Turn back the clock to the start of the 2014 crop year. Growers wrapped up their 2013 season with production at 492,000 tons and a year of record returns. Then, along comes the “big one” – a 570,000 ton crop in the same year that China’s own crop increased 50,000 tons, and even Chile’s crop was up 10,000 tons.
Facing an additional 140,000 tons of walnuts available globally, 2014 brought its share of challenges to the industry. For the first time in many years, the supply of walnuts exceeded demand. In the meantime, years of record returns had led to thousands of new acres in the ground. The industry realized with annual production only continuing to increase, it needed to assess both existing and new markets to determine where those increases in production could go.
That same year, the California Walnut Board (CWB) launched a small $2.2 million test advertising program that targeted ingredient use in the U.S. That campaign included 28 print ad placements as well as digital advertising, aimed to show consumers how simple it could be to include walnuts in the everyday diet. The ads were evaluated through market research and determined to be successful at motivating consumers to purchase walnuts.
At that time, 22% of U.S. households purchased walnuts, leaving ample room for growth. Just an increase to 30% of households buying walnuts could utilize as much as 70,000 additional tons.
Those households represent new users, people who don’t currently buy walnuts. In order to buy, they need to be given a reason to purchase and incorporate walnuts into their meals. Only 18% of non-users say that price is the reason why they don’t buy, and 60% don’t use walnuts because they are not top of mind or they don’t know how to use them. These potential new users won’t buy just because of a sale or low prices. They need inspiration and to be shown how to use walnuts.
To address this opportunity, the CWB’s board members voted to fund a major advertising effort with an investment of $15 million towards domestic advertising in the 2015 crop year. This multi-media campaign was a re-launch of the California walnuts brand. An effective re-launch requires the right product, right price, and right program – we had all three.
The award-winning campaign featured ten weeks of national cable and spot market television with mouth-watering commercials, and national print and digital advertising November 2015 through July 2016. The campaign resulted in 5.2 billion impressions (15% above the 4.5 billion estimated impressions when the buy was made).
Evaluating success is a critical step in the campaign and the CWB has considered multiple metrics. All ads encouraged consumers to visit walnuts.org for simple recipes with heart-healthy[1] walnuts. There was an immediate response to the advertising with website traffic, resulting in a 286% increase in visits to the website during the first month of the campaign. There was an expected decrease in traffic in March after the television commericials ended, but traffic still continues to be significantly higher than last year. In fact, website visits were up an average of 154% from November through June.
Retail sales are a key measure of consumer response to the ads, and Nielsen data showed an overall increase in sales of baking walnuts of 5.8% for the advertising time period (as of June 4, 2016). In fact, walnuts outperformed the baking shelled nuts category which was down 0.6% year-over-year for the same time period. Domestic shipments were considered as well. A direct relationship between the timing of the advertising and shipments cannot be shown as buyers sell through their existing inventory and begin to replenish it. After a slow start to the crop year, domestic shipments began to rebound in February resulting in double-digit growth during the subsequent months (28.36% in February, 27.55% in March, 43.08% in April, 30.99% in May, 11.97% in June). Year-to-date shelled shipments are up 9.93%.
Another important tool for measuring success is consumer market research. The CWB conducted an advertising tracking study[2] in mid-February with a sample of more than 1,800 women 18 years old and older. Overall awareness of the ads was good across both television and print along with scores for believability and understandability. A variety of metrics were evaluated, and key findings from the national representative sample found:
- 84% purchase intent after seeing the ads
- 69% said the American Heart Association Heart-Check mark on the ads would positively affect their decision to buy walnuts
These metrics are all positive indicators that the campaign performed well in its first year. One year of this level of investment is not enough to impact long-term demand. It takes years to build awareness, and we would expect at least three years to see the results of this effort.
Again, success requires the appropriate mix of the right product, right program, and the right price. We believe that moderation of pricing along with the investment in the consumer advertising campaign was a winning combination in stimulating domestic shipments.
The California Walnut Board’s Market Development Committee realizes the importance of creating a high level of consumer awareness in order to stimulate demand – critical with larger crops expected in the coming years. The committee recommended another year of advertising at a similar spend level to the full board, which was approved at the June board meeting. The new campaign has been designed for greater continuity, while still delivering significant impact. The television ads will run on national cable November through May. Print advertising will run October through August, with the integration of two new print advertising executions. As we have shared before, just like it takes several years to get that first significant harvest from a new walnut tree, it takes more than one year to build and sustain the level of demand that will result in meaningful growth in the domestic market. This is a goal the industry must achieve for long-term success.
[1] Supportive but not conclusive research shows that eating 1.5 ounces of walnuts per day, as part of a low saturated fat and low cholesterol diet, and not resulting in increased caloric intake may reduce the risk of coronary heart disease (U.S. Food and Drug Administration, March 2004). One ounce of walnuts provides 18g of total fat, 2.5g of monounsaturated fat, 13g of polyunsaturated fat, including 2.5g of alpha–linolenic acid — the plant-based omega–3.
[2] 2016 Rose Research Advertising Tracking Study