The supply of almonds has not meaningfully grown since…
The supply of almonds has not meaningfully grown since the 2010 crop. Acreage has grown at 2-3%, but yields per acre have not matched the high mark of 2010 (not incidentally our last wetter than average rainfall year). The May Subjective Estimate of 1.95 billion for 2014 continues this trend.
Market demand is stronger than supply so prices continue their upward trajectory. With prices at all time highs, it is instructive to see which markets can sustain demand. The U.S. continues as the biggest, most consistent source of almond-pounds growth. Other developed markets are also showing a willingness to purchase higher priced almonds, particularly those markets where Blue Diamond has launched Almond Breeze and has invested in advertising. The U.S., U.K. and Japan share this Blue Diamond-driven growth.
There is a wood carving in my office that says “Fear is Opportunity in Disguise.” My mom gave it to me quoting one of my first President’s Corners which referenced the market concern of the day. I am sure you remember the euphoria over the market growth in China and also a fear that a change in demand from the market could drive prices downward. With two years of double-digit declines in China and still rising prices, we now realize the fears of the day were unfounded. More importantly, we rediscovered the opportunity for far more growth than we could ever have imagined from markets described as mature by the industry.
It is not uncommon for industries to chase new markets or customers, while neglecting the established. Fortunately, we did not fall into that trap. Instead, we renewed focus on consumer insights, product innovation and advertising that created a renaissance of growth. This surprised and reignited the confidence in the market potential of so-called mature markets.
Going forward, the almond industry, and Blue Diamond in particular, must remember that our greatest opportunities for growth may not come from those markets with the least consumption. In many cases it is easier to get your best customer to consume more than introduce a new customer. With U.S. per capita consumption at only a can a month we have plenty of room for next generation almond products and marketing before reaching our Can-A-Week standard.