An Industry Updatefor Walnut GrowersPresented at 2006 Grower Meetings

California Walnuts

Responding to Change

• The Marketing Order est. 1948• Last formal rule making 1976• Diamond goes public – July 2005• The Industry has grow – 355M Tons• Technology• Customers Needs• The only certainty is change!

Board Structure

• The Coop is now a public company• The goal is to maintain balance• Acknowledge growth and its ramifications• Language that includes emerging business

entities – custom packers• Common language

Board Authority

• The power to respond to future needs and change more easily– Change Board structure– Alter nomination rules

• Set standards for outbound product not covered in USDA grades and standards

• The ability to utilize all marketing tools to promote walnuts, including advertising

Consistency and Other

• Cross check sections – there are 90 sections in the marketing order for the Walnut Marketing Board

• A new section has been added acknowledging the complementary nature of the WMB and the Commission

• Provide for more informal rule making• Change the fiscal year

Do it right!

•It will make any future modification– Easier– Faster– More timely

U.S. Walnut Production History

050

100150200250300350400

85 87 89 91 93 95 97 99 01 03 '05

Crop Year

Shor

t Ton

s - T

hous

ands

Total CA Walnut Availability

050

100150200250300350400450500

85 87 89 91 93 95 97 99 01 03 '05Sh

ort T

ons

- Tho

usan

ds

Production Carry-in

Total US Shipment History

100110120130140150160170180190200

85 87 89 91 93 95 97 99 01 '03Crop Year

Shor

t Ton

s - T

hous

ands

The Focus on Health

Proven health benefits are driving demand for California walnuts

The Changing Perception of Walnuts

1990Nuts and Fat are

Bad!(Newsday,12/23/90)

2004The ‘Mega Nut

is a Super Food“Walnuts are the flagship nut in this Super Food category, a rich source of plant-derived

omega-3 fatty acids.”(Steven Pratt, Superfoods

Rx, © 2004)

1995 Good fat v. Bad fat;

Nuts are good(Los Angeles Times Syndicate, 2/22/95)

2000Good for salads

and snacks. Good for you.

(USA Weekend, 9/23/01)

2008 Walnuts are unique

among Super Foods. This ‘mega nut

benefits the whole body – blood pressure,

diabetes, weight control, cancer, heart

and bones.

Walnut Health ResearchStudies that have published the past two years

• University of Barcelona: Walnut diet better than Mediterranean diet at reducing risk of heart disease.

• Penn State: Walnut diet reduces CRP levels, a measure of inflammation.

• University of Wollongong: Walnuts reduce LDL cholesterol in people with type 2 diabetes.

• University of Texas: Walnuts contain melatonin, a powerful antioxidant.

• Loma Linda University: Walnuts do not cause weight gain.

Walnut Health ResearchStudies that may publish this year

• Penn State: Walnut diet reduces blood pressure.

• Loma Linda University: Walnuts better than fish at reducing LDL cholesterol.

• University of Barcelona: Walnuts improve arterial function/blood flow after high fat meals.

• Penn State: The omega-3s in walnuts promote bone health.

Walnut Health ResearchStudies in progress

• Walnuts & Breast Cancer• Walnuts & Aging/Memory• Walnuts & Diabetes• Walnuts & Antioxidant

Status of Blood

Domestic Marketing Activities

• We use health research as the foundation for all activities.

• We focus efforts on key influencers.– MOMs– MEDIA– HEALTH PROFESSIONALS

• We promote taste & nutrition.

Public Relations Efficiency2005-6 media impressions may reach 3 billion in the U.S.!

•'04-05 values through June 2005

•Does not include book circulation, trade shows, consumer fulfillment or web visits.

Walnut Marketing Board Publicity Program Efficiency

$0.63$0.60 $0.59

$0.54

$0.42$0.37

0

500

1000

1500

2000

2500

'99-'00 '00-'01 '01-'02 '02-'03 '03-'04 '04-'05

Program Year

Impr

essi

ons

(Mill

ions

)

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

CPM

(Mill

ions

)

ImpressionsCPM

Print AdvertisingDirected at nutrition and health professionals

school foodservice

ad

healthprofessional

ad

Export Market Updates

MAP/CWC Allocation Levels

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 '04 '05

Crop Year

MAP CWCFunding in Millions

Inshell Walnut Exports

0

10

20

30

40

50

60

70

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 '03 '04

Crop Year

Tons

(tho

usan

ds)

Shelled Walnut ExportsInshell walnut equivalents

0102030405060708090

100

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 '03 '04

Crop Year

Insh

ell e

quiv

alen

t (to

ns)

Germany: Public Relations• Consumer impressions = 824.4 million• Print media = 2,132 articles• TV = 46 programs, 11.3 million viewers• Website = > 120,000 site visitors• Easter Sweepstakes = 83,000 entrants

Germany: POS & Advertising

• California Walnut World Brochure Line– 3.4 million brochures

distributed in 04/05– Recipes, health facts– Distribution – Key Success – ALDI Chain

• Print Ad Campaign– 65 ads– Targeted publications– Key messaging

Korea: Public Relations

Public Relations• 32,610,000 consumers reached• 1,831,000 trade reached• 34,441,00 impressions• $5,313,200 ad equivalent value

Print Media• 148 articles

Television • 3 National Programs

KOREA: New Product Development

• Developed partnerships with 15 new companies

• 35 new product applications

• Increased incremental usage by 25%

Questions?

Walnut Marketing BoardCalifornia Walnut Commission1540 River Park Drive, Suite 203

Sacramento, CA 95815

Dennis Balint(916) 922-5888

dbalint@walnuts.org