About Diamond Foods, LLC
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;
Diamond Foods operates two business segments: Snacks, which accounted for 56% of its sales during fiscal 2015 (ends July) and includes its Kettle Brand chips and its Pop Secret brands; and Nuts (44% of sales), which sells various types of nuts under the Emerald and Diamond of California brands.
The company owns no nut groves of its own; instead, it sources them from growers. During FY2015, 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; macadamia nuts from Australia and South Africa; 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.
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 rang up 75% of its sales in the US in FY2015, while 16% of sales came from in Europe.
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 sells its products in grocery, drug, convenience, and club stores (global, national, regional, or independent types), as well as mass merchandisers and other retail and non-retail channels. Its major customers include
Diamond Foods' consumer-targeted advertising campaigns are carried out through print and digital advertisements, field marketing events, social media (Facebook, Twitter, and YouTube), coupons, co-marketing arrangements with complementary consumer product companies, cooperative advertising with certain retail customers, and through television advertisements.
Overall, the company spent $39.4 million on advertising in FY2015, compared to $43.3 million and $41.5 million in fiscal years 2014 and 2013, respectively. During FY2014, the company shifted its funds toward promotional spending and away from advertising for Kettle UK and Pop Secret products as it awaited the completion of its Emerald packaging transition.
Diamond Foods has struggled to grow its sales over the past few years. It's also suffered three consecutive years of losses (FY2012 through FY2014) mostly as its tight operating margins (from high commodity costs) have been met with high overhead costs and high levels of interest expense on its long-term debt.
The food manufacturer's net sales dipped 1% to $864.2 million in fiscal 2015 (ended July) as nut sales declined by 2% mostly because on lower sales volume as the company exited select low-margin product SKUs, and as it transitioned to new packaging for its Emerald brand products. Snack sales improved by 1%, however, thanks to sales volume increases across the snacks product lines and higher prices on Kettle Brand products in the US. By geography, sales in the US were flat, sales in Europe fell 7%, and sales in other countries swelled by 15%.
Despite slipping sales in FY2015, Diamond Food's net income spiked to $33 million for the year -- its first profit since 2011 -- thanks to a combination of lower cost of sales, lower overhead costs, lower interest expenses as it paid down its debt levels, and a lack of non-recurring costs from 2013 (including loss on warrant liability, warrant exercise fee, and a $83 million loss on debt extinguishment item as it paid down its long-term debt. Diamond's operating cash levels rose sharply to $48 million in FY2015 thanks to its sharp improvement in cash earnings during the year.
Diamond Foods continued in 2015 its strategy of increasing its market share in the snack-food sector and building its long-term value through new product launches, effective marketing programs, and productivity improvements. Accordingly in July 2015, the company opened its new 7,000-plus square foot innovation center in Salem, Oregon with the hopes of developing and testing new products for Diamond's entire family of brands.
The food manufacturer also selectively acquires companies that expand its snack lines, a growing part of its business.
Mergers and Acquisitions
In February 2015, Diamond Foods purchased a 51% stake in Netherlands-based vegetable and organic potato chips manufacturer Yellow Chips, which marketed its products under private labels as well as through its premium Go Pure brand in Europe. Yellow Chips had already been producing Kettle Brand Vegetable Chips for Diamond.
In February 2012, Diamond Food's bid to acquire Pringles from
1050 DIAMOND ST
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Employer Type: Privately Owned
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