Dive Brief:
- After almonds consistently increased in price for years, hitting a peak in early 2015, those prices have since significantly dropped, about 25% since late 2014.
- However, in the interim, manufacturers had to adapt to those high prices, which often meant either raising prices or cutting back the use of almonds in their products. Total shipments of almonds saw a 12% decline in 2015, and exports dropped 15%, according to the the Almond Board of California.
- Now that prices are decreasing again, buyers are returning with larger shipment requests, particularly in anticipation of how upcoming weather patterns could impact almond crops and future pricing.
Dive Insight:
Ingredient costs are a key factor in the prices manufacturers have to charge to maintain profitability, so when prices swing like they did for almonds, manufacturers tend to respond either by adjusting prices to match or reformulating products without the ingredient that now comes at a higher cost.
When the bird flu outbreak led to an egg shortage last year, prices for eggs, particularly liquid or breaker eggs, soared, and manufacturers were forced to adapt. General Mills, for example, tapped a powdered egg alternative from Hampton Creek, which the company used for its Betty Crocker cake mixes and refrigerated cookie dough.
Demand for almonds continues to be strong, despite previous price hikes, so manufacturers can capitalize on lower prices and buy now while they maintain this level before any foreseeable weather or crop conditions cause prices to increase again in the future. If manufacturers have been sitting on stores of almonds to stretch them out while prices remained high, they can replenish those stores while prices are down. They can then produce almond-containing products now before prices fluctuate once again.