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Europe has traditionally been the top export market for almonds, but emerging markets like China and India are changing that balance with import rates that are rising by leaps and bounds. The growing rate at which almonds are devoured reflects the increasingly upscale tastes of these regions as their middle classes expand. During August and September, the first two months of the new harvest season, Chinese import volume eclipsed that of Europe for the first time, according to Kristi Saitama of the Almond Board of California. Between 2006 and 2010, U.S. almond exports increased by 14 percent worldwide; in China, they grew by a staggering 169 percent in that same time frame. India's showing, a 30 percent increase, looks modest by comparison.
Asia presents bigger challenges, as well as a potentially bigger payoff. In China, both Blue Diamond and the Almond Board have been building demand pretty much from the ground up through the use of mass-market advertising and celebrity spokespeople (usually famous actresses). Now, they're a popular street snack, roasted, seasoned, and served in the shell from carts. As in the United States, ads that emphasize the nuts' health benefits have resonated with consumers—a marketing message that wouldn't have gotten traction in these locations until recently.
While this has led to huge increases in Chinese consumption of U.S. almonds, it's a high-volume, low-margin business. Most of the shipments to both China and India are bulk almonds, shelled or in the shell. While shelled almonds command a slight premium, both cost much less than branded snack products or chopped, sliced, and otherwise processed nuts. Blue Diamond's Carroll says that while Chinese consumers are aware of the health benefits of almonds, the price point of branded almonds is still an issue. Whereas a European with mid-afternoon hunger pangs might buy a 150-gram bag of almonds, a Chinese consumer might buy three or four individually wrapped chocolate-dipped almonds. To coax Indian consumers into eating costlier almonds, Blue Diamond is developing products like an almond-studded chocolate bar formulated to appeal to Indian palates.
Blue Diamond worries that the Obama administration's inaction on trade deals will put a brake on future growth. The South Korean free trade agreement that's currently in a holding pattern in Washington, much to the frustration of businesses of all sorts, is a particular sore spot for the cooperative. Susan Brauner, who handles public and government affairs for Blue Diamond, says the $25 million almond market in South Korea could triple in five years if a 45 percent tariff on processed and snack almonds and a 21 percent tariff on whole, shelled almonds were eliminated. (There's also a 5 percent tariff on other types of almonds, which the free trade agreement would also do away with.)
Brauner worries that Australia, an upstart almond producer with a growing season opposite to California's, could present a formidable challenge if it got a foothold in South Korea, which could lead to broader expansion in the fast-growing Asia-Pacific almond market. Australian nut growers are already targeting countries like India as potential export markets for their anticipated increase in crop production. With no trade barriers between Korea and Australia, American nuts would be in a poor position to compete on price. President Obama has indicated that he wants to hammer out the South Korean FTA before the G20 meeting in November. If the almond tariffs are eliminated, Blue Diamond stands a much better chance of remaining California's almond powerhouse for the next century.
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