WEBINAR TRANSCRIPT

Loretta Kelly: Welcome, everyone. I'm Loretta Kelly, Director of Strategic Marketing for Blue Diamond's Global Ingredients Division. Thank you for joining us today as we unpack the latest market trends and insights impacting the food and beverage industry. Blue Diamond's Global Ingredients Division is the industry's first choice for value-added almond ingredients. 

That's because we understand what you need from an almond supplier: not just the highest quality almonds and almond products, but a true partnership. Only Blue Diamond offers you applied almond expertise. That's how we leverage our knowledge and experience to help you use our products to enhance yours. Our market product and consumer insights can help you find new ways to use almonds to drive consumer appeal on the label and demand for your product. 

Blue Diamond offers an unparalleled array of almond forms and varieties from sliced, diced, slivered or whole almonds to almond protein powder, almond flour and almond butter. And for virtually any application, we provide unmatched product knowledge and service. Our focus and resources ensure that the features and benefits of almonds shine through, and that helps you derive more value from your purchases with us. 

Thank you again for being with us today. And remember that you can submit your questions for the live Q&A in the chat box on the side of the screen. Now, please join me in viewing today's webinar. 

 

Dr. Dan Sonke: Hello and thank you for joining us. I'm Dr. Dan Sonke, Director of Sustainability here at Blue Diamond Growers. 

Sustainability is obviously a topic of great concern to today's consumers. In fact, 60% of global consumers say it's an important component of their purchase decisions, and fully 85% say they've shifted their buying habits toward being more sustainable. Consumers know their purchasing dollar has power, and they're using that power to choose companies that incorporate sustainable practices throughout their supply chains. Using suppliers that make and honor those commitments is one of the ways formulators can meet those consumers' needs. 

At Blue Diamond, we're focusing on several pillars that enable our crop of growers to cultivate a more resilient future for our customers and the planet. Sustainable agriculture, water conservation, biodiversity and pollinator health and climate and energy resiliency. Those pillars inform how we nurture our people and our communities. We're going to cover all of that today, so let's dive right in. 

We'll start with sustainable agriculture. To help our growers incorporate more sustainable practices, we've created programs that incentivize more regenerative practices and offer resources to help. One of our major initiatives is our Orchard Stewardship Incentive Program, which encourages growers to assess their practices, calculate their climate impact and improve biodiversity. About 40% of Blue Diamond acreage is currently engaged in the program, and in 2022 alone, the program paid $1.74 million directly to growers. 

We don't stop at the orchard, though. We've also taken steps to minimize waste in our production processes. Almond hulls, which make up more than half of our harvest by weight, are used as livestock feed, which frees up land and water that would otherwise be used to grow feed crops. The shells can also be used as feed or bedding. And we don't throw out kernels with cosmetic blemishes. Instead, they're processed into products like almond milk, almond flour and almond oil. 

Speaking of waste reduction, let's talk about water usage. It's a common misconception that almonds use a disproportionate amount of California's water. But the truth is, almonds are grown on about 21% of California's farmland, and yet they only use 14% of the water used in the state to grow food - less than their proportional share. Not only that, growers use a third less water to grow a pound of almonds today than they did in 1990. Much of that reduction comes from adopting technology like the efficient micro-irrigation systems used by an estimated 90% of our member orchards. 

Another precious resource we're protecting is our bees. Without pollinators like them, we simply wouldn't have enough to eat. By some estimates, 70% of the world's food crop types depend on them, including almonds. That's why many of our growers give pollinators a place to thrive by providing access to clean water, cover crops or hedgerows, as well as using pest management practices to prevent them from encountering pesticides. Growers that put all of these into practice and meet certain criteria can become Bee Friendly Farming® Certified. We're targeting certification of 15% of all Blue Diamond acres by 2025 and we're already more than two-thirds of the way there. 

The fourth pillar is climate and energy solutions. An Economist survey found that consumers believe brands have as much responsibility as governments to create positive environmental change. After all, our growers' livelihoods rely on a healthy environment for growing their crops. We completed an assessment of our greenhouse gas emissions this year, so we know where to focus our efforts. And we're empowering teams at our facilities to support emissions reductions, waste, diversion and energy and water efficiency initiatives. We've also been awarded $45 million by the USDA for our proposed Climate-Smart Commodities Program, which will enable us to rapidly expand practices on our growers' orchards to sequester carbon and enhance biodiversity. 

Blue Diamond Growers isn't an ordinary company. We're a cooperative owned by farmers, most of whom are small family-owned operations. We serve our people and our communities best by encouraging sustainable practices. It means we can deliver a higher-quality product, produced in a way that consumers can be confident in. But more than that, we're deeply rooted and invested in the impact our business has on the environment and in our communities. Our Almond Innovation Center provides access to sustainability expertise that can help guide your new product development. 

And while we're doing what the market demands - 88% of U.S. consumers say they prefer to purchase products from a company leading with purpose - the truth is, we would do it anyway. It's the right thing to do, and everybody benefits. 

Thank you for joining me today. If you'd like to learn more, check out our inaugural sustainability report, Growing a Better Tomorrow, which you can download from our website. 

I hope you found this look into Blue Diamond's sustainable roots and our applied almond expertise helpful. 

 

Toby Stonelake: Welcome, everyone. My name is Toby Stonelake, and I'm the Senior Product Marketing Manager for the Global Ingredients Division here at Blue Diamond. I'll be your moderator and host for the Q&A portion of the webisode. If you have questions that you would like to ask our panelists, please navigate to the top of the window and click on the Q&A button. 

With that, I would like to introduce our panelists. First, I'd like to introduce Miriam Gautier, managing director at Bösch Boden Spies. Please share a little more about yourself. 

Miriam Gautier: Thank you so much for the introduction. Yes, my name is Miriam Gautier. I'm with Bösch Boden Spies, Managing Director, and we are your agent for Europe. So we represent Blue Diamond to the European food industry - not only Blue Diamond, many of the world leading producers of fruit and nut ingredients to the European customers. 

So we supply over 1,000 food and beverage manufacturers in Europe covering from Scandinavia to Italy, from Portugal to Greece. So we have really good insights in these over 1,000 customers to see what are the market demands from the consumers in Europe. And this is also something that we can always share back to our 40 suppliers. So it's really just selected suppliers, who really are, in most of the cases, cooperatives. And I really think that this approach of long-term cooperative is in itself already a sustainable approach. And this is something that our customers really do value. 

Toby Stonelake: Perfect. Next up, we have Jenny Hebets, Senior Director, Responsible Sourcing and Supplier Development with the Kellogg Company. Would you like to share some more about yourself, Jennifer? 

Jenny Hebets: Thank you, Toby. A pleasure to join you today for this wonderful session. The video was really well done and incredibly impressive. So really, hats off to the Blue Diamond team for kicking us off with that. 

I'm joining you today from the Kellogg Company. So I, as we mentioned, am our Senior Director for Responsible Sourcing and Supplier Development or Engagement. And what that means is I oversee everything in Kellogg's related to all of our agriculture supply chains and ensuring that we are meeting our sustainability targets within all of our supply chains, but with a large focus on our agriculture supply chains and how we do that primarily in two ways: We do it through investing directly in in our agriculture supply chains and through what we call, "origins programs." And we do it also in partnership with our suppliers. 

And much of what you alluded to in the video, in terms of the importance of really cooperating with our suppliers and forming that hand-in-hand partnership to achieve these goals that we're all grappling with, and to confront these challenges in sustainability - partnership is really, really key to that. 

So I guess I should back up a little and say, you know, for those of you who may not be familiar with the Kellogg Company, but we are, of course, the global food and snacking company. We've been around for many generations dating back over 100 years, and they're the makers of brands that we've all grown up on and have learned to love and rely upon - brands like Corn Flakes and Pringles and Pop-Tarts, and the list goes on and on. So we have a global presence with manufacturing sites and teams all over the world. And our ingredient procurement spans countries all over the world and in supply chains all over the world. 

So Blue Diamond has been an important supplier to us in the almond space for a long time. And we really appreciate the forward looking and innovative efforts of Blue Diamond because that's exactly what we're striving for. 

Toby Stonelake: Perfect. Really appreciate that. Jennifer. Next up, from our Blue Diamond team, Dr. Dan Sonke, Director of Sustainability. 

Dr. Dan Sonke: Thank you, Toby. It's great to be here. I sort of been introduced already, but I am the Director of Sustainability at Blue Diamond Growers, and have been for nearly two years now. But I have over 20 years of experience in the sustainability world, and over ten years of experience specifically in sustainability and consumer packaged goods. And then the other fun part of my background is that I actually grew up on an almond farm, and it actually was and is a Blue Diamond member almond farm. 

So coming to work for Blue Diamond in sustainability, for me personally, was like coming home to work on the family farm, except that I get to go to an office every day. And I have responsibility for all things sustainability at Blue Diamond Growers today. Thank you. 

Toby Stonelake: Thank you, Dan. And finally, from the Blue Diamond team, Loretta Kelly, for the Global ingredients Division. 

Loretta Kelly: Good morning, everyone. I'm glad to be here, of course. I'm Loretta Kelly, Director of Strategic Marketing for our Global Ingredients Division. Excited to be here to talk about sustainability. I believe sustainability is one of the key topics that our B2B customers are looking to learn and understand about. And it's really exciting to be here to be able to support and participate in educating and making people aware of how Blue Diamond is leading the charge in that area in the almond industry. 

Toby Stonelake: Great. So you've gotten to meet our panelists, everyone. We're going to start things off with a question to Miriam, and we'll also repeat the same question to Jennifer to learn a little bit about their perspectives on sustainability. So that first question, Miriam, is would you mind sharing a little bit about your companies and what sustainability means to you and your customers? 

Miriam Gautier: Yes, happy to share. So and the sustainability approach has always been one of our main focuses through this long-term approach, but it's really coming up from the customer side since 2013, 2014 - that was when we started to get the first requests from our industrial customers, specifically on, "What are your sustainability measures, can you improve, can you have a plan, strategic plan?" 

So we started to set that up in our company, and really introduced a strategic team with the strategy behind it in 2018. And we are also now certified from a German body on sustainable managing. And we have a key perspective way to go forward. So like I was mentioning, we ourselves do not produce, but we provide for the European food industry for many, many generations. 

[With] Blue Diamond, our partnership actually goes back to 1956, so nearly 70 years. So it's also this generational approach and the same we have on the customer side. So we have industry customers that have this reliable sourcing with our partners for many generations. And I think this yeah, the approach - just to have a focus, like how can we focus on quality? 

Quality is one of our main pillars, of course. So is innovation - how can we go forward? - and then safe and reliable supply chains and traceability along the supply chain are three main figures that are important. We also did an extensive survey last year actually to find out - we asked over 100 customers, key customers in the European food industry, "What are your main targets?" And of course climate protection is number one. But then at second position is already traceability in the supply chain. So this is something we - of course cooperatives do have a large benefit because like you mentioned in your video, also, if you have a new idea and how can we do wastewater reduction or something, you can immediately expand it to the whole cooperative. 

And this is such a leverage to the food industry. And I mean, with all the challenges that we are facing in Europe at the moment, for the purchasers on the industrial side, having reliable sourcing is just one issue less to be concerned about. So this is something we could - we can really bring a benefit. 

Toby Stonelake: That's great. And so just as a follow up to kind of your answer, are there any specific sustainability challenges that you as an organization or the food industry faces? You mentioned climate and reliable sourcing. Are there any others? 

Miriam Gautier: Yes, definitely - there's also packaging material. This is a big trend coming up with not only trend, because this is something to say is that the focus is now also on finding sustainable packages or packages that are being able to be fully recycled. This I know is a big challenge, and yeah, it's not a very easy task to tackle. 

A second challenge is that there is no clear regulation. Like the countries are starting on individual regulations like we have on - which is a German one which is now, since the first of January, come into place on a supply chain traceability concerning especially the Workforce Act to - protection of the workforce along the supply chain. And I know that on the EU they are working also on one regulation. 

So this is, at the moment, a challenge to have one, clear, defined perspective where to work towards to. 

Toby Stonelake: Yeah, absolutely. Now we shared a lot. Thank you very much, Miriam. Jennifer, from your perspective and with Kellogg, would you mind sharing a little bit about what Kellogg thinks about sustainability and what that means? 

Jenny Hebets: Absolutely. Thanks, Toby. You know, sustainability is embedded into the core principles - the core ethos of Kellogg. Our founder, W.K. Kellogg, believed from the very beginning of the founding of the company over 100 years ago that that, you know, part of running a business was doing good for society. And so our core ESG strategy is really core to our business strategy. 

And that overarching strategy is we've always taken a holistic approach. And so there are four pillars of that overall strategy. It covers our work to address hunger, our work to address well-being and nutrition, as well as equality or equity, diversity and inclusion and sustainability. So sustainability is really one of those four pillars, and we really make concerted efforts to make sure that those are holistic in our approaches to addressing each one of those pillars. 

But specifically in sustainability, we do very much have a set plan and we have very publicly facing targets that span everything from reducing our Scope 1, 2 and 3 carbon emissions. We have commitments, you know, in renewable electricity. We have commitments to reduce waste water. We also have commitments to reduce our packaging and as well as commitments to 100% responsibly-sourced ingredients, as well as supporting 1 million farmers and actors in our supply chains. And each of those goals, there's a lot more detail in terms of the timelines that we've set for ourselves, the methodology in terms of what, kind of, what counts, what doesn't, and that's all available on our website. 

So, you know, these days our sustainability goals are really focused on, if I had to distill it down, to kind of people and planet. And I guess I'll pause there, that's kind of the summary of where we're focused. 

Toby Stonelake: Yeah, absolutely. And so - and then again, following up with, you know, where Kellogg's is as far as sustainability, what do you guys see as challenges kind of entering the space of sustainability? 

Jenny Hebets: Exactly. So that's why I paused because I knew we were going there next. Yeah, I'm happy to, to jump right in. You know, it's all a challenge. And I think that's what makes sustainability endlessly fun and interesting is the complexity is the challenge, right? And the continual learning of either unintended consequences or every time you set a goal and you try to achieve it, you realize just how hard it is to achieve these things, especially at scale. 

And so continuously learning about just how hard it is to affect change is our greatest challenge. Now, happy to be more specific because I know that's a very vague answer. So if I had to distill it down to the one thing that is top of mind for absolutely everyone, it is carbon reductions. 

And for us that is our Scope 3, by far and away is our largest opportunity space in terms of achieving our sustainability goals and for us, our Scope 3 emissions are your entire carbon footprint, right? So that's why really working hand in hand with our suppliers on, on all aspects of reducing our carbon footprint, will just have such a ripple effect all the way through the food chain. 

So the challenges there range from, you know, what are the practices that will help us reduce these emissions, how are we capturing it, how are we measuring it, how are we reporting it, so on and so forth. How are we paying for it? So there's plenty to unpack there. But if I had to sum it up in one phrase, would be Scope 3 carbon emissions. 

Toby Stonelake: Yeah, absolutely. Okay. Thank you both so much for that kind of baseline information about both your perspectives on sustainability and some of the challenges you're facing. I'm going to move to a different question and open up to all panelists. How do we expect sustainability practices to evolve in 2023? What's new? 

Dr. Dan Sonke: We can expect to see continued growth and interest in soil practices, the regenerative agriculture, carbon sequestration type practices that that Jennifer was referencing, that, you know, carbon capture on farms, putting that carbon into the soil in the form of organic matter, not only as a means to combat climate change, but we know it has benefits for the soil and the resiliency of the cropping system. 

And I think consumers are increasingly hearing this message, seeing the government interest in these programs. I expect we'll continue to see that area grow. Jennifer's right: It's climate, climate, climate is - it's a key priority that will continue to be a focus across the across the world, I think. 

Toby Stonelake: Yeah, absolutely. So shifting gears a little bit, how does sustainability and sustainability initiatives impact product development and or ingredient sourcing? 

Miriam Gautier: Definitely. We have contact to these over these multiple customers. So - and we talk a lot with your R&D, and our sales team goes proactively out, like, presenting new ingredients and always constantly trying to get them to work on new innovations, which is anyway always the challenge of the food industry, finding new, innovative products. 

And over the years we have definitely seen that when we are in the scoping phase, but before we even actually build the business case, when we're in the scoping phase, they do really ask, like, of course, products that are sustainable, that are regenerative, that have a good holistic approach, will be on the top list for product development. 

We even have a corporate [client] whose R&D [can] only get access to suppliers that already have sustainability approved in their own systems, so they could not even work on a new product development if it isn't from a sustainable supplier. 

So it definitely does impact the product development phase. If you - yeah - if you have a not-sustainable product, you might be moved out - that you're removed from the list. 

Jenny Hebets: And I would just to piggyback on that a bit, I think the question itself hits on the two most important levers, and that is: can we innovate in how the products are grown and produced, and can we innovate on what products that we're putting into our final product or what ingredients we're putting into our final products. And we are actively exploring both levers and, increasingly, our sourcing decisions are influenced by both levers. 

So we're really looking at how our suppliers are acting to reduce their carbon emissions in their operations. But how are they innovating for us and with us in terms of their product offerings as well. And I would just kind of put a plug out there, you know, for any of the ingredient suppliers, small or large, that are innovating in terms of new carbon smart ingredients: 

We're here for it, we're all ears. 

Toby Stonelake: That's great. Any additional thoughts there on that question from the other panelists? 

Okay. I'm going to move on to another question, which is, why? Why are consumers so concerned or so focused on brand transparency when it comes to sustainability practices? And do we believe this is a trend that's going to stick around for the long term? 

Loretta Kelly: I can take that one. I definitely think consumers are very focused in this area. I think over the past few years between the pandemic and lockdown, people are seeing the effects of how the decisions that they're making can impact the overall environment. Headlines are hitting around climate change. There's extreme weather swings, and so consumers want to know how they will be able to make adjustments in their behavior to take responsibility for some of these actions. 

I think it's a long-term trend. I think it's here to stay as long as we continue to have these external environmental things continuing to happen. And I think it's really important for us at this portion of supply chain to be able to provide and be good partners with other CPG companies and other companies we supply to - to make sure we're informing and educating and making sure people know what we're doing to ensure we have climate-positive ingredients and that we can help them educate their consumers as well as to what we're, what they're doing -  what we're doing. 

Dr. Dan Sonke: And I would just add, let's not forget that retailers are the gateway to consumers, and retailers want to dedicate their shelf space to the companies that are going to be reliable and that are being responsible in addressing these issues that Loretta mentioned appropriately. And so that affects all of us in the CPG space. 

Toby Stonelake: Absolutely. Absolutely. 

So I have one final question, and then we will close with a few, maybe, comments. And this question kind of is the tail end of the sustainability story. We've talked a lot about, you know, what each company is doing and what we're doing kind of on our, on our farms and with our ingredients. But is food waste a top consideration for consumers making purchase decisions, and what can be done from your perspective to help eliminate food waste through its practices? 

Miriam Gautier: So food waste definitely is a huge topic here in Europe. So this whole upcycling subject - the whole upcycling theme - is getting played on multiple panels. I was just at a congress a couple of weeks ago where it was, around a chocolate congress, and they, of course - the cacao fruit is a huge topic at the moment. So - but we see this all along. It's like trying to find ways to upcycle product at the sourcing. So you could reduce food waste all along the supply chain. But I think it's very elegant to really start at the source and see what Blue Diamond is already doing - how can we reduce food waste at the beginning. I feel like cattle feed, for instance, is a nice way, but it definitely is a huge topic in Europe and it's - and it's growing. We have lots of startups rebuilding their whole business model around solutions for, for food waste. 

Toby Stonelake: Yeah. 

Jenny Hebets: I love that, Miriam, but I'm happy to just kind of reinforce that. I actually worked in cocoa for many years and I know the cocoa fruit conundrum really well. It's exciting to hear that there's more innovation continuing on in that space. 

And you're right, I think food waste solutions ultimately have to come pretty far upstream. They have to come pretty close to the production of the raw ingredient, and it ends up falling to the producers or the processors and aggregators to implement that innovation. 

And that can be very expensive and that can involve complete shifts in the business models. If you're a cocoa producer and all of a sudden you're being asked to be a juice producer or whatnot, when you need a cold chain and you need a completely different customer base and different branding - I mean, they're totally different business models. And so I think - just to reiterate exactly what you said, but finding ways to support those innovations in business models alongside the innovations and product innovation, I think will be huge to unlocking food waste. 

Dr. Dan Sonke: And just a reminder that not only does the almond industry utilize its byproducts to put them to best and highest use to minimize waste in the orchard, but we also have a shelf stable, dry product that has a long shelf life. 

And so compared to the, you know, the fruit and vegetables that we all sometimes forget in our refrigerators and they go bad rather quickly - which I'm not saying we shouldn't eat them, they're still good for us but - you know that compared to that, the almond has a long shelf life and very little goes to waste. 

And of course, at Blue Diamond, we can also put all the almonds to use. If it's chipped and scratched, we can put it into another form like an almond butter or almond flour. And so, by utilizing the breadth of our processes, we can really minimize food waste in our supply chain. 

Toby Stonelake: Appreciate you kind of putting the bow on that one, Dan, and kind of closing that question out. I want to - we've reached the end of our Q&A session of the webisode. I want to thank everyone for joining us. I want to give special thanks to Jennifer and Miriam for joining us as our special guests today. To the audience members, if your questions were not answered over the course of this webisode, we'll try to reach out to you individually. 

Additionally, if you're hungry for more food and beverage insights, visiting our Ingredients Insights page at bdingredients.com/insights and be sure to check out our podcast, Grown in California, the Blue Diamond Almond Podcast, where our next podcast topic will be on sustainability, where we're going to be diving into a lot of these questions that possibly we're not answered today. 

So thank you again to everybody and have a great day.