Mother of invention

California Almond Growers’ Exchange

by Alyssa A. Lappen
Forbes | Mar. 10, 1986

Vol. 137, No. 5, p. 156
711 words

Blue Diamond, the 5,700-member California Almond Growers’ Exchange, a farmers’ cooperative, has been so successful getting folks here and abroad to gobble more nuts that it sold 70% of the world’s almonds last year. That was more than $400 million worth, with 60% of sales in 90 foreign countries. Between 1968 and 1985, with not one penny of federal subsidy, the California farmers expanded their almond crop from 80 million pounds annually to 460 million pounds, selling every nut that they grew.

But there’s one small problem in this marketing coup: The growers haven’t made a dime in five years. The trouble is that their break-even point has been stuck at 90 cents to $1.000 a pound since 1980. There is price resistance, and the strong dollar has been a problem for much of that time. Delicious though they are, almonds aren’t quite as necessary as oil.

The California growers have no hope of artificially cutting supplies, in the OPEC manner, to bolster prices. They figure they grow the nut of choice and that, given an already smaller crop and a weaker dollar, they will come out all right if they keep pressing their innovative merchandising worldwide.

That in itself will be no small feat. “Each country’s market for almonds is a little different from the next,” says Roger Baccigaluppi, Blue Diamond’s president and chief executive.

Take West Germany, Blue Diamond’s largest market outside the U.S. At first most of its almonds were bought from Spain primarily for marzipan, which is used to make candy and as filling in pastries. The conventional wisdom was that the German market was sated. But Baccigaluppi discovered that his competitor’s almonds arrived in burlap bags ocntaining stems and branches, thereby padding the weight of the shipments. Blue Diamonds made sure its weight was all almonds. And it offered German candymakers 12-month contracts with a guaranteed price instead of the month-to-month shipments and the fluctuating prices of the Spanish product. Then Baccigaluppi showed the Germans how almonds could be slivered for bakery goods, mashed for almonds butter, added wole to candy bars, and so on. The result: Although the U.S. dollar has kicked up the price of California almonds by 25% in Germany since 1980, almonds use will grow more than 50% this year, to 90 million pounds.

Having conquered West Germany, Baccigaluppi marched on Russia, Blue Diamond’s second-largest foreign market. Consumption of California almonds grew 300% in 1985 to 45 million pounds, and sales should nearly double by year-end. “The Soviet Union does not lend itself to promotion,” Baccigaluppi notes. Nevertheless, he noticed that the government’s 1980 five-year plan included improving the Soviet diet. He promptly commissioned a study from the University of California at Davis, which reported that almonds have no cholesterol and contain as much protein per pound as cooked lean beef. Clearly, Moscow was impressed. The Soviets have largely replaced imports of Indian cashews and Turkish hazelnuts with California almonds, which are also an officially endorsed snack food in the U.S.S.R.’s anti-alcoholism campaign.

Baccigaluppi had earlier invaded Japan, now Blue Diamond’s third-largest foreign market. Back in the late 1960s almonds were an unknown commodity there. But Baccigaluppi, undaunted, had opened a Japan Market Development Office staffed by Japanese. Those staffers have since developed a mind-boggling menu that ranges from almond tofu, soy sauce and spaghetti sauce to almond miso soup, sausages and milk.

There’s more. In the last six months consumption of California almonds has grown 55% in Holland, 48% in France, 40% in the U.K. and 23% in Switzerland.

Which is all very impressive, of course, but would be even more so if Baccigaluppi’s boys were making money. Marketing cannot alone create a successful business. But in this case, it is certainly a major reason the almond growers may be eyeing that light at the end of their long, dark tunnel. This year the nut growers expect to break even and next year, they say, they’ll make a few bucks. After all, the dollar is now moving more in their favor and the California crop has topped out, while world almond consumption has not. Oh, yes, and Baccigaluppi is moving on to Scandinavia, Korea, Taiwan and India, among others.

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Alyssa A. Lappen is a U.S.-based investigative journalist. She is the former Managing Editor at the Leeb Group (2012-2017); a former Senior Fellow of the American Center for Democracy (2005-2008); and a former Senior Editor of Institutional Investor (1993-1999), Working Woman (1991-1993) and Corporate Finance (1991). She served six of her 12 years at Forbes (1978-1990) as an Associate Editor. Ms. Lappen was also a staff reporter at The New Haven Register (1975-1977). During a decade as a freelance, her work appeared in Big Peace, Pajamas Media, Front Page Magazine, American Thinker, Right Side News, Family Security Matters, the Washington Times and many other Internet and print journals. Ms. Lappen also contributed to the Terror Finance Blog, among others. She supports the right of journalists worldwide to write without fear or restriction on politics, governments, international affairs, terrorism, terror financing and religious support for terrorism, among other subjects. Ms. Lappen is also an accomplished poet. Her first full-length collection, The Minstrel's Song, was published by Cross-Cultural Communications in April 2015. Her poems have been published in the 2nd 2007 edition of Blood to Remember: American Poets on the Holocaust and both 2007 issues of Wales' award-winning Seventh Quarry: Swansea Poetry Magazine. Dozens of her poems have appeared in print and online literary journals and books. She won the 2000 annual Ruah: A Journal of Spiritual Poetry chapbook award and has received a Harvard Summer Poetry Prize and several honorable mentions.

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