Blue Diamond’s net almond sales dropped by 21% in latest annual report. Here’s why
The top executive of Sacramento-based Blue Diamond Growers said the almond cooperative faced “significant challenges” in its latest fiscal year resulting in a 21% decline in net sales from a year earlier.
Those challenges Blue Diamond President and CEO Kai Bockmann said include an oversupply of almonds, inflationary pressures, depressed market prices and shifts in consumer shopping patterns.
“It’s a very challenging environment,” he said.
Cooperative statistics show net sales declined to $1.3 billion in the 2022-23 fiscal year which ended Aug. 25. The cooperative saw $1.6 billion in net sales in the previous fiscal year.
Blue Diamond, a cooperative of more than 3,000 farmers, is one of the largest almond producers in the world. It processes the almonds it buys from the farmers at plants in Sacramento and in the Central Valley at locations in Salida and Turlock.
Separately an Almond Board of California commissioned report found that the state’s almond growing acreage dropped by around 5% in 2023.
Richard Waycott, president and CEO of the trade association, said that fewer plantings and orchard removals were driven by the fact that farmers aren’t making money growing almonds.
“It’s a particularly difficult time for the industry,” he said.
The almond board commissioned Land IQ report found it was the second consecutive yearly drop in almond acreage. The last time that occurred was 1995.
Blue Diamond’s Bockmann said some of the cooperative’s approximately 3,000 growers are “under water.”
But Bockmann said many farmers are still profitable and he said he could count on one hand the number of growers who have left the cooperative this year.
Factors behind the almond market turnaround
A key problem Blue Diamond officials said is that the 2020-21 growing season produced the surplus of almonds affecting the market today. The crop reached a record 3.1 billion pounds of almonds.
While this year’s crop was back to a more normal 2.88 billion pounds of almonds, the record season in 2020-21 means the supply of almonds continues to exceed demand, said Dean LaVallee, Blue Diamond’s chief financial officer and chief operating officer.
“There are just too many almonds in the world,” said CEO Bockmann.
LaVallee said growers are currently paid $1.50 per pound of almonds compared to $2.00 a year earlier.
Blue Diamond said it paid farmers $629 million in the latest fiscal year, down from $904 million in the previous year.
Bockmann said Blue Diamond had an 800 million-pound unused inventory at the end of August, which “no doubt casts a shadow on grower profitability.”
He said this has led to large discounts to wholesalers.
“The current market prices are admittedly not sustainable,” he said. “Even though the industry continues to move tremendous amounts of almonds, we need to further reduce the existing inventory to rebalance supply and demand.”
Bockmann said another issue was inflation and its effect on consumer spending habits.
“Consumers often chose to trade down to lower cost alternatives and smaller package sizes to reduce their overall grocery spend, which negatively affected volume,” he said.
Efforts to boost almond sales
Bockmann said the company is aiming to increase sales by introducing new products.
He said Blue Diamond successfully introduced in the last year chocolate covered almonds with reduced sugar.
Blue Diamond also inked a deal with Starbucks in China. The coffee chain is using Blue Diamond’s Almond Breeze milk at Starbucks locations in that country, he said.
Bockmann said the cooperative will not be successful in the future without a new operating strategy that targets the growth of new products.
“A lot of the pages of the old playbook are not going to work,” he said.“We’ve got a lot of eggs in a relatively few baskets right now. It’s all in the Almond Breeze and the snack nuts.”
One area he cited is developing new products for international markets and the success of a new item in Thailand.
“We have a product in Thailand that has little anchovy-type fish inside the slivered almonds in a can,” he said. “We could never sell that in the U.S. But if certain products resonate with consumers in international markets, we’re going to develop those products.”
Bockmann said Blue Diamond also wants to target restaurants, school cafeterias and food operations at military bases with new almond based recipes.
He cited as an example a mom and pop restaurant using a rosemary salt pepper sliced almond as an ingredient on a salad.
”Everybody’s selling brown almonds,” Bockmann said of Blue Diamond and competitors. “Cheap and cheerful, largely a commodity,” he said.
Bockmann said Blue Diamond will continue to sell those brown almonds.
“We can’t abandon that obviously, but our job is to create demand for other products as well,” he said.
