The California Almond Journey Transforming a Mindset

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The California Almond JourneyTransforming a
Mindset

• Richard Waycott
• President and CEO
• Almond Board of California

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ABCs 2008/09 Budget Sustained Program Support
41,900,000 - 2008/2009 19,300,000 2002/2003
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The Scope of the Industry Some Unique Aspects

• Spanning 800 kilometers throughout Californias
  Central Valley
• 100 of U.S. production (70 export, 30
  domestic)
• 80 of worldwide production
• 1 California agricultural export
• Top U.S. horticultural export
• 1 US agricultural export to the EU and India

Farmgate value about 3 Billion
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Bearing Hectares
267,000
225,000
200,000
150,000
100,000
75,000
50,000
0
1950
1960
1970
1980
1990
2000
2008
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Source National Agricultural Statistics Service,
California Field Office
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Almond Production and Shipments
Gold Bars Represent Record Production Years
Stars Represent Record Shipment Years
Metric Tons
Year to-date
Source Almond Board of California August-July
fiscal year basis 08/09 Year-to-date is for
seven months (Aug.-Feb.)
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Market Overview - Diversification
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Geographic Diversification
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Where Almonds are Sold Category Diversification

• Total ingredient and foodservice market 72

Fastest-growing category.
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15 Year Overview The Almond Journey
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Overview 15 Year Journey

• Four key timeframes
• 19941997 An Unlikely Beginning
• 19972001 Programs Launched
• 20012003 Nutrition Messaging Takes Off
• 2003 and beyond Becoming Essential

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19941997 An Unlikely Beginning

• Legal challenges severely limit activities
• Awareness and per capita consumption declined
• Little known about almond content and consumers
• Research efforts began
• Nutrition research
• General health, cancer, cardiovascular (e.g.,
  blood pressure and cholesterol), and diabetes
• Other research begins manufacturer, consumer,
  and influencer audiences
• Limited Consumer Public Relations efforts

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19972001 Programs Launched

• AIM 175 five-year plan
• New programs established
• Communications programs
• Print advertising
• Expanded PR with Phylicia Rashad
• Nutrition research
• Cholesterol
• Heart health
• Foodservice and manufacturers
• Recipe development
• Food technologists
• Per capita consumption growing

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20012003 Nutrition Messaging Takes Off

• Significant research studies were published
• About cholesterol and heart-health benefits
• Consumer programs now focus on nutrition
• Public Relations
• Begins to focus on vitamin E and heart health
• Expands to influencers
• Beginning of foodservice and manufacturing
  advertising
• Salmonella food safety scare
• Major effort to establish industry food safety
  protocol program

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ABC Nutrition Research Program

• Began in 1995 to substantiate the health and
  nutritional benefits of California almonds, NOW
  over 75 published papers in high impact journals
• Pursues research relevant to todays consumers
• Partners with leading universities and
  institutions globally
• 10 million research investment to date

Key Research Areas 1995-2009
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Milestones
2005 Almonds Added to USDA MyPyramid
2003 FDA Nut Health Claim ? Total Cholesterol
LDL
Portion Control Tin Suggested by Subject in ABC
Study
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Almond consumption rises with nutritional
messaging
USDA, ERS, 2008
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2003 and BeyondBecoming Essential

• Take industry from Good to Great
• Pursue US and EU almond only heart-health claim
• All programs focus on heart health
• Strong relationships with global health
  organizations
• Nutrition research exploring weight management
• Industry implements required pasteurization of
  raw almonds (2007)

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Marketing Overview Return on Investment
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Marketing Approach

• Programs work together to maximize impact
• All marketing is based on research
• Consumer research
• Market research
• Nutrition research

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Consumer Advertising

• An evolving message has shifted from taste and
  general health to taste and heart health

High Nutrition
2006
2004
2005
High Taste
July 2003
20012003
19982000
Taste and Versatility Taste and Nutrition Taste
and Heart Health
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Consumer Advertising

• Almonds Are In campaign ran for three years
  from
• April 1998February 2001

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Consumer Advertising

• Talking Almonds ran from March 2001December
  2003 (2½ years)

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Food Service and Manufacturing AdvertisingAnd
You Thought

• When you are looking for healthy ingredients,
  almonds are a healthy ingredient that adds the
  most value

Chocolate
Cereal
Batter
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New Global Marketing Approach
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Background

• In spring 2005 initiated process to set demand
  goals by U.S. target audiences out to 2010/11
• As marketing expenditures were discussed in light
  of the potential 1.5 billion pound crop
• Assuming similar growth (in per capita pounds)
  achieved over the previous four years
• Resulted in a desire to strategically analyze the
  potential overseas

86M lb. goal based on four years, assuming 05/06
crop size will constrain growth. Depending on
when supply allows incremental shipments (limited
05/06 crop delays growth by one year).
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Process

• Conducted a Global Demand Analysis for the U.S.
  for international markets
• Beginning in August 2005, worked with ABC staff
  and committee members to identify areas of focus
  and market groupings

Russia
U.S.Canada
C./E. Europe
W. Europe
NEAsia
China
Middle East
India
Mexico
SE Asia
Mercosur
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Process

• Needed to understand the potential for demand
  growth in each of the markets

Growth Potential
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Global Demand Analysis
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Global Marketing Strategy

• Geographic
• US/Canada, EU
• China and India
• Japan, Korea, Taiwan

• Category
• Chocolate
• Bakery/Patisserie
• Snack

Market, Nutrition Functional Research
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Strengthen Almond Mega Markets

• Both mega markets possess significant influence
  around the world
• North America U.S. remains largest
  single-country market
• EU block of 27 countries with increasing
  commonalities
• 72 of 2007-08 shipments, which equates to 910
  million pounds
• 78 projected future potential volume

North America (U.S./Canada)
European Union (EU)
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Invest in Priority Development Markets

• Significant and burgeoning population of upwardly
  mobile, middle-class consumers
• Require unique market strategies and programs
• Important for long-term growth of the industry
  Mega Markets in Training
• 9.5 of 2007-08 shipments, which equates to 119
  million pounds (YTD 08/09 116 million pounds)
• 12 projected future potential volume

India
China
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Grow and Leverage Regional Driver Markets

• Relatively affluent consumers interested in
  health, quality, and well-being
• Programs build on industry investment and success
  to date
• Strong influencers of Pan-Asian trends
• Japan Health and beauty
• South Korea Entertainment and information
  technology
• Taiwan Food industry

Japan
South Korea
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Global Category Strategy

• Three categories drive 75 of new retail product
  volume
• Volume drivers are global, multi-national or
  regional players
• Industry growth strategies for geographic/brand
  extension
• All tapping consumer trends for healthier
  indulgence

Confectionery
Bakery/Patisserie
Snacking
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Research, the Foundation of Marketing

• Marketing decisions are based on an in-depth
  understanding of what drives consumer preference
  for almonds
• Tap into consumer pull to create manufacturer
  push
• Industry investment in nutrition research builds
  credibility and removes barriers to consumption
• Supporting market development with technical and
  functional knowledge

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Global Marketing Strategy

• Geographic
• US/Canada, EU
• China and India
• Japan, Korea, Taiwan

• Category
• Chocolate
• Bakery/Patisserie
• Snack

Market, Nutrition Functional Research
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The Almond Journey Lessons Learned

• Cohesive Industry
• Long Term Vision
• Realistic Expectations
• Science Centric
• Consistent Support
• Research
• Staff
• Funding

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California Almond Industry - 35 Years of Growth
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Thank you and Lets Work Together