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WhiteWave Foods Co (WWAV), The Hain Celestial Group, Inc. (HAIN), The J.M. Smucker Company (SJM): Profit From the Many Going Nuts Over All Things Almond

I love almonds, so when I discovered WhiteWave Foods Co (NYSE:WWAV)Blue Diamond Growers, and others produced almond milk, it was bye bye soy milk. And when I tasted The Hain Celestial Group, Inc. (NASDAQ:HAIN)’s almond butter, it was adios to peanut butters, such as The J.M. Smucker Company (NYSE:SJM)‘s All Natural.

I’m hardly alone, as global demand for almonds and almond milk is soaring, while demand for almond butters and almonds as ingredients in various food products is rising. This increasing demand is attributed to taste reasons and health-related benefits. Let’s look at the investment implications of this tasty topic.

The world is nuts for nuts – specifically, almonds

Supply and demand figures:

  • California produces 80% of the world’s and 100% of the U.S.’s almonds
  • Demand for California’s almonds has increased 51% in five years
  • Demand from Asia for California’s almonds has increased 154% in five years
  • U.S. per capita consumption of almonds has increased more than three-fold since 1997
  • U.S. per capita consumption of almonds surpassed that of peanuts in 2011

Almond milk making big moo-ves on cow and soy milk

Consumption of cow milk has been on a long decline in the U.S, primarily due to health concerns over antibiotic content and lactose intolerance issues.

Soy milk has largely had the plant-based non-dairy beverage category to itself. That’s changed. While almond milk has long been on some grocer’s shelves, it was in the shelf-stable area. It’s only been since 2010 that almond milk has invaded the refrigerated dairy section.

U.S. retail sales of plant-based nondairy beverages, such as soy, almond, rice, coconut and hemp milk, hit $1.33 billion in 2011, and are expected to top $1.7 billion by 2016.

Soy milk had 68.7% of the dairy alternative beverage market in 2011, followed by almond milk at 21.2%, rice milk at 7.2%, and coconut milk at 2.6%. Almond milk sales increased 79% from the previous year.

The almond milk players

Blue Diamond and White Wave’s Silk brand are duking it out for almond milk supremacy.
Silk Pure Almond sales skyrocketed more than 500% in 2010 and 69% in 2011. Blue Diamond’s Almond Breeze sales jumped 240% in 2010 and 59% in 2011.

Whole Foods Market, Inc. (NASDAQ:WFM) and other grocers carry almond milk under their private labels. Whole Foods Market, Inc. (NASDAQ:WFM) is largely viewed as just a retailer. I think some miss the fact that it’s steadily becoming a food producer, as it offers items from almond milk to spices under its “365” brand. Some shoppers might be hesitant to substitute traditional supermarket private label brands for brand-name products due to perceived quality issues. However, I don’t think this is much of an issue with Whole Foods’ brand. The company’s quality image likely carries over to its store-brand products.

The almond butter players

The Hain Celestial Group, Inc. (NASDAQ:HAIN) sells almond butter (and other nut- and seed-based butters) under its MaraNatha label. Many are organic, some are not.

The J.M. Smucker Company (NYSE:SJM)’s needs to “up” it butters game and offer a couple almond butters. It’s no doubt losing market share. Some consumers are switching to almond butter for taste and/or health-related reasons. Peanuts are more likely to be tainted with a toxic mold (aflatoxins) than are almonds and other nuts.

Whole Foods carries almond butters under its 365 brand.

WhiteWave Foods Co (NYSE:WWAV) was spun off from Dean Foods. It began trading late last year, with Dean selling its remaining interest in May. WhiteWave Foods Co (NYSE:WWAV) produces and sells plant-based foods and beverages, coffee creamers, non-organic and organic dairy products. Its better known brands include Silk, International Delight, Land O’Lakes, and Horizon Organic.

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