BOSTON – One key to Diamond Foods growing its snacks business is gaining distribution for its Kettle brand in the eastern half of the United States. On the West Coast, the brand has a market share in the teens versus low single digits out east, said Ray Silcock, chief financial officer.
“We are testing some D.S.D. (direct-store-delivery)-type systems on the East Coast,” Mr. Silcock said June 24 during a presentation at the Oppenheimer Consumer Conference. “We have a partnership with Snyder's/Lance, who distribute to certain customers for us on the East.”
He added one key to the brand’s growth on the West Coast has been the willingness of traditional retailers to create shelf space and aisles devoted to natural and organic products.
“It gives us an opportunity to stand out and to be perceived as being the natural product that we are as opposed to being lost in the display on the chip aisle,” he said.
Packaging also is a point of growth for the brand, most notably smaller pack sizes.
“Kettle traditionally was available in the large sharing bag, 5 oz and 8 oz,” Mr. Silcock said. “And where we're trending towards small bag – it's not a meaningful piece of our business yet, but we see it growing fast.
“In the case of some of our more mainstream competitors, that small-bag business is really their profit engine. That is not the case for us right now, but we expect that business to grow, and that will help improve our margins, too, once that business is of sufficient magnitude.”
With regards to its Pop Secret brand, Diamond Foods is working to stop the slide that has impacted most center-store categories.
“So, the (Pop Secret) category is declining,” he said. “It's declining, but that's true of most center-store categories in grocery retailing right now in the U.S. We see the need to try and turn that around, and we anticipate in the year ahead taking more aggressive, consumer-oriented messaging for the brand.
“There was a time when some of our competitors advertised a lot on television and elsewhere, and that's why we feel that one way to try and stop that slippage is to communicate more directly to consumers about the benefits of microwave popcorn, which really, as I say, is quite a different product from what you get in a bag.”
Mr. Silcock said the company would outline the marketing effort in greater detail during its next earnings call in September and added the marketing plan would “help get that (category) growth back.” But then he clarified and noted, “Maybe not grow it, because I think that's probably an implausible outcome, but get it back to stability.”