Blue Diamond Growers, headquartered in Sacramento are one of the globe's largest almond cooperatives, disclosed a significant 21% reduction in net sales for the fiscal year 2022-23, plummeting to $1.3 billion from the previous year's $1.6 billion. The cooperative's President and CEO, Kai Bockmann, attributed this downturn to a confluence of challenges, encompassing an oversupply of almonds, inflationary pressures, subdued market prices, and transformative shifts in consumer shopping behavior. Boasting a membership of over 3,000 farmers, Blue Diamond processes almonds at multiple facilities, including sites in Sacramento, Salida, and Turlock.
In tandem with Blue Diamond's struggles, a report commissioned by the Almond Board of California revealed a 5% contraction in the state's almond growing acreage during 2023, marking the second consecutive annual decline. Bockmann acknowledged the lingering impact of the record 3.1 billion pounds of almonds produced during the 2020-21 growing season, resulting in an ongoing surplus that continues to outstrip demand. Despite a return to a more typical crop size of 2.88 billion pounds in the latest season, the market imbalance persists, prompting a reduction in grower payments from $2.00 to $1.50 per pound of almonds.
Dean LaVallee, Blue Diamond's Chief Financial Officer and Chief Operating Officer, emphasized the core predicament, stating that the world is currently grappling with an excess of almonds. The cooperative faced challenges, ending August with an 800 million-pound unused inventory, casting a shadow over grower profitability.
In response to the market dynamics, Blue Diamond is strategically positioning itself to enhance sales by venturing into new product offerings. Notable among these introductions are chocolate-covered almonds with reduced sugar. Additionally, the cooperative inked a deal with Starbucks in China, supplying Almond Breeze milk to the coffee giant's outlets in the country.
Kai Bockmann stressed the necessity for a revamped operational strategy to navigate the evolving market landscape. While acknowledging the continued significance of traditional almond products, Blue Diamond is determined to create demand for a more diversified product portfolio. The cooperative is targeting various sectors, including restaurants, school cafeterias, and food operations at military bases, with innovative almond-based recipes. This strategic initiative aims to broaden the cooperative's product range beyond conventional offerings and stimulate market demand.
The challenges faced by Blue Diamond underscore the intricacies of the almond market, with oversupply, changing consumer preferences, and global market dynamics influencing the cooperative's operations. Navigating these complexities requires a multifaceted approach that includes diversifying products, exploring new markets, and fostering innovation within the almond industry.