Americans are not being asked anymore to eat “a can a week.” That’s arguably not enough.
Blue Diamond Growers will need more than that to meet its next milestone within the next several years, but judging from recent success stories they’ll get there.
Members of the almond cooperative were told that the company achieved a record $1.2 billion in sales last year and is knocking on the door of $2 billion in sales within the next four to five years if their 20 percent annual growth trend continues.
That’s right: 20 percent a year!
“That’s just part of who we are and what we’ve been doing,” said Mark Jansen, chief executive officer of the Sacramento, Calif.-based almond cooperative.
Explosive growth in the California almond industry, coupled with health claims such as “certified heart healthy” by the American Heart Association, can be credited with some of this success. But that’s not all.
Jansen says Blue Diamond continues to market itself as “the best, most profitable option for growers” by aggressively building the value-added segment of its business. It’s in that value-added segment Jansen says the grower-owned cooperative realizes its greatest profits.
Jansen also credits margin-enhancement with fueling Blue Diamond’s growth.
It’s not merely sliced and diced almonds that go into breakfast cereals and other food products that Jansen calls “value-added.” Last fall the cooperative launched Almond Breeze in Japan and Jansen couldn’t be more pleased with its success there. Almond Breeze has been on American grocery store shelves for a decade now, where it continues to see double-digit growth in a dairy-substitute market once dominated by soy.
According to Jansen, Almond Breeze is on target for massive growth in Japan as it remains the fastest growing product category in the Blue Diamond portfolio.
“The challenge is how you take it from zero to a $200 million business over the course of the next six years,” Jansen said of Almond Breeze’s introduction to the Japanese consumer.
Jansen is confident it can be done given Almond Breeze’s domestic success.
“If we can achieve a similar level of almond milk penetration in Japan we will easily achieve that $200 million sales volume,” he said.
Jansen told growers at the organization’s annual meeting that Silk, its nearest competitor in the United States, outspends Blue Diamond 4:1 in terms of advertising and coupon offerings.
“The only way for us to compete is for us to have a better quality product, having more focused product innovation, and a better strategy and execution,” he said.
Despite being out-spent in certain areas of marketing, Jansen said the cooperative has seen the effectiveness of its U.S. television advertising double. Blue Diamond has been also named the official snack nut of the U.S. Ski Team, U.S. Snowboarding and U.S. Freeskiing.
Part of this campaign includes a national television advertising campaign called “Welcome to Breezeville.” Commercial performance and research testing of the television advertising has already revealed high scores in messaging, driving purchase intent and overall likeability of the brand, Jansen said.
The social media portion of the Breezeville campaign showed an immediate consumer response. Jansen said their Facebook offering showed a 45 percent increase in fan base after launching the television spots.
Blue Diamond hasn’t always made the best decisions, Jansen told growers in December.
In 2004 almond prices shot up 50 cents per pound. “This was devastating to Blue Diamond because we make longer commitments to our customers than other handlers,” he said.
That decision cost the company as it trailed other almond handlers an average of seven cents per pound for its 2004 crop.
Jansen said history began to repeat itself in 2012. In September that year almond prices shot up another 50 cents. “This time our situation was even more difficult as our grocery customers require six months to execute a new price increase,” he said.
Once again, Blue Diamond was looking at lower returns than competing almond handlers. Couple this with serious concerns by Blue Diamond customers over pricing issues and rumors that Blue Diamond was going to be uncompetitive with its decision to build a new processing plant in Turlock, Calif., and Jansen said the organization’s leadership was “losing sleep over the dilemma.”
“I told the team that we cannot afford to take a step backwards, even after two years of very competitive returns,” Jansen said. “A step backwards would lead credence to the naysayers. So in December of that year the leadership began implementing our ‘play-to-win’ strategy. We cut costs and took pricing and found ways to sell more of our most profitable products.”
Extreme volatility in the almond market at the time had Blue Diamond holding its breath that competitors could still time the market right and beat the 100-plus year old cooperative with price and profit.
“When our final returns were reported we were clearly successful,” Jansen said.
Bullet-proof the co-op
Jansen wants to use the current high-times within the almond industry to “bullet-proof the co-op.” By that he means the company needs to now begin preparing for lean years that inevitably come as a result of normal business cycles. He intends to do this through developing a holistic business approach that he hopes will put Blue Diamond grower returns at least 10 cents per pound ahead of the rest of the almond industry.
The holistic approach he talks about will include a top-to-bottom look at everything from the grower to the consumer and how the company can improve its margins throughout the system. Jansen realizes it won’t be easy given that the company has already successfully trimmed wasteful operations and found new ways to become even more efficient.
This integrated look will factor in the entire supply chain, including transportation, warehousing, logistics and demand planning.
One large area where the company will continue to see its efficiencies improve is in the 200,000 square foot Turlock processing facility, which went online in 2013.
“We’ve built Turlock to be modular,” he said, meaning the facility can be expanded simply by moving walls with a crane and adding space to the facility.
“You should be prepared for the economic benefits of this facility to continue to grow,” he told growers in December.
Consumption of Blue Diamond almonds continues to grow, particularly where consumer advertising is being employed, Jansen said. In the four markets where consumer advertising was increased last year, a marked increase in product consumption was seen. Shipment growth in 2012-1013 grew by 8 percent in the United States, 8 percent in the United Kingdom, 7 percent in Japan and 40 percent in Australia, he said.
Conversely, Asian countries where Blue Diamond does not yet advertise saw 5 percent decreases in sales.
“We’re still working our way into other markets around the globe,” Jansen said. “But the trajectory is there to continue our growth.”