Newly public nut purveyor Diamond Foods
Diamond CEO Michael Mendes blamed flat year-over-year sales on unspecified "timing factors" in the company's retail product lines, specifically its Culinary and Snack divisions -- and more specifically, its Emerald brand of nuts. As discussed in last week's Foolish Forecast, the Snack division is key to Diamond's future growth, and aside from lower-than-expected sales, the company is making progress here. The company got new Emerald varieties placed with grocers Publix and Albertson's
The company is focusing on expanding its 14.1% share of the market for snack nuts. In my opinion, this is the right way to go. Considering that the company has already captured nearly 40% of the culinary and in-shell markets, and that in-shell nuts are by definition intended for snacking, Diamond clearly has the capability to capture more market share in this sphere.
To do that, of course, the firm needs to displace established competitors such as Sanfilippo
Although the nut-friendly Atkins diet fad is dying off, the similarly nutophiliac South Beach diet has been gaining strength in the U.S., raising the possibility that Diamond can both expand market share and benefit from a growing market for its products. That one-two punch could do wonders for the company's income statement.
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Fool contributor Rich Smith does not own shares of any company named above.