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The California Almond Journey Transforming a Mindset

The California Almond Journey Transforming a Mindset. Richard Waycott President and CEO Almond Board of California. ABC’s 2008/09 Budget Sustained Program Support. $41,900,000 - 2008/2009 $19,300,000 – 2002/2003. The Scope of the Industry – Some Unique Aspects.

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The California Almond Journey Transforming a Mindset

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  1. The California Almond JourneyTransforming a Mindset Richard Waycott President and CEO Almond Board of California

  2. ABC’s 2008/09 Budget Sustained Program Support $41,900,000 - 2008/2009 $19,300,000 – 2002/2003

  3. The Scope of the Industry – Some Unique Aspects • Spanning 800 kilometers throughout California’s 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

  4. Bearing Hectares 206,400 166,300 68,800 100,300 132,300 37,000 267,000 225,000 200,000 150,000 100,000 75,000 50,000 0 1950 1960 1970 1980 1990 2000 2008 4 Source: National Agricultural Statistics Service, California Field Office

  5. 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.)

  6. Market Overview - Diversification

  7. Geographic Diversification

  8. Retail 76% Ingredient 63% Snack* 37% Foodservice and Bakeries 24% Where Almonds are Sold – Category Diversification Total ingredient and foodservice market = 72% *Fastest-growing category.

  9. 15 Year Overview – The Almond Journey

  10. Overview – 15 Year Journey • Four key timeframes 1994–1997: An Unlikely Beginning 1997–2001: Programs Launched 2001–2003: Nutrition Messaging Takes Off 2003… and beyond: Becoming Essential

  11. 1994–1997 – 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

  12. 1997–2001 – 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

  13. 2001–2003 – 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

  14. ABC Nutrition Research Program • Beganin 1995 to substantiate the health and nutritional benefits of California almonds, NOW over 75 published papers in high impact journals • Pursues research relevant to today’s consumers • Partners with leading universities and institutions globally • $10 million research investment to date Key Research Areas 1995-2009

  15. Milestones 2005: Almonds Added to USDA MyPyramid 2003: FDA Nut Health Claim  Total Cholesterol & LDL Portion Control Tin Suggested by Subject in ABC Study

  16. Almond consumption rises with nutritional messaging USDA, ERS, 2008

  17. 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)

  18. Marketing Overview – Return on Investment

  19. Influencer Programs Public Relations Research Advertising Industrial & Foodservice Marketing Approach • Programs work together to maximize impact • All marketing is based on research • Consumer research • Market research • Nutrition research

  20. 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 2001–2003 1998–2000 Taste and Versatility Taste and Nutrition Taste and Heart Health

  21. Consumer Advertising • “Almonds Are In” campaign ran for three years from April 1998–February 2001

  22. Consumer Advertising • “Talking Almonds” ran from March 2001–December 2003 (2½ years)

  23. Food Service and Manufacturing Advertising“And You Thought” • When you are looking for healthy ingredients, almonds are a healthy ingredient that adds the most value Chocolate Cereal Batter

  24. New Global Marketing Approach

  25. 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).

  26. 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

  27. Health Culture Consumer Economy Distribution Key Categories Process • Needed to understand the potential for demand growth in each of the markets Growth Potential

  28. Almond Experience Exploratory Emerging Evolving Established 1.5 W.Europe 1 US US Canada Mexico N. Asia 0.5 Mercosur Canada W.Europe C/E Europe India Russia Market Market Russia 0 Volatility Stability C/E Europe -0.8 -0.6 -0.4 -0.2 0 0.2 0.4 0.6 SE Asia Middle East Middle East India China -0.5 China N. Asia Mexico SE Asia -1 Mercosur -1.5 Almond Inexperience Global Demand Analysis

  29. Global Marketing Strategy • Geographic: • US/Canada, EU • China and India • Japan, Korea, Taiwan • Category: • Chocolate • Bakery/Patisserie • Snack Market, Nutrition & Functional Research

  30. 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)

  31. 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 Invest in Priority Development Markets India China

  32. 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 Grow and Leverage Regional Driver Markets Japan South Korea

  33. 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

  34. 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

  35. Global Marketing Strategy • Geographic: • US/Canada, EU • China and India • Japan, Korea, Taiwan • Category: • Chocolate • Bakery/Patisserie • Snack Market, Nutrition & Functional Research

  36. The Almond Journey – Lessons Learned • Cohesive Industry • Long Term Vision • Realistic Expectations • Science Centric • Consistent Support • Research • Staff • Funding

  37. California Almond Industry - 35 Years of Growth

  38. Thank you and Let’s Work Together

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