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While Blue Diamond Growers provided members with industry-leading returns for the past 11 years, such was not the case with the 2024 crop when the cooperative trailed some competitors.
West Coast Nut recently sat down with CEO Kai Bockmann to discuss the challenges the co-op faces, the steps it is taking to address them and the exciting opportunities Bockman sees moving forward.
Q. Letās discuss a few of the challenges and the programs Blue Diamond has developed to address them.
Consumer preferences change very quickly. Weāve been on quite a ride over the last decade when non-dairy beverages saw phenomenal growth. As an example, our Almond Breeze business was a big driver of our returns.
We were in an enviable position when that trend took off, and the Almond Breeze business grew at an exponential rate up to 2021. Post-COVID, thereās been a decline in consumption of not just almond milk but all non-dairy beverages.
There are a couple of contributors, with one being peopleās paychecks only going so far. Theyāre having to make tough choices about what to put in their grocery basket, and theyāre coming back to dairy milk, which is at a lower price point.
The good news is we continue to increase our share in that space. Weāre still the market-leading brand even though we have formidable competitors, whether itās on the almond milk side or other non-dairy options.
We remain relevant with consumers, but we have to continue to innovate and develop new products to stay that way. As an example, we are launching a new line of almond milk under our Blue Diamond brand with just three ingredients: almonds, water and sea salt. Having a āclean labelā helps differentiate ourselves from whatās out there, and we have the brand equity because everybody knows Blue Diamond.
Q. What is the co-op doing to stir consumer excitement?
Shoppers tend to make their purchase decisions at the shelf within just a few seconds. We need to attract their attention. So weāre doing a total brand refresh because we havenāt changed our packaging or logo for over 20 years.
We need to bring excitement back to the category, and itās already resonating with consumers and key retail decision-makers. Weāre seeing increased turns of our products, whether itās Mikeās Hot Honey-flavored almonds or getting into mixed nuts with Almonds and More, something we havenāt done historically.
Itās bringing a whole new generation of consumers to Blue Diamond. Forty percent of consumers who buy Almonds and More have never had a Blue Diamond product. So weāre excited about the brand relaunch, which has a whole new look and feel.
With it comes all the marketing, and not just the traditional outlets like TV and social media, but also in-store sampling. When we get people to try our product, theyāre like, āWow, this is pretty awesome.ā
The good news is weāre getting increased household penetration. This year alone, weāve added 250,000 new households to our snack nuts business. Weāre also getting into the produce department, which is a different part of the store that people havenāt seen us in before.
Weāll continue to expand our portfolio to different parts of the store because we want to have an increasing share of the stomach.
Q. How have decreased domestic almond shipments weighed on the co-op?
Having a large domestic presence is a strength but also can be a detriment when consumers in that market have to tighten their belts financially. You have to have a diversified business so youāre not overreliant on any one outlet. If you look at grower returns for the 2023 crop, which was also a challenging year, our diversified business helped us outperform our industry peers.
For us, itās about not being reactive to short-term movements. We have to be agile and nimble, but at the same time we canāt abandon our disciplined, methodical approach when it comes to diversified products and markets.
There are other amazing opportunities right in our backyard in the U.S.
Q. How has Blue Diamond reacted to the uncertain export situation?
Itās a very uncertain environment, and tariffs and non-tariff barriers are changing on a daily, weekly and monthly basis. We canāt focus on those elements outside our control. Instead, we focus on areas we can control.
What we can control is making sure that in the big markets like China and India, we donāt put all our eggs in relatively few baskets. Take Canada as an example. Weāve been able to accelerate our growth even in light of the tariff situation.
Itās about making sure weāre in a lot of different markets. We rely on our resources to continue to lobby in Washington, D.C., to make sure lawmakers understand the impact tariffs have on our grower-members. And weāre looking for opportunities like in India, where they recently backtracked some of the tariffs they had in place.
Q. How will closing the Sacramento plant benefit grower returns?
This is a journey that will take us to June 2027, and it will mean stronger returns to our growers. Weāre shutting down the largest almond processing plant in the world and letting go 600-plus employees so we can run as efficiently as possible.
At the end of the day, weāll have the same capabilities that we have today in two assets rather than three. (The two facilities to which he referred are in Turlock and Salida.)
Weāre reducing our workforce by over 40%. So if weāre doing more with less, obviously it has a significant positive impact on our efficiencies and ultimately our grower returns. Thatās what itās all about.
Q. How is Blue Diamond responding to lackluster grower returns?
Weāre not satisfied with the 2024 returns. We know our growers arenāt satisfied with them either.
We made sizable investments five-plus years ago to meet forecast consumption that ultimately never materialized. Obviously, thereās a cost when you make significant investments that hits the bottom line and ultimately grower returns.
The other thing I would add, we got fat in terms of overhead structure because we were trying to ramp up to match anticipated growth. Again, no one had a crystal ball, and things changed very quickly. Since I took over as CEO, weāve reduced our corporate headcount to 2018 levels, and thatās before we even close the Sacramento plant.
This year was a miss in terms of grower returns, but weāve launched a lot of changes to ensure we regain our industry-leading position. Closing Sacramento was a difficult but necessary decision because we know it is the right decision for the longer term. If we didnāt do this now, weād ultimately pay the price down the road.
For us, itās a marathon and not a sprint. We strongly believe future returns will reflect the decisions that we made, but theyāll take time.
Blue Diamond has been around for 115 years. Our balance sheet is strong, our brand is flourishing, our product is amazing, and our people have never been more fired up to deliver the best possible return to our growers. These are tough times for sure, but I have never been more excited about whatās ahead.
Vicky Boyd | Contributing Writer
A veteran agricultural journalist, Vicky Boyd has covered the industry in California, Florida, Texas, Colorado, the South and the Mid-South. Along the way, she has won several writing awards. Boyd attended Colorado State University, where she earned a technical journalism degree with minors in agriculture and natural resources. Boyd is known for taking complex technical or scientific material and translating it so readers can use it on their farms. Her favorite topics are entomology, weeds and new technology. When sheās not out āplaying in the dirt,ā as she calls agricultural reporting, Boyd enjoys running, hiking, knitting and sewing.
