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Co-op's 1,900 members to hear details and then vote: Diamond Walnut seeks to go public

One of California's largest agricultural marketing cooperatives and handler of 50 percent of the state's walnut crop, Diamond Walnut wants to abandon its cooperative business model and become a public company.

At least that is what the directors and management want. It will be up to the 93-year-old cooperative's 1,900 members whether this major change will take place.

This month grower members were to be given the details of the proposed switch from cooperative to public company before voting on the change. SEC filings proposed an offering of 5.33 million shares of stock at $14 to $16 per share for proceeds of as much as $85.3 million.

The plan filed with the SEC also said 6.7milion shares of cotton stock and $18.6 million in cash will be given current co-op members. The underwriters of the IPO would get 800,000 shares.

If grower-members approve the change from a cooperative to a publicly-held company, Diamond would become a cash buyer of walnuts. However, current grower/members will be given the option of delivering walnuts to the company for as long as 10 years for market prices.

Diamond has experienced remarkable sales growth the past five years, doubling gross sales from $194 million to $383 million.

Long a culinary produce provider, Diamond in August 2004 launched Emerald brand snack nuts in to the $2.7 billion per year snack nut market. That market is now dominated by branded products from Planters and growing at a rate of almost 15 percent annually.

Emerald brand offers all the snack nuts, including almonds, walnuts, peanuts, cashes, and almonds. The launch was followed by the sponsorship of a major football bowl game and a $2 million commercial in the Super Bowl followed by a nationwide television campaign, including spots during the Olympics and Major League Baseball.

Diamond officials have made it clear they are going after the Planters market with the Emerald Brand. Planters is part of the Kraft Foods conglomerate with sales of $32 billion. One the Emerald ads states, “Check yourself, Planters. There's a new nut on the scene.”

World's largest

Diamond products are processed and packaged at facilities in Stockton, Calif.; Lemont, Ill.; and Robertsdale, Ala. Approximately 50 percent of the California walnut crop passes through the doors of the 550,000-square-foot Stockton plant each year, the largest and most technologically advanced such plant in the world. All other shelled products are also packaged in Stockton.

Diamond products are sold in more than 60,000 U.S. retail stores and to buyers in 100 countries. It commands 37percent of the culinary nuts sales in the U.S.

After a strong performance in California test markets, Emerald products were launched nationwide less than a year ago.

Emerald quickly emerged as the No. 2 snack nut brand in Northern California and company officials say Emerald “is well on its way to achieving similar status nationwide within the next year.” Emerald products can already be found in 75 percent of the nation's grocery stores with additional distribution to major drug store chains, convenience stores and mass merchandisers.

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