A New Era for Almonds: NASS Subjective Estimate- 2 billion lbs
Often we can look to history for a repeat of market conditions. However, the dramatic market correction from unprecedented high almond prices to more historical averages represents a “first” for the industry. In this instance, history was written. We are entering a new era for almond processing. Here’s why doubling down on marketing and innovation investments to accelerate value-added sales growth is key to our continued success.
In 2010, we were presented with a business challenge – accelerate sales growth while improving our grower returns enough to attract additional grower tonnage. And with onset of drought, we would need to do it with ever-inflating almond prices in the market. Since 2011 we have delivered on this challenge by improving our margins, accelerating investments in future growth, transforming into a value-added almond business and growing our competitive advantage.
Today we face a new challenge. Crops will be larger bringing almond market prices back to historically normal levels. We must grow our value-added sales faster than our almond handle or we will dilute the competitive return advantage of Blue Diamond. By growing our marketing and innovation investments, we are safe-guarding our ability to accelerate value-added sales growth while managing our optimal almond supply.
Blue Diamond was built for opportunities such as this. Through the decades, our mix and competitive edge have moved from growing commodity sales over to the higher profitability of our value-added businesses. We are prepared to increase consumption and sales by optimizing our brand and ingredient offerings while maintaining a stable base of commodity sales. Managing to this optimal mix will ensure we deliver on our mission to maximize the returns of each grower who entrusts Blue Diamond with their almonds.
Looking ahead, the 2016 NASS subjective estimate affirms this year’s crop will be strong and surpass last year’s production. The Almond Board’s recent assessment increase was in response to the looming growth in supply and affirms the need for a full industry effort to move almonds into market channels. The quickness of this crop supply increase requires an “all in” team approach. Blue Diamond will be a valuable member of the team. Examples of our commitment to grow marketing investments have already begun. We introduced new TV advertising for Almond Breeze and we are also committing to significant advertising of snack almonds during the upcoming Summer Olympics. Our global ingredients business is securing a steady pipeline for our high quality almond flour and working with global brand partners to again make almonds their “nut of choice” in new and existing products. Exciting opportunities for expanding AlmondBreeze almond milk, AlmondBreeze Barista Blend and snack nuts into food service brands are on the rise.
As we progress into the second half of this decade you will see our innovative new product development ramp up, our promotion and advertising of all brand categories increase, our branded products placed into new countries, and our expansion into food service products all while reenergizing our global ingredient businesses.
For many companies, including marketing co-ops, changing directions is difficult. Successful strategies are often repeated long past their usefulness, ignoring changes in the marketplace. It is usually after a crisis of performance that a real change in direction is implemented. It is my hope that Blue Diamond can lead the almond industry in avoiding this success trap. From a position of strength we are changing our course to address the dramatic revision in market prices and the expectation of increasingly large almond crops. This will require significant investment with the idea that foregoing a few pennies today will ensure a more profitable future.
At Blue Diamond our intention is to continue to provide industry-leading returns, but we will not maximize short-term returns at the expense of long-term demand generation and its sustainable profitability. We are optimistic in the future of the almond industry and energized by the opportunity to lead your co-op. Because we are proactively managing change, I am confident that at Blue Diamond the best is yet to come.