Though criticized for being a water-thirsty crop grown mostly in California, almonds are more popular than ever. And spreads made from the tree nut are increasingly supplanting peanut butter in U.S. lunch boxes and pantries. Americans are eating about 2 pounds of almonds per person annually, double the amount they consumed just seven years ago.
Protein-rich Paleo diets, peanut-butter allergies and evolving tastes have all fuelled demand. That’s sent major U.S. food makers such as Hain Celestial Group and JM Smucker into the market, where they’re vying against smaller suppliers. Almond butter now comes in a range of flavours, including maple and dark chocolate.
But the almond craze has come at a cost. The growth in consumption -- coupled with smaller crops -- have sent prices surging to record levels. With California in its fourth year of drought, the burgeoning assortment of almond products is in danger of becoming too costly for most consumers.
“Almonds a year ago were priced at about $3.30, and we thought that was an exorbitant price,” Stephen Smith, Hain Celestial’s chief financial officer, said on a conference call last month. “And here we are looking at prices in the mid-$4 range.”
For now, almond spreads are stealing market share from peanut butter. U.S. sales of specialty nut butters -- including those made with almonds -- have more than doubled since 2011, according to research firm IRI. They jumped 22 per cent last year to reach $448.9 million. Peanut-butter sales, meanwhile, fell 4.1 per cent.
More kids have peanut allergies these days, sending parents in search of alternatives. The number of U.S. children who can’t eat peanuts tripled from 1997 to 2008, according to Food Allergy Research & Education Inc. For that reason, some schools have banned peanuts altogether.
The situation prompted Smucker to get into the almond-spread business in 2013. The company rolled out an almond-butter version of Jif in creamy and crunchy varieties, becoming the first national brand to make the move. Jif also sells cashew butter and hazelnut spreads.
“There’s a little peanut-butter fatigue, and you have people who want to try different types of spreads,” said Bloomberg Intelligence analyst Kenneth Shea. Consumers are more willing to experiment, and almonds have a lot of protein, he said.
Bloomberg News, edited by ESM
