Living for nuts
It’s the small details that make each nut unique. So states John B. Sanfilippo & Sons (JBSS), parent company of the Fisher brand, referring to its own distinctive differences as a top nut marketer and processor in the U.S.
The company processes and contract manufactures nearly 2,000 stock-keeping units of nuts; snacks such as trail mixes, cracker-and-pretzel mixes, sesame stick and corn stick mixes and nut/berry mixes; and sunflower seeds, among other products. It starts our conversation by describing its commitment to delivering an unsurpassed product, “influencing every stage of a nut’s journey, from sourcing directly from growers to processing snacking and cooking nuts to perfection.
“Our history in the nut business goes back over 90 years,” states Jeffrey Sanfilippo, chairman of the board. “We have been growing ever since, and the passion for the nut business has been passed down through the generations.”
The company markets its snack nuts, recipe nuts, snacks and mixes under the Fisher, Orchard Valley Harvest, Flavor Tree, Sunshine Country and private brands. In 1995, the acquisition of the Fisher nut brand really placed JBSS on the national map. It was also an early promoter of the health benefits of nuts, starting a campaign for them in 2004, when the Food and Drug Administration (FDA) launched a qualified health claim.
Striving for unmatched quality, taste, aroma and texture is its credo. “We live for nuts,” explains Jeffrey Sanfilippo. “For more than 90 years, we’ve been dedicated to procuring, processing and packaging the best nuts in the business. In many ways, this is a business we’ve been in since we were kids. We have the same passion among our employees, many of whom have decades of experience with the company and the industry. We’ll keep on satisfying, one little nut at a time.”
Based in Elgin, Ill., JBSS’s business has exploded in the last 10 years. And with nuts being touted as high in “good” cholesterol and mono- and polyunsaturated fats and better for you, it’s no wonder.
“Consumers are always looking for great-tasting, convenient snacks they can feel good about eating,” says Howard Brandeisky, senior vice president of global marketing and customer solutions. “Nuts are perfect for meeting those needs. Consumers perceive nuts to be a healthy snack, full of protein, healthy oils, vitamins and minerals. With the aging population, consumer interest in healthy snacks is only increasing. And the more convenient, the better.”
The company now occupies a massive, 1-million-sq.-ft. corporate headquarters/production/distribution center complex in Elgin that serves as a centrally located hub for its customers and is outfitted with 85 production lines. The burgeoning business also has 1,300 employees, 800 of which are located at the Elgin operations.
JBSS also has four more production facilities located in primary nut-growing regions: One each in Bainbridge, Ga. (occupying 245,000 sq. ft.), and Garysburg, N.C. (160,000 sq. ft.), both located in the main growing regions for runner- and Virginia-type peanuts, respectively; another in Gustine, Calif. (250,000 sq. ft.), which shells, stores, processes and packages walnuts and is located in the central walnut growing region of California. A fourth in Selma, Texas (265,000 sq. ft.), serves a similar role for pecans and is near pecan growing regions.
“The strategic locations of these facilities, coupled with our commitment to advanced technology, are major contributors to the quality and freshness of our nut products,” notes Jasper Sanfilippo, president and COO. “California is a key growing region for walnuts, and Texas is in the middle of the pecan growing region of North America.”
Garysburg and Bainbridge are key peanut-processing plants in JBSS’s manufacturing system. Garysburg, can shell and process 70 million lb. of Virginia peanuts annually. This facility also roasts and packages salted and roasted in-shell peanuts. Bainbridge is a fully integrated peanut-processing facility, with capabilities that include shelling, blanching, granulating and producing peanut butter. This facility also has a high-speed polyethylene terephthalate (PET) bottling line for dry-roasted peanuts.
The Elgin facility sits on a 95-acre complex that contains some of the most advanced automation in the nut industry, Jasper Sanfilippo notes. Expanded a few times, the facility is constantly being upgraded with new equipment as needed. “We’re always upgrading our production capabilities,” he says. “Recent expansions include increasing our standup bag capacity, given the mounting popularity of this package style with consumers. We also continually look for opportunities to automate to reduce costs and improve quality. We recently added the newest in laser-sorting technology to remove foreign material and defects from cashews.”
Jasper Sanfilippo also points out that the Elgin facility is perhaps the largest nut-processing facility under one roof in the world. “It’s dedicated to value-added manufacturing such as oil and dry roasting and candy and chocolate coating,” he says. “It also has a wide range of packaging platforms like PET jars, composite cans, vertical form/fill bags, standup bags and portion-controlled pouches.”
A multifaceted, global source
JBSS’s strategic approach to developing its brands includes partnering with customers and tailoring supply procedures to meet their specific industry needs. The company has nut products across four channels of trade: Consumer, international; commercial; and contract manufacturing. Representing 59% of its business, the consumer segment supplies nut-based products, including consumer-packaged and bulk products, to a majority of retailers across the country.
“We’ve been in contract manufacturing for many years,” says Mike Valentine, chief financial officer and group president. “It’s a limited but important part of our business. We have only a handful of contract manufacturing partners that we’ve been doing business with. Our long relationship with our partners is a testimonial to our dedication to quality and service.”
The contract manufacturing business, which manufactures products for other manufactures, incorporates a focused group of longtime customers. On the other hand, the private-label snack, baking and produce nuts business contract-manufactures nut-based snacking solutions for retailers under their own brand names. Its strong commercial ingredients business includes foodservice products sold to operators and distributors as well as to other food companies that use nuts as ingredients.
Our vision is to be the global source for nuts,” Jeffrey Sanfilippo adds. “We are investing to expand globally. For example, we opened an office in Shanghai to foster market entry efforts there. We see great opportunity internationally, and we are taking the necessary steps to build an infrastructure to support our growth goals in emerging markets such as China.
“Between our branded and private brand products, we distribute products throughout the country,” he continues. “Some of our branded products are offered internationally, and we supply some of the international needs of our private brand partners. We distribute to many countries throughout the world, with South Korea being our largest international market at this time.”
Energy and safety-minded
Currently Safe Quality Food (SQF) certified at Level 2, JBSS is the first company to win an Energy Star Challenge award for all of its facilities. It also received an Energy Star Partner of the Year award in 2011, so food safety and sustainability are top of mind with this company.
About four years ago, JBSS began implementing a resource-conservation program, says Jasper Sanfilippo. “Energy reductions are focused on intensive electric- and gas-consuming operations. We are also using renewable packaging. Our increased use of plant-based film cut 265,000 gallons of oil annually. And we purchase all of our corrugated cases now through the Sustainable Forestry Initiative [SFI].
“The FDA is currently reviewing the nut industry to determine what level of food-safety risk it poses,” he adds. “Depending on the outcome of the FDA’s review, additional equipment could be necessary.”
JBSS is also very packaging savvy. Developing several award-winning packages over the years, it was the first to package nuts in a clear PET can and considers a premium look as conveying premium quality. The company also uses a variety of resealable, zippered, standup flexible film pouches for both recipe and snacking nut categories.
“We began using resealable standup bags [for Fisher recipe nuts] in 2011,” Brandeisky points out. “That has been a huge category game changer and the first significant new category innovation in years. Consumers like to reseal the bags to keep the nuts fresh, and the standup feature makes it easier for them to find in the pantry. Retailers prefer this package because it merchandises better than the standard layflat bags. This innovation, among other things, has driven double-digit category growth on the brand and put Fisher in a position to challenge the category leader for share leadership.”
Other packaging innovations include an attractively printed square container with a peelable/reseable lid for Flavor Tree Limited-Edition Dark Chocolate Pretzels. Produced by Clear Lam Packaging, the patented/patent-pending Prima Pak packaging technology replaces heavy rigid packaging, while improving shelf appeal.
“We’re always trying to identify packaging innovations that add value for out retail customers as well as the end consumers of our products,” says Brandeisky. “For consumers, PrimaPak offers a convenient package with a ‘Peal and ReSeal’ lid that opens easily and reseals tightly to help preserve product quality. The technology allowed us to create a ‘gift-wrapped’ presentation that wouldn’t have been possible on standard packaging. For retailers, the package offers many supply chain benefits driven by a 70% reduction in package weight and also supports our corporate sustainability efforts. Compared to PET jars, the package merchandises better at retail because of the larger front primary display panel.”
From a manufacturing standpoint, along with its environmental savings, a Prima Pak production line is simple to run versus a PET or composite can line, Jasper Sanfilippo points out. “The PrimaPak lines are also less expensive and require less people to run,” he says. “The launch of Flavor Tree dark chocolate pretzels was limited to the holiday season, so that we could get more consumer and customer reaction to the package.”
JBSS continues to invest in the nut industry to grow its brands. In 2007, the company relocated from Elk Grove Village, Ill., to the spacious Elgin facility. Two years later, it launched more than 20 new products under the Fisher brand portfolio, including an exclusive line of cooking and baking nuts under the Fisher Culinary Touch Cooking and Baking Add-Ins and Toppings lines.
In 2010, it acquired the Orchard Valley Harvest business, with products including raw, dry-roasted, oil-roasted, salted and flavored nuts, organic nuts, snack nuts and trail mixes, blends, chocolate-covered nuts, recipe nuts and dried fruit. Founded in 1990 in Modesto, Calif., the line is now available in the produce section of grocery stores.
“Fisher is our largest brand, with more than $130 million in net sales,” Brandeisky states. “The brand competes in both the snack and recipe nut categories as well as in trail mixes. Growing our brands is a key corporate strategy, and we’re proud to say that in fiscal 2013, the Fisher brand net sales grew more than 8% compared to the prior year.
Some of the new Fisher products that debuted in 2013 include Cheddar Crunch Almonds, Oatmeal Trail Mix and a line of Mammoth Pecans. “The Cheddar Crunch Almonds tap into consumers’ love of cheddar cheese, one of the top flavors in the salty snack category,” Brandeisky explains. “The Oatmeal Trail Mix provides a great-tasting trail mix and a great way to start the day. The premium-sized Mammoth Pecans are offered in a variety of satisfying savory-and-sweet flavors for an enhanced snacking experience.”
This year, JBSS is launching Fisher snack nut varieties such as Sweet BBQ Peanuts with a sweet-and-tangy BBQ flavor and Hunger Fighter trail mix, containing 5 g. of protein per serving. “Consumers are increasingly interested in foods that provide protein because they feel it helps keep them from being hungry,” he adds.
Portions, trends count
For consumers who want to curb portions, JBSS is currently rolling out a mini portion-pack of various Orchard Valley Harvest nut and fruit varieties for on-the-go consumers who want a great-tasting and authentic snack. Building on the success of the brand’s 2-oz. mini pack, the 1-oz. portion-packs are multipacked in an 8-count, resealable standup bag featuring a large, clear film window on the front, enable shoppers to see them. Flavors include Dark Chocolate Almond, Whole Natural Almonds, Trail Mix and Cashews. “Our most recent introduction was in-shell pistachios,” Brandeisky says.
Following consumer trends and rolling with their changing desires, JBSS understands that consumers are using recipe nuts for more than just baking. “They’re using them in salads, as toppings on cereal, yogurt and ice cream and in their favorite main dish recipes, which is why we are calling them ‘recipe nuts’ rather than ‘baking nuts,’” Brandeisky adds. “They even use nuts more frequently in main dishes for dinner. So we gave Fisher a robust social media and digital media program to support the brand and are constantly developing new recipes and offering consumers new and innovative ways to add nuts to their cooking.”
Keeping current with other food trends, last year, JBSS named the Food Network’s cooking star Alex Guarnaschelli, as its celebrity chef spokesperson. “Alex, of course, is a regular on the Food Network show, Chopped, and is also an Iron Chef winner,” Brandeisky points out. “She is a nationally recognized, award-winning chef and also a mom who enjoys creating uncomplicated yet appealing recipes that don’t require tons of prep and ingredients. As such, she really connects with our consumers who are interested in fresh twists to everyday recipes and meals.
“Our Food Network sponsorship is a fully integrated marketing campaign showcasing Chef Alex and the Fisher brand,” he says. “The campaign includes recipe vignettes, Food Network magazine print ads, digital ads and a public relations campaign.”
But despite all of the company’s success, it certainly faces challenges. It’s not immune to commodity price increases, which have been escalating in the last five years, Jeffrey Sanfilippo acknowledges.
“One key challenge is helping consumers and major customers manage significant cost increases,” he says. “Like other food commodities, nuts have seen meaningful increases in prices due to global demand and short-term supply issues. To help mitigate price increases, we initiated several cost-containment projects and are working with major customers on reconfiguring package sizes and product components. We expect that increasing global demand will remain a factor in our business, but that adjustments in consumer purchasing will help stabilize our markets.”
Jeffrey Sanfilippo cites many factors driving raw materials price increases, such as a consistent increase in worldwide demand driven by consumer interest in snacks that they perceive as healthy. “Demand extends well beyond the U.S.,” he says. “At the same time, the supply of nuts hasn’t been able to fully increase to accommodate the demand. In some cases, weather events such as drought have negatively impacted yields. It takes five to 10 years for new plantings of tree nuts to generate meaningful production, so supply is very inelastic in the short-term and not able to quickly respond to increased prices.”
Passionate to the core
Nonetheless, this hasn’t stopped JBSS from significantly growing its domestic operations, expanding internationally and enjoying net sales increases (annual sales are about $734 million). “Our passion for the nut business and providing value for our customers is what really sets us apart from some other companies,” Jeffrey Sanfilippo sums up. “Passion has been at the core of our success.”
Always interested in improving to stay ahead of competition, he says JBSS has three strategic pillars that outline its focus: Grow brands; expand globally; and create value with key customers. “As a result, we have shifted sales volume away from raw bulk nuts to value-added consumer retail products,” he notes.
“We expect to keep growing as we deliver quality, innovative products for our customers and consumers worldwide,” he says. “The success of any company is contingent upon having a strong team to manage and grow the business. We have that here at JBSS.”