Almond and chia prices are going through the roof, says Hain Celestial

Asked about commodity pricing on the firm’s Q2, 2013, earnings call yesterday, John Carroll, executive vice president and CEO at Hain Celestial US, said:

“Second half almond and chia pricing will be up over 30% versus the first half, so not just versus a year ago, but versus the first half, due to higher demand and lower crop yields.”​

Second half almond and chia pricing will be up over 30% versus the first half​

The firm, which supplies almond-based beverages, desserts and nut butters, and a range of chia products, has already announced a price increase on its almond and chia products that will go into effect in the fourth quarter, he said: “But that only offers us very limited relief. ​

“The key offsetting these almond and chia increases will be leveraging our proven productivity function for additional savings.”​

Group CEO Irwin Simon added: “On ​almonds, the price pressure started in the first half, however, because we had bought out through the first half, we were not affected by it.”​

Asked how easy it was to pass on higher prices for products containing these ingredients, CFO Ira Lamel said: “The thing is we are able to pass price on and especially with almond, butters and nut butters because with other nut butter plants, ​[some] peanut butter plants ​[are] not even operating. ​

“It’s either you take the price increase or you don’t get it, because we’ve got a line of people that want the product today and are willing to pay the price and the same ​[applies to] chia seeds.”​

There is a shortage right now on blue corn​

The other two commodities bosses are watching closely are rice and blue corn, he said.

“There is a shortage right now on blue corn. We actually went long on blue corn originally and now we’re buying it on a stock-by-stock basis… but both of those are really pale in comparison to the headwinds from chia and almonds.”​

Greek Gods Greek yogurt sales were up 39% in Q2​

While some of the biggest packaged food brands have suffered volume declines in mature markets such as the US and Europe, Hain Celestial generated strong growth in the second quarter, posting a 57.8% rise in net income to $31.6m on net sales up 24.8% to $455.3m in the three months to December 31 (Q2, 2013).

Sales in the US were up 9.4% to $280.4m in the quarter, while at 7.5%, Hain’s latest 12-week AOC (all outlets combined) sales growth in the US significantly outpaced that of rivals, claimed Simon.

“​Just some notable mentions, our Greek Gods Yogurt sales were up 39%; Earth’s Best pouches were up over 15%, and Celestial Seasonings, we’ve had some of the strongest key numbers that we’ve ever seen.”​

Much of this was driven by availability improvements and distribution gains in Walmart, Kroger, Safeway, Target, Publix, Sams Club and Giant Eagle, he said.

We are pretty excited about BluePrint ​

Asked about New York City-based premium juice cleanse brand BluePrint, which Hain acquired last year, he said: ”The​ whole juicing category is just a hot category today. We think we have a tremendous product and January being the big slim down month, we saw some tremendous sales in January… ​

“We are pretty excited about BluePrint. We think there is big opportunity for us to expand this at retail in a major way. We are focused on it in Canada, in Europe and we think the whole juice category and fresh juice either from a cleansing, from a meal, and just juice in general will be a big growth for us.”​

Asked about other acquisition opportunities, he said: “We’ve identified three or four other good acquisitions that are in the $25-30m range in categories that we are not in today. And being part of Hain we think we can take them to higher level.”​

Why are almond prices going up?​

Several factors are contributing to higher almond prices, including rocketing demand from China, growing interest from manufacturers interested in their health benefits, rapidly growing market for almond-based products in the dairy free market, wider use in ready to eat cereals, and continued demand from more traditional bakery and confectionery firms.

According to a January 14 report from Bill Morecraft, general manager at the global ingredient division of almond giant Blue Diamond, the 2012 California crop is likely to be around 1.85 billion pounds, well below the National Agricultural Statistics Service (NASS) estimate of 2.1 billion pounds.

In a market analysis​ posted on January 16, Dan Cummings, a founder member of Project Apis m​. (PAm), a non-profit honey bee research organization and a fellow director at Blue Diamond, said: “There is lots of speculation as to the cause of the short crop but certainly a very dry growing year played a significant role.​

"The average moisture level of deliveries was down 1% from normal.  Furthermore, kernel sizes were smaller than expected and often very flat and/or with shrivel on the edges.  Insect damage was greater than recent years..." ​

But he added: “The prospects for a big crop in 2013 look promising.”​