEX



PART 1 - 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     8-12


PART II - OTHER INFORMATION


     ITEM 1.   LEGAL PROCEEDINGS                                  13


     ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                   13


     SIGNATURES                                                   14

                                 PAGE 2
<PAGE>

                        CELESTIAL SEASONINGS, INC.
                     CONSOLIDATED INCOME STATEMENTS
                (in thousands, except per share amounts)
                              (unaudited)
<TABLE>
<CAPTION>

                             Three Months Ended          Nine Months Ended 
                                   June 30,                   June 30,
                             ------------------          ------------------       
                                1998      1997             1998      1997
                             --------    ------          -------    -------
<S>                          <C>       <C>              <C>        <C>
Case volume                      857       656            3,959     3,586

Net sales                    $19,395   $11,589          $79,124    $63,123
Cost of goods sold             6,822     5,172           28,151     23,129
                             --------    ------          -------    ------- 
  Gross profit                12,573     6,417           50,973     39,994

Operating expenses:
  Selling and marketing       10,371     4,931           35,713     27,195
  General and administrative   1,528       945            4,619      3,064
  Amortization of intangibles    319       320              982        967
                             --------    ------          -------    -------     
    Total operating expenses  12,218     6,196           41,314     31,226

Operating income                 355       221            9,659      8,768
Interest expense                 154       101              386        378
                             --------    ------          --------   --------
Income before income taxes       201       120            9,273      8,390
Income taxes                      77        46            3,570      3,271
                             --------    ------          --------   --------
Net income                   $   124     $  74          $ 5,703    $ 5,119
                             ========    ======          ========   ========
Earnings per share-basic:
  Net income per common 
     share                   $  0.03     $0.02          $  1.39    $  1.26
                             ========    ======          ========   =========  
  Weighted average common 
    shares                     4,143     4,053            4,116      4,052
                             ========    ======          ========   ========= 
Earnings per share-assuming dilution:
  Net income per common 
    share                    $  0.03     $0.02          $  1.31    $  1.24
                             ========    ======          ========   =========
  Weighted average common 
    shares                     4,449     4,135            4,365      4,131
                             ========    ======          ========   =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements. 

                                    PAGE 3

<PAGE>
                                
                          CELESTIAL  SEASONINGS,  INC.
                         CONSOLIDATED  BALANCE  SHEETS
                                (in thousands)
                                  (unaudited)

                                     ASSETS
<TABLE>
<CAPTION>

                                               June 30,       September 30,
                                                 1998              1997
                                               --------       --------------
<S>                                           <C>               <C>
Current assets:
  Cash and cash equivalents                   $   2,048         $   2,829
  Accounts receivable, net of allowance
    (June - $447 Sept. -$165)                    12,540             7,755
  Inventory                                      23,682             8,410
  Deferred income taxes                             480               200
  Prepaid expenses                                1,046               641
                                               ---------      ---------------
    Total current assets                         39,796            19,835

Property, plant and equipment, net               17,845            17,085
Intangible assets, net                           12,764            13,236
Goodwill, net                                     5,940             6,150
Deferred income taxes                               317               263
Other assets                                      1,081             1,802
                                               ---------      ---------------
Total assets                                  $  77,743          $ 58,371
                                               =========      ===============
         
                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                            $   7,557          $  4,160
  Accrued liabilities and wages                   6,320             4,584
  Accrued income taxes                              454                99
  Accrued interest payable                           67                31
  Current portion of long-term debt                 357               373
                                               ---------       --------------
    Total current liabilities                    14,755             9,247

Long-term debt                                   13,081             6,073

Stockholders' equity:
  Common stock, $.01 par value - 
  authorized 15,000,000 shares;
  June - issued 4,154,489 shares, 
    outstanding 4,145,589 shares
  Sept. - issued 4,068,491 shares, 
    outstanding 4,059,591 shares                     42                41
  Capital surplus                                34,692            33,540
  Retained earnings                              15,348             9,645
  Treasury stock, 8,900 shares of common 
    stock at cost                                  (175)             (175)
                                                --------         ----------    
       Total stockholders' equity                49,907            43,051
                                                --------         ----------
Total liabilities and stockholders' equity     $ 77,743         $  58,371
                                                ========         ==========  
</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>
                                                         Nine Months Ended
                                                              June 30,
                                                         ------------------     
                                                          1998        1997
                                                         ------      ------
<S>                                                     <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                              $  5,703   $  5,119
  Adjustments to reconcile net income to net cash 
    (used in) provided by operating activities:
    Depreciation                                             960        840
    Amortization of intangibles                              982        967
    Amortization of financing fees                           146        147
    Deferred income taxes                                   (334)       (43)
  Changes in operating assets and liabilities:
    Accounts receivable                                   (4,785)     3,146
    Inventory                                            (15,272)    (1,696)
    Prepaid expenses                                        (405)       610
    Accounts payable                                       3,397     (1,469)
    Accrued liabilities and wages                          1,736       (566)
    Accrued income taxes                                     355      1,182
    Accrued interest payable                                  36        (17)
                                                          -------    --------
Net cash (used in) provided by operating activities       (7,481)     8,220
                                                          -------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                     (1,720)     (597)
  Increase in intangible assets                              (300)     (427)
  Decrease in other assets                                    575       144
                                                          --------   --------
Net cash used in investing activities                      (1,445)     (880)
                                                          --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from common stock issuance                       1,153       115
  Acquisition of treasury stock                                -        (80)
  Increase in long-term debt                                7,250     2,285
  Reduction in long-term debt                                (258)   (5,168)
                                                          --------   --------
Net cash provided by (used in) financing activities         8,145    (2,848)
                                                          --------   --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS         (781)    4,492

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD            2,829       204
                                                          --------   --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD               $  2,048  $  4,696
                                                          ========   ========
CASH PAID FOR INTEREST                                   $    179  $    237
CASH PAID FOR INCOME TAXES                               $  3,549  $  2,132  

</TABLE>
See accompanying notes to unaudited 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 third fiscal quarter  ends  on
the  last  Saturday  of  June.  For  presentation  purposes,
however,  the  third fiscal quarter is presented  as  if  it
ended on June 30.

     The unaudited consolidated financial statements include
the   accounts   of   the  Company  and  its   subsidiaries.
Intercompany balances have been eliminated in consolidation.
Certain  reclassifications have been made to  the  Company's
fiscal  1997 financial statements to conform them to  fiscal
1998 classifications.

       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,
1997. 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, 1998. The Company believes  that  this
Quarterly  Report  on  Form 10-Q is  representative  of  its
financial position, its results of operations and  its  cash
flows  for the periods ended June 30, 1998 and 1997  covered
thereby.

      Earnings  Per Share - In accordance with Statement  of
Financial  Accounting  Standards  No.  128,  "Earnings   per
Share,"  the  increase in weighted average common  shares  -
assuming  dilution is due to the application of the treasury
share  method for outstanding stock options. The application
of  the  treasury  share method resulted  in  an  additional
306,000  and  82,000 weighted average shares for  the  three
months  ended June 30, 1998 and 1997, respectively,  and  an
additional  249,000 and 79,000 weighted average  shares  for
the nine months ended June 30, 1998 and 1997, respectively.

                          PAGE 6
<PAGE>

2.   DETAIL OF INVENTORY ACCOUNTS
<TABLE>
<CAPTION>

                                             June 30,       September 30,
                                               1998              1997
                                            ----------      -------------
<S>                                         <C>              <C>
Raw materials and supplies                  $   12,031       $   4,924
Work in process                                  3,344           1,393
Finished goods                                   9,375           2,431
                                            ----------      -------------
                                                24,750           8,748
Less inventory reserves                          1,068             338
                                            ----------      -------------
Total                                       $   23,682       $   8,410
                                            ==========      =============
</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 appealed the district court's decision to
the United States Court of Appeals for the Tenth Circuit. On
September  5,  1997,  the  court  of  appeals  reversed  the
decision  of the district court. The court of appeals  found
that  the plaintiff's complaint alleged sufficient facts  to
support  his  claim.  The  case has  been  returned  to  the
district   court  for  further  proceedings.  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 seven most recent quarters.
<TABLE>
<CAPTION>

                                       Quarter Ended
                 ------------------------------------------------------------  
                        Fiscal 1998                   Fiscal 1997
                 -------------------------  ---------------------------------
                 June 30  Mar.31  Dec.31    Sept.30  June 30  Mar.31  Dec. 31
                 -------  ------  -------   -------  -------  ------  -------
                                           (in thousands)
<S>             <C>      <C>     <C>        <C>      <C>     <C>      <C>
Case volume         857    1,611   1,491        855      656   1,491    1,439
Net sales       $19,395  $32,329 $27,400    $15,916  $11,589 $25,861  $25,673
Gross profit     12,573   21,131  17,269      9,439    6,417  16,978   16,599
Operating income    355    5,549   3,755        898      221   4,969    3,578
Operating margin    1.8%    17.2%   13.7%       5.6%     1.9%   19.2%    13.9%
Net income      $   124  $ 3,341 $ 2,238    $   545  $    74 $ 3,007  $ 2,038
Percent of fiscal
  year net sales    N/A     N/A     N/A        20.1%    14.7%   32.7%    32.5%
</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 new product introductions, the timing of
trade   promotions,   and   advertising  and   consumer   promotional
expenditures.  The  Company, as is common  in  the  tea  and  dietary
supplement  industries,  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 these factors can be
significant.

NEW PRODUCT LINES 

      Recently,  the Company introduced a line of dietary  supplement
products.  These  products  are based  primarily  on  herbs  such  as
echinacea, ginkgo biloba, ginseng and St. John's wort. Sales of these
new  products  significantly increased the Company's net  sales,  and
promotional  support  for  the products significantly  increased  the
Company's  marketing and selling expenses for the quarter ended  June
30, 1998.

      To  date,  sales  of  these new dietary supplements  have  been
largely  to  retail  accounts such as grocery stores,  natural  foods
stores,  mass  merchandisers and drug stores, and  therefore  do  not
indicate  that  the  products  are,  or  will  be,  successful   with
consumers.

      The  Company's experience with dietary supplement  products  is
limited.  The  dietary  supplement market is highly  competitive.  In
addition,  the  dietary  supplement  market  is  driven  by  consumer
preferences and overall industry sales are volatile. As a result, the
Company's sales of its dietary supplement products are subject to the
risks  relating  to  the  future trend  of  overall  industry  sales,
competition, whether the Company's products will achieve customer and
consumer  acceptance  and other risks normally  associated  with  the
introduction  of  new  products.  There  is  no  assurance  that  the
Company's dietary supplement products will be successful.

                           PAGE 8
<PAGE>
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    
                      June 30,     June 30,        June 30,       June 30,
                  -------------  -----------    ------------    ------------
                  1998    1997   1998   1997    1998 to 1997    1998 to 1997
                  ----    ----   ----   ----    ------------    -------------
<S>              <C>     <C>    <C>    <C>          <C>             <C>
Net sales        100.0%  100.0% 100.0% 100.0%       67.4 %          25.3%
Cost of goods 
   sold           35.2    44.6   35.6   36.6        31.9            21.7
                  ----    ----   ----   ----
Gross profit      64.8    55.4   64.4   63.4        95.9            27.5
Selling and 
   marketing      53.5    42.6   45.1   43.1       110.3            31.3
General and 
   administrative  7.9     8.1    5.8    4.9        61.7            50.8
Amortization of 
   intangibles     1.6     2.8    1.3    1.5        (0.3)            1.6
                  ----    ----   ----   ----
Operating income   1.8     1.9   12.2   13.9        60.6            10.2
Interest expense   0.8     0.9    0.5    0.6        52.5             2.1
                  ----    ----   ----   ----
Income before 
   income taxes    1.0     1.0   11.7   13.3        67.5             10.5
Income taxes       0.4     0.4    4.5    5.2        67.4              9.1
                  ----    ----   ----   ----
Net income         0.6%    0.6%   7.2%   8.1%       67.6             11.4
                  =====   =====  =====  =====

</TABLE>
                                  PAGE 9
<PAGE>

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 1997

      Net  sales. Net sales for the three months ended June 30,  1998
increased  67.4%  to  $19.4  million  from  $11.6  million  for   the
comparable  period in fiscal 1997. The Company's new line of  dietary
supplement products contributed net sales of $6.9 million during  the
third quarter of fiscal 1998, as compared to $0.8 million during  the
prior  year period. Net sales of the Company's tea products increased
16.8% primarily due to the sales of a new line of green tea products,
as well as expansion in the Company's international and natural foods
distribution  channels. These increases were partially  offset  by  a
decrease in sales of the Company's iced tea products.

      Gross profit. Gross profit for the three months ended June  30,
1998  increased  95.9%  to $12.6 million from $6.4  million  for  the
comparable  period  in fiscal 1997, primarily due  to  increased  net
sales.  The  Company's gross profit margin increased  to  64.8%  from
55.4%  for  the comparable prior year period. The increase  in  gross
margin was primarily due to decreased sales of the Company's iced tea
products  which  have lower margins than the Company's  hot  tea  and
dietary  supplement products, favorable pricing on key herbs used  in
the Company's products, the effect of reducing tea bag count from  24
to  20  per  package  and the impact of greater  utilization  of  the
Company's manufacturing facility based on higher sales volume of  its
tea products.

      Selling  and marketing expenses. Selling and marketing expenses
for  the  three months ended June 30, 1998 increased 110.3% to  $10.4
million  from $4.9 million for the comparable period in fiscal  1997,
and  increased as a percentage of net sales to 53.5% from 42.6%.  The
increase  in  selling  and marketing expenses primarily  was  due  to
increased consumer promotion and advertising expenses associated with
the Company's dietary supplements product line.

      General and administrative expenses. General and administrative
expenses  for  the three months ended June 30, 1998  increased  61.7%
from  the  comparable  period in fiscal  1997,  and  decreased  as  a
percentage of net sales to 7.9% from 8.1%. The increase was primarily
due  to  increased personnel costs and legal fees associated  with  a
shareholder's lawsuit (see note 3 of Notes To Unaudited  Consolidated
Financial Statements).

      Operating  income. Operating income for the three months  ended
June  30, 1998 increased 60.6% to $0.4 million from $0.2 million  for
the  comparable period in fiscal 1997, primarily due to increased net
sales  and improved gross margin. This increase was partially  offset
by  increased selling and marketing expenses. Operating income  as  a
percentage  of  net  sales  remained relatively  unchanged  from  the
comparable period in fiscal 1997.

      Interest  expense. Interest expense for the three months  ended
June  30,  1998 increased 52.5% from the comparable period in  fiscal
1997,  primarily  as  a  result  of increased  borrowings  under  the
Company's  credit facility. Borrowings were needed to fund  increased
working  capital  requirements, primarily in  the  form  of  accounts
receivable  and  inventory associated with the  introduction  of  the
Company's dietary supplements line.

     Income taxes. Income tax expense for the three months ended June
30,  1998  increased 67.4% from the comparable period in fiscal  1997
due to increased  pre-tax income.

                              PAGE 10
<PAGE>

NINE MONTHS ENDED JUNE 30, 1998 COMPARED TO THE NINE MONTHS ENDED
JUNE 30, 1997

      Net  sales. Net sales for the nine months ended June  30,  1998
increased  25.3%  to  $79.1  million  from  $63.1  million  for   the
comparable period in fiscal 1997. Net sales growth was primarily  the
result  of  increased  sales  of  the  Company's  dietary  supplement
products  and  the introduction of a line of green tea products.  The
Company's dietary supplement products contributed net sales of  $13.6
million for the nine months ended June 30, 1998, as compared to  $2.4
million  during  the prior year period. This increase  was  partially
offset by a decrease in sales of the Company's iced tea products.

      Gross  profit. Gross profit for the nine months ended June  30,
1998  increased  27.5% to $51.0 million from $40.0  million  for  the
comparable  period  in fiscal 1997, primarily due  to  increased  net
sales.  The  Company's gross profit margin increased  to  64.4%  from
63.4%  for  the comparable prior year period. The increase  in  gross
margin was primarily due to decreased sales of the Company's iced tea
products  which  have lower margins than the Company's  hot  tea  and
dietary  supplement products, favorable pricing on key herbs used  in
the  Company's products, and the impact of greater utilization of the
Company's manufacturing facility based on higher sales volume of  its
tea products.

      Selling  and marketing expenses. Selling and marketing expenses
for  the  nine  months ended June 30, 1998 increased 31.3%  to  $35.7
million from $27.2 million for the comparable period in fiscal  1997,
and  increased as a percentage of net sales to 45.1% from 43.1%.  The
increase  in  selling  and marketing expenses primarily  was  due  to
increased personnel costs and trade and consumer promotion expenses 
associated with the introduction of the Company's dietary supplements line.

      General and administrative expenses. General and administrative
expenses for the nine months ended June 30, 1998 increased 50.8% from
the  comparable period in fiscal 1997, and increased as a  percentage
of  net  sales  to 5.8% from 4.9% for the same period  of  the  prior
fiscal  year.  The increase was primarily due to increased  personnel
costs, legal fees associated with a shareholder's lawsuit (see note 3
of Notes To Unaudited Consolidated Financial Statements) and expenses
associated with the support of accounts receivable.

      Operating  income. Operating income for the nine  months  ended
June  30, 1998 increased 10.2% to $9.7 million from $8.8 million  for
the  comparable period in fiscal 1997, primarily due to increased net
sales.  Operating  income as a percentage of net sales  decreased  to
12.2%  from  13.9% primarily due to increased selling  and  marketing
expenses.

      Interest  expense. Interest expense for the nine  months  ended
June  30,  1998  remained relatively unchanged  from  the  comparable
period in fiscal 1997.

      Income taxes. Income tax expense for the nine months ended June
30, 1998 increased 9.1% from the comparable period in fiscal 1997 due
to increased pre-tax income.

                           PAGE 11

LIQUIDITY AND CAPITAL RESOURCES 

     The operations of the Company historically have been funded with
a  combination of internally generated funds and external borrowings.
Other than funding ongoing operations, the Company's principal   uses
of funds in the future will be the development of new or existing tea
and  dietary  supplement  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 credit facilities. The
Company  currently  believes that funds  from  operations  and  funds
expected  to  be available under the Company's credit facilities  are
likely  to  be  sufficient to meet operating and capital requirements
unless  a significant acquisition is made. If necessary, the  Company
believes it can increase availability under its credit facilities. On
July 23, 1998 the Company signed a commitment letter for a new three-
year  credit facility, the terms of which are being finalized. It  is
anticipated  that  the  facility  will  provide  for  a  $15  million
revolving  credit  line and a $7 million line  of  credit  supporting
existing industrial development bonds.

           Cash  and cash equivalents decreased $0.8 million for  the
nine  months  ended June 30, 1998. Cash used in operating  activities
was  $7.5 million for the nine months ended June 30, 1998. During the
current  fiscal  year, the Company has experienced increased  working
capital  requirements, primarily in the form of  accounts  receivable
and  inventory,  associated  with the introduction  of  its  line  of
dietary supplement products. The Company's investing activities  used
cash  of $1.4 million for the nine months ended June 30, 1998,  while
financing  activities  provided cash of $8.1  million  for  the  nine
months ended June 30, 1998.

      The Company incurred capital expenditures of approximately $2.0
million  during  the nine months ended June 30, 1998, including  $1.7
million primarily for factory and computer equipment and $0.3 million
for  the design and development of new packaging artwork. The Company
anticipates making capital expenditures of approximately $2.9 million
in fiscal 1998.

YEAR 2000 COMPLIANCE 

      The  Year  2000 issue is the result of computer programs  being
written  using  two digits rather than four to define the  applicable
year. Any of the Company's computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than
the   year   2000.  This  could  result  in  a  system   failure   or
miscalculations  causing disruptions of operations, including,  among
other  things,  a  temporary inability to process transactions,  send
invoices, or engage in similar normal business activities.

      The  Company,  after an inventory of its business  systems  and
business  interactions, is currently executing a plan to prepare  its
systems  and  business relationships for the Year 2000. Although  the
exact  steps  and  timing  vary depending upon  component  type,  the
Company  expects  to  complete  its  plan  of  preparation  for   all
components on or around July 1, 1999. In the event there is  a  delay
in the completion of the Year 2000 compliance plan, the Company is in
the  process of developing a contingency plan which will include some
non-computerized  backup  systems. The ability  for  the  Company  to
achieve  Year  2000  compliance is, however,  highly  dependent  upon
compliance  of the systems of the Company's customers, suppliers  and
other   third   parties   with  which  the   Company   has   business
relationships.

     The total cost to the Company of Year 2000 compliance activities
has  not  yet  been, and is not anticipated to be,  material  to  its
financial position or results of operations in any given year.  These
costs,  and the date on which the Company plans to complete the  Year
2000  modification and testing processes, are based  on  management's
best  estimates,  which  were derived using numerous  assumptions  of
future   events  including  the  continued  availability  of  certain
resources, third party modification plans and other factors. However,
there  can be no guarantee that these estimates will be achieved  and
actual results could differ from those plans.

      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 "Seasonality,"  "New  Product
Lines,"  "Results of Operations," "Liquidity and Capital  Resources,"
and "Year 2000 Compliance" 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, consumer  acceptance  of  new
products,  general  economic conditions, consumer trends,  costs  and
availability  of  raw  materials and management information  systems,
competition and the effect of governmental regulation.

                              PAGE 12

<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 6.  EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------
(a) Exhibits
    --------
Exhibit  No.                         Description
------------                         -----------
        

23.1           - Report of Deloitte & Touche LLP on unaudited consolidated
                 financial statements
        

(b) Reports on Form 8-K
    -------------------

   There were no reports on Form 8-K for the quarter ended 
   June 30, 1998.

                              PAGE 13
<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)


     August 7, 1998 By:  /s/  Darrell F. Askey
                         ---------------------
                         Darrell F. Askey

                         Vice President - Finance and Chief Financial
                         Officer
                         (Principal Financial Officer)
                                  
                                  
                              PAGE 14
<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        16
             unaudited consolidated financial          
             statements                                 


                              PAGE 15