Consumers’ increasing interest in healthy eating and a growing global middle class is fuelling almond demand, with the industry experiencing a 78 percent growth in shipments between crop years 2006/2007 and 2011/2012, according to Blue Diamond Almonds.
FLEXNEWS spoke to Bill Morecraft, general manager of the company’s Global Ingredient Division, about the changing dynamics of the almond industry and how the company is looking to innovation to drive further growth.
[FLEXNEWS] How have the dynamics of the almond industry evolved over the last year?
[Bill Morecraft] We are seeing a flattening of supply intersecting with a demand curve that is still on the rise for the California Almond Industry. For the almond crop years 2010 and 2011 we had increases in supply of 24 percent and 16 percent respectively, with growing shipments absorbing the larger supply. In the current crop year, our supply is eight to 10 percent smaller than the prior year which means the industry cannot keep pace with the growing demand for almonds.
The historical rise in almond shipments by geography
[FLEXNEWS] What are your predictions for the industry for the years to come? How significantly will almond production growth slow?
[Bill Morecraft] In the very short term we expect to experience slower growth in supply. As new acreage is planted, it will take four to five years to materially impact the supply.
[FLEXNEWS] Changing eating habits have driven almond growth in mature markets. How is Blue Diamond tapping into the ‘free from’ trends?
[Bill Morecraft] As the leading innovator of new almond products we introduced Almond Breeze, a dairy, non-soy substitute several years ago. More recently our Nut Thins and Nut Chips were introduced to meet consumer needs for gluten free snack crackers.
[FLEXNEWS] In June last year, you told FLEXNEWS that Blue Diamond had just invested in an almond innovation centre in Sacramento. Can you provide an update and the center’s importance moving forward?
[Bill Morecraft] Construction on our Almond Innovation Centre is complete. The official grand opening is 14th March. Our product development facility will be unlike any other in the almond industry. It will house the latest tools and technologies for our staff of food scientists. Our labs will be equipped to work on the latest advancements in dry and oil roasted products, the next generation of flavoured almonds, almond-based beverages such as our Breeze line and other almond related products.
We are expanding our work in application development for almond ingredients in confectionary, cereals, bakery, dairy and several other product categories. Continuing to raise the level of those services is an essential part of our strategy. We view the facility as the foundation for and the incubator of new and exciting almond ingredient applications.
[FLEXNEWS] When it comes to future innovation, in which trends and segments do you see Blue Diamond almond products playing a part?
[Bill Morecraft] There are several different trends emerging within the food industry where almonds prevail as an ideal solution: first, the increased instances of healthy snacking among consumers makes almonds a great choice for a healthy, nutritious and filling snack.
The application development work we are doing at Blue Diamond with flavoured almonds is meeting a market need for convenience and innovative new products. Flavoured almonds have typically been thought of as only a snack. We have taken the flavoured almond concept to the next level by creating unique sweet and savory flavoured almonds that are used as an ingredient. Our customers can then select their desired almond format such as sliced, diced, slivered, etc. to be used as an essential ingredient within their application.
While I can’t comment specifically at this time, it is safe to say our out-of-the-box thinking has us more focused about the product in the box and how almonds can complement a product’s taste, texture and now flavour.
[FLEXNEWS] Over 10 years, almond shipments to India have grown 145 percent, while almond shipments to China have grown nearly 1,000 percent. What are the challenges linked to meeting this surge in interest and how is Blue Diamond keeping on top of such demand?
[Bill Morecraft] Blue Diamond was instrumental in opening these markets. We remain closely connected with these markets and understand the needs of the customers. Significant investments were made in order to develop these markets, ensure we can manage the complicated logistics, understand the different cultures and develop a product line that in some cases in unique to their specific geography.
Our years of experience and having the infrastructure in place to ship products globally have us well positioned to meet growing global demand for almonds.
[FLEXNEWS] Almond pricing will reflect supply tightness for the near future. As almonds are one of the most affordable tree nuts, how strongly will a price increase impact on their popularity?
[Bill Morecraft] While we have seen strengthening in market prices, the cost of other tree nuts has also risen. In recent years, almonds have been the most affordable tree nuts and today, while the gap has narrowed, almonds remain the most affordable tree nut.
A significant advantage almonds offer over peanuts, and all other tree nuts, is their versatility in use as an ingredient. If cost becomes a factor in an end product application we can generally work with the customer to explore ways in which we can change the almond form to meet their economic requirements. For example, it might be a change in granulation, or perhaps using a different variety or size of almond. The depth of our product line and our experience enables us to overcome obstacles in meeting the needs of our customers.
[FLEXNEWS] What can processors do to plan for their future supply needs?
[Bill Morecraft] Blue Diamond brings a unique focus to ingredients unlike other nut companies. With a branded snack division and decades of experience, we understand the importance of meeting customers’ supply and specification requirements.
We do an extensive amount of research to fully understand the trends within the product segments in which we compete. We work closely with customers’ marketing and R&D departments to collaborate on new product development, logistics and ways in which we can ensure we meet their exacting specifications. We think and act as a top tier supplier of ingredients.
As a grower cooperative with more than 3,000 members, and half of the growers located in California, we are well positioned with supply to parallel the needs of our customers. Many of our growers will add acreage and Blue Diamond continues to add growers to the cooperative. However, the changing market dynamics will make it more difficult for the intermediary supplier to fulfill the needs of their larger, strategic customers.
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