MODESTO, Calif. — Although the 2012 California almond crop wound up 7% smaller than the previous year’s, Blue Diamond Growers still managed to harvest a record $1.2 billion in global almond sales.
Much of the growth was tied to a 14% increase by volume of value-added sales, which now account for more than 60% of the cooperative’s revenue, said Mark Jansen, president and chief executive officer.
But the feat wasn’t easy and required intensive scrambling midway through the marketing year, Jansen told members attending Blue Diamond’s 103rd annual meeting, Nov. 20, in Modesto.
Under the cooperative’s marketing structure, growers harvest the almond crop in the fall, and Blue Diamond markets it through Aug. 30 of the following year.
In 2012, prices shot up by 50 cents per pound, not unlike what happened in 2004, Jansen said. Back then, Blue Diamond member returns suffered and ended up trailing the industry average by 7 cents per pound.
The 2012 price increase also coincided with the co-op’s launch of a record 15 new products and the completion of the first phase of its food manufacturing plant in Turlock.
“This time the situation was even more difficult because grocery customers require six months (lead time), and our consumer business was five times larger,” he said. “And the news got worse. (Rumors spread) that Blue Diamond was not going to be competitive because they were building the Turlock plant.”
Shortly before last Christmas, Jansen said he assembled his management team to outline the situation.
“They cut costs. They took pricing and found ways to sell more and more profitable products,” he said.
The result was a revenue increase of $189 million compared to the previous year and grower returns of 5 cents per pound above the industry average.
Altogether, Blue Diamond paid out a record $828 million to growers for the 2012 crop.
Since Jansen took the helm of the almond cooperative three years ago, it has put greater emphasis on branded value-added consumer products.
During the 2012 marketing year alone, U.S. branded business increased 30%, to $469 million.
Blue Diamond’s latest introductions include three oven-roasted berry-flavored almond snacks and three oven-roasted, coffee-flavored varieties frequently sold with other nuts and dried fruit adjacent to the produce department.
Clinton Shick, an almond grower from the McFarland area and board chairman, credited nutritional research the almond industry started funding in the 1990s for changing consumers’ perceptions.
“Back then, almonds had fat and fats were bad,” he said. “Because of the work for the last 15 years, you’ve been able to read many positive stories about almonds.”
The 2012 marketing year also marked the first time that Blue Diamond has aired television commercials on three continents — North America, Australia and Europe. In each case, the co-op saw significant sales increases of its branded products after the ads ran.
To continue the momentum of the past three years, Jansen said the co-op needs to buffer itself from the cyclic nature of agriculture.
He outlined three major initiatives that include optimizing the supply chain, replacing an antiquated IT system with one from business software provider SAP and adopting efficiency-focused lean manufacturing.
And Jansen wasn’t bashful about his goals for the almond co-op — to grow as a global branded food company with $2 billion in sales and grower returns of 10 cents per pound above the industry average.