Nut company is feasting as high-protein folks buy

John B. Sanfilippo & Son enjoys sales gains during current health trend

February 01, 2004|By CHICAGO TRIBUNE

When the country goes on anti-fat mood swings, John B. Sanfilippo & Son Inc. suffers.

The Elk Grove Village, Ill.-based nut company has endured several fat-fighting episodes, but until recently it never benefited from health trends. Because of such protein-rich diets as Atkins and new heart-healthy claims available to nut sellers, Americans are increasingly snacking on the treats, tossing them on salads and seeking prepackaged foods with nuts.

"This has been really a unique period," said Jasper Sanfilippo, the company's chief executive.

Nowhere has the nut movement been more apparent than at 82-year-old Sanfilippo, where the company's shares skyrocketed more than 400 percent in the past year to more than $50 per share from $10.

The stock closed at $36.80 yesterday, down $1.18, or 3 percent, after top executives informed the U.S. Securities and Exchange Commission of its plans to sell 2 million shares.

Sanfilippo owns the Fisher Nut brand, sells nuts to other food producers and packages private-label nuts for Wal-Mart and other companies. Its sales jumped 19 percent, to $408.5 million, in its fiscal year that ended in June.

Its sales leapt nearly 31 percent, to $121.7 million, in the most recent quarter it reported, which ended in September.

The country's second-largest nut seller behind Planters, a unit of Northfield, Ill.-based Kraft Foods Inc., Sanfilippo is involved in nearly all levels of the business: cleaning, inspecting, shelling, roasting, packaging, shipping and selling nuts at retail outlets. Family-controlled Sanfilippo does not own farms but does provide some farmers with peanut seeds and gets the first option to buy their crops.

Nuts have long been a slow-growth business, with sales suffering when low-fat diets are fashionable. Recent years, though, have provided a bonanza of publicity for the industry.

Last year the Food and Drug Administration approved a health claim that nuts "may reduce the risk of heart disease." That followed industry-sponsored research that showed the health benefits of nuts, which were promoted in magazines, talk shows and other media outlets.

Now, the nut industry is benefiting from the popularity of the high-protein Atkins, South Beach and Zone diets.

Sanfilippo officials said they expected the FDA ruling and publicity about nuts' health benefits to boost sales but that "we had no idea this Atkins thing was going to have the effect it's been having recently," said Michael Valentine, Sanfilippo's chief financial officer.

Industry officials said they expect nut sales to grow even if the protein-rich diets turn out to be short-lived.

Much of the growing perception of nuts as health food can be traced to the industry's effort.

The Almond Board of California began investing 10 years ago in studies of almonds' health benefits. The organization presented the results to medical officials, top chefs and the public through campaigns in publications that focus on cooking and healthful lifestyles.

Richard Waycott, the board's president, said almond sales have increased 20 percent annually each of the past two years. He does not expect nut sellers to suffer much if interest in high-protein diets fades.

"We're really positioned on our own as healthy food," Waycott said. "The FDA certainly hasn't come out endorsing the Atkins diet."

U.S. nut sales jumped 11 percent last year, to $1.8 billion, according to research firm ACNielsen, although those figures do not include Wal-Mart sales.

"I haven't seen double-digit growth in the past 10 years," said Irene Britt, general manager of Kraft's salty snacks division, which includes Planters.

Planters reinvigorated its famous Mr. Peanut character in a new advertising campaign last year to drive home the message that nuts are appropriate for nearly every occasion, from Saturday night parties to relaxing at home alone.

Sanfilippo, though it lacks Planters' name recognition, positioned itself well for the rise in nut sales.

In the late 1980s, the company decided to become involved in numerous levels of the business, from just off the farm to store shelves. Sanfilippo officials said that allowed the company to control for quality, which proved critical as private-label brands increasingly demanded high quality from suppliers in the 1990s.

Sanfilippo packages nuts for 63 private-label brands, including Wal-Mart.

The company also made a well-timed move in 1995, when it acquired the nationally recognized Fisher Nut brand from Procter & Gamble at a low point for the nut industry. Sanfilippo further built the Fisher brand by offering small packets of slivered almonds and other ingredients, nut mixes and chocolate-covered treats.

Jeffrey Sanfilippo, executive vice president of sales and marketing, said the broad product line has paid dividends with the increased interest in nuts. In addition to baking, more people are using nuts in main courses, particularly with Asian and Middle Eastern dishes.

The recent health trends make Sanfilippo's range of products more attractive.

"Low-carb diets are really starting to kick in now," Jeffrey Sanfilippo said. "People are looking to nuts as a good snack alternative."

The Chicago Tribune is a Tribune Publishing newspaper.

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