DIAMOND FOODS, INC.

Shy, you ask? Nut a bit. Diamond Foods has come out of its shell. While the company still sells plenty of walnuts, peanuts, almonds, and other varieties of nuts, primarily under the Diamond and Emerald brands, snacks are a growing part of its business. Diamond Foods sells microwave popcorn under the Pop Secret brand and Kettle brand potato chips. The snack food maker sells its products to food retailers: Wal-Mart and Costco combined account for about 30% of sales. Non-retail nut customers include food processors, restaurants, bakeries and food service operators. The company was founded in 1912 as Diamond Walnut Growers.

Geographic Reach

San Francisco-based Diamond Foods has production facilities in California, Indiana, Oregon, Wisconsin, and Norwich, England. In addition to US markets, it also does business internationally, mainly in the UK, Germany, Spain, the Netherlands, Turkey, Japan, and South Korea. The company rings up more than three-quarters of its sales in the US, and about 15% in Europe.

Operations

The company owns no nut groves of its own; instead, it buys from growers. During fiscal 2012 (ends July) all the walnuts, peanuts, and almonds, and most hazelnuts, were sourced in the US; pecans came from the US and Mexico. It imported Brazil nuts from the Amazon basin; cashews from India, Africa, Brazil, and Southeast Asia; and pine nuts from China and Turkey. Other agricultural commodities it needs for production, such as corn and potatoes, were provided by growers in the US and UK.

Sales and Marketing

The company's products are sold in more than 60,000 US retail locations and are available in some 100 other countries. Diamond plans to expand its retail distribution outlets to include more drug, convenience, and club stores, as well as mass merchandisers.

Major customers include Wal-Mart Stores and Costco, which accounted for 18% and 12% of fiscal 2012 (ends July) sales, respectively.

Financial Performance

Diamond's fiscal 2012 (ends July) sales rose by about 1.5% vs. the prior year, on increased snack sales and increased culinary and retail in-shell sales. The company was unprofitable in 2012, posting a net loss of about  $86 million, and cash flow from operations plunged as well. Diamond Foods blamed the loss on a decline in walnut crop deliveries and higher commodities costs, particularly for walnuts. Also, cost related to its unsuccessful bid for Pringles hurt the company's bottom line.

Strategy

Diamond Foods is pursuing a strategy of increasing its market share in the snack-food sector. However, a bid to acquire Pringles from Procter & Gamble  for $1.5 billion -- a thus become the second-largest snack company in terms of retail sales behind  behind PepsiCo-owned Frito-Lay -- fell through in February 2012 due to an internal investigation into the company's payments to walnut growers. The board of Diamond Foods announced then announced that it was restating its financial results for two years and had replaced its CEO and CFO. The company had better success acquiring Kettle Foods in 2010 and the Pop Secret brand from General Mills (2008). 

Mergers and Acquisitions

The March 31, 2010 acquisition of Kettle has already proved profitable. Diamond's 2010 fiscal year (ended on July 31, 2010), total net sales were $680 million, compared to $571 million for fiscal 2009, an increase of 70%. The company attributed this uptick to increased snack sales, particularly the Kettle brand (which it had owned for only four months before the end of its fiscal year).

Pop Secret is the US's #2 popcorn brand behind ConAgra's Orville Redenbacher products. (ConAgra also makes the popular Act II microwaveable popcorn.) In addition to popcorn, the company's other snack foods include roasted, glazed, and mixed nuts, trail mixes, and dried fruits.

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DIAMOND FOODS, INC.


600 Montgomery St Fl 13
San Francisco, CA 94111-2715
Phone: 1 (415) 445-7444
Fax: 1 (866) 7549479
www.diamondfoods.com

STATS


  • Employer Type: Public
  • Stock Symbol: DMND,
  • Stock Exchange: , NASDAQ
  • Executive Vice President and Chief Operating Officer: David Colo
  • President and Chief Executive Officer: Brian Driscoll
  • Chairman: Robert Zollars

Major Office Locations

  • San Francisco, CA

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