Almonds

Almonds Global Market Outlook:

The global edible nuts market accounted for $88.8 billion in 2020 and is expected to reach around $103.1 billion by 2027 at a CAGR of around 2.2 percent between 2020 and 2027

Almonds Market Drivers and Constraints

Drivers

Rising health & wellness awareness

• Increasing per capita consumption of various nuts is an indicator of the increasing demand

• Significant promotions by the industry is also helping the consumers to understand the health benefits and various applications

• Increasing disposable income and convenience factor also favor the industry growth

Increasing application in the food and beverage industry

• Increasing adherence toward traceability and food safety of the nuts sourced are encouraging, especially for the products sourced from developing countries

• Sustainability and focus on carbon footprint are seen, as the supply assurance strategies by consumers

R&D

• Development of new varieties with high-yield potential and drought/disease/pest resistance are the key factors in the growth of the edible nuts market

Constraints

Climate change and weather volatility

• Unpredictable weather and the evolving climate are the major factors that decide the supply availability each year, irrespective of the increasing demand

Limitation on arable land

• Rapid urbanization is restricting the availability of land for cultivation and various government policies, in terms of land utilization, are magnifying this trend

High cost of production

• The processing of nuts is a complex process, which influences the net cost of the products. Thereby, the high costs of nuts could prevail as an hindrance to the growth of global market

Almonds: Pricing Analysis

• Difficult growing conditions, caused by persistent drought and supply chain issues, coupled with uncertain crop in the upcoming season are expected to keep price movement sideways.

• Almond growers are facing challenges, due to stagnating price and high input costs, coupled with rising food inflation, affecting the overall demand internationally and domestically.

Almonds Cost Structure Analysis

Companies are investing substantially in R&D to develop varieties that are drought/pest/disease resistant and can self- pollinate. All these efforts will have a considerable impact on the cultural cost, which forms 45 percent of the total production cost.

• Cultural cost is the major cost contributor, which includes the pollination cost, insect & gophers check, fertilizer, irrigation, pruning, weed management, disease irradiation, pick up & ATV, etc.

• Pollination cost accounts for 16–20 percent of the cultural cost, as the grower has to hire bees for pollinating the trees. Recently, new varieties are developed for self-pollination to reduce this cost. This is not possible in the matured trees/trees under cultivation, which need bees for pollination

Porter's Analysis on Almonds

Supplier Power

• Farmers and co-operatives are the suppliers to the edible nut industry

• Large companies, like Olam, ADM, etc., have control over nuts, like almonds and peanuts, whereas the rest of the edible nuts are fragmented across the respective producing belts

Barriers to New Entrants

• Moderate to large capital investment is required to process and store, depending on the edible nut supplied

• Trade barriers are being laid to protect the domestic processing industry in several producing countries, such as interstate ban on the transport of RCN through the border posts of Ivory Coast and the recent ban in the Goan interstate sale of cashew nuts in India

Intensity of Rivalry

• Highly fragmented industry and the competition mainly occurs while procuring the raw material for processing

• In an undersupplied condition, established suppliers, like ADM, Olam, etc., will have an upper hand.

Threat of Substitutes

• There is no substitute for edible nuts

• Nuts (except peanuts, which is used in oil extraction) are not essential ingredients in many of the commercial food products. Therefore, if there is high volatility in terms of price or supply, the manufacturing of food products containing nuts will go down

Buyer Power

• Less than 40 percent of the nuts are bought by confectionery and other FMCG companies

• Buyer will have more bargaining power on the easily available nuts, like peanuts and almonds

• Buyer power is combatively low for limited high-value nuts, like hazelnut, cashew, etc.