Blue Diamond Comes Out of Its Shell

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A decade ago, Blue Diamond Growers was a company in trouble. After being a pillar in the Sacramento business community for more than 90 years, the company seemed to be shell-shocked, a struggling reminder of the days when agriculture was king in Sacramento. Sales had dropped to a longtime low in 1995, in no small part because almonds had been branded as a source of dietary fat. Almonds were out. Blue Diamond farmers were just trying to make ends meet.

But in 2001, a new management team, led by President and CEO Doug Youngdahl, strolled into the modest Blue Diamond offices at 17th and C streets and quietly began to make changes. In the past five years, things have changed dramatically. The company, which has roared back to life to become one of the largest agricultural cooperatives in the country, has become a virtual colossus, opening and grabbing global market leadership in more than 90 countries, tripling gross sales to nearly $2 billion and helping to boost this year’s almond crop to a record-shattering 1.3 billion pounds. The company is now advertising on the “Oprah” and “Dr. Phil” shows and sponsoring  the NFL. Almonds are back and so is Blue Diamond.

The company began in 1910 when an entrepreneur from Lodi named J.P. Dargitz pitched the idea to local almond growers that by forming a co-op, they could gain economic and political leverage.

Today, Blue Diamond consists of more than 3,500 growers, from Red Bluff to Bakersfield. Besides the 90-acre storage and processing site on C Street, which houses more than 1 million square feet of buildings, making it the largest such plant in the country, Blue Diamond also operates a large plant in Salida, near Modesto.

The financial structure of the company is straight- forward. There are no shares involved. Growers receive revenue based solely on the volume and quality of their almond crop. A portion is set aside each year for capital improvements, advertising and other business expenses.

Over the decades, Blue Diamond’s prices have fluctuated, but as one longtime almond grower says, “We’re a tough breed. We’ve survived nearly a century of floods, pests, droughts and Democrats.” But in the 1990s, things turned ugly. Uncooperative weather, cutthroat competition that drove prices dangerously low and warnings that eating almonds was unhealthy created so much havoc that many farmers had trouble paying their bills. Some even dug up their almond trees and planted grapes.

Blue Diamond struggled but kept fighting. The successful slogan, “One can a week, that’s all we ask,” was created in the late 1990s. Almonds were being used in an increasing variety of products, from breakfast cereals to cookies. Still, something was missing. The demand for almonds remained almost stagnant.

Enter Youngdahl. Tall, trim and articulate, Youngdahl grew up on a farm in Minnesota and worked for several years for the Pillsbury Corp. in Indiana before migrating to California and the almond industry. Youngdahl was immediately faced with major challenges. “He had to figure out a way to build the Blue Diamond brand name, keep almond prices high, expand overseas markets and make the processing plant more cost effective,” says current Blue Diamond Board Chair Clinton Shick. “These were some pretty big tasks, but we had a lot of good people working on it already, and it didn’t take long before things began to turn around.”

One of the first moves by Youngdahl and his staff was to blow the lid off the company’s cautionary marketing approach. An aggressive campaign was launched that included advertising on the “Oprah” and “Dr. Phil” TV shows. The company hadn’t advertised on TV for 20 years, but now it not only shelled out the considerable cash for these spots (Youngdahl wouldn’t disclose how much), it also became an official sponsor of most of the NFL teams, as well as the World Poker Championships.

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