Diamond Foods, Inc.

1050 South Diamond Street
Stockton, California 95205-7087
USA
Telephone: (209) 467-6000
Fax: (209) 461-7309
Web site: www.diamondnuts.com

EMERALD NUTS MARKETING CAMPAIGN

OVERVIEW

In 2004 Diamond Foods, Inc., a company known for producing culinary nuts, created a high-quality selection of snack nuts called Emerald Nuts, which came in packaging that fit automobile cup-holders. The canister lids measured out 1.5-ounce servings. To create national brand recognition and to move away from its image as making nuts that were only for cooking, Diamond released its "Emerald Nuts Marketing Campaign" in early 2004.

The "Emerald Nuts Marketing Campaign," created by Goodby, Silverstein & Partners, appeared in print, Internet, and television formats. The agency created 15 television commercials that all played on the initials "E.N." The first two spots, "Encouraging Norwegians" and "Exercising Newscasters," aired in Northern California markets during the 2004 Super Bowl. "Encouraging Norwegians" showed a portly Norwegian man standing next to a bull's-eye target while someone off camera fired arrows at it. The man gave encouragement, such as "Good shot," while snacking on Emerald Nuts. The spot ended with a voice-over stating, "Encouraging Norwegians love Emerald Nuts." Diamond spent an estimated $9.9 million on advertising during the first 10 months of 2004.

The campaign's bottom-line success was measured in July 2004, when Diamond reported an annual net revenue of $350 million, which was $50 million above the previous year. In a daring move Diamond gambled almost the entirety of its advertising budget to air a 30-second spot (which diverged from the "E.N." theme) during the 2005 Super Bowl. "We can buy one spot, and we can make one ad for that one spot," Sandra McBride, Emerald's vice president of marketing, told the Boston Globe. The gamble paid off when Diamond sales grew 56.3 percent during the three months following the game. The "Emerald Nuts Marketing Campaign" also garnered a gold EFFIE in 2005.

HISTORICAL CONTEXT

Diamond, an established brand in California since 1912, was owned by more than 1,800 growers at the start of 2004. This farmers' cooperative, doing business as Diamond, led the world in culinary walnut production and in-shell walnuts. Diamond paid nut growers 3.5 cents a pound over the industry average, which was 1.8 cents a pound. In January 2004 the cooperative took a stab at the burgeoning snack-nut market by creating Emerald Nuts, a brand that offered nuts in exotic flavors, curvy containers, and larger sizes, with fewer peanuts in the assorted packages. The snack-nut sector only had one major player, Planters Nuts, one of the many brands owned by Kraft Foods. Besides taking advantage of a sector with only one main competitor, Emerald Nuts were intended to capitalize on the popularity of the Atkins diet, a high-protein and low-carbohydrate weight-loss plan that encouraged nut consumption. Further, the nut sector reported 12.7 percent growth in 2004. Analysts attributed this sharp rise to a heightened demand for high-protein foods and to the U.S. Food and Drug Administration's announcement that nuts reduced heart disease.

"What we're doing with Emerald Nuts is building a new consumer franchise over in the snack-nut aisle," McBride told the Stockton Record Previously Diamond products had been located solely in supermarkets' baking aisles. One of the greatest challenges for the "Emerald Nuts Marketing Campaign" was successfully introducing the public to an unheard-of brand. "It does cost somewhere between 20 and 30 million dollars to build a brand name," Suzanne Walchli, an assistant professor of marketing at University of the Pacific, explained to the Record. "It's rather difficult to break even on a brand in the first year."

The advertising climate during the period between the 2004 and the 2005 Super Bowls welcomed the innocent silliness of Emerald Nuts' branding. When Janet Jackson's wardrobe "malfunctioned" during the 2004 Super Bowl halftime show and exposed her breast, more than 500,000 complaints poured into the Federal Communications Commission (FCC). In response the FCC instituted massive censorship restrictions across most media channels. Therefore the climate for 2005's Super Bowl, the one that Diamond poured a majority of its Emerald Nuts advertising budget into, was increasingly sensitive. "Everybody was paying more attention this year," McBride told the Record. "That attention was good for Emerald."

TARGET MARKET

The "Emerald Nuts Marketing Campaign" targeted 25-to 45-year-old males and females. Surveys showed that faster-paced Americans were drifting away from traditional sit-down meals. "In a survey last month, we found that more than 62 percent of adults polled admit to replacing a meal with a snack at least once per week," Michael J. Mendes, Diamond's president, said in an interview with Business Wire. "We want to convey the message to general consumers, and professional or armchair Olympic athletes, that not all nuts are created equal. Emerald sets a higher standard in snacking, providing a quality alternative to less healthy snacking options."

Sports enthusiasts were continuously targeted during the 2004 leg of the campaign. After the 2004 Super Bowl, 15—second television spots were shown during the Athens Summer Olympics and then during the World Series. The 30—second spot that aired during the 2005 Super Bowl was viewed by 89.2 million people and ranked as one of the campaign's greatest expenditures. "Even at a rate of $2.4 million for 30 seconds of air time, advertisers said, the Super Bowl is among the cheapest advertising available when you factor in the cost per eyeball," according to Naomi Aoki, a writer for the Boston Globe. A survey conducted by Penn, Schoen & Berland Associates, a strategic communications firm, determined that the majority of Super Bowl viewers would rather miss the actual game than the Super Bowl's commercials.

COMPETITION

Nabisco Holdings Corp. owned Planters Nuts until Kraft purchased Nabisco in 2000. Up until 2004 Planters was the only nationally branded snack nut and dominated supermarket's snack-nut aisles. "Planters is like the Big Brother of salty snacks. We had to come up with creative that stood out, was fun and that just sticks with you beyond 15 seconds," Jeff Goodby, the Goodby, Silverstein & Partners cochairman who helped formulate the Emerald Nuts campaign, explained to Brandweek.

In 2003 ad agency Foote Cone & Belding created commercials for Planters that depicted the brand's mascot, Mr. Peanut, dancing to disco music in one spot and break-dancing in another. Using computer-generated imagery, other Mr. Peanut commercials showed Mr. Peanut's life as a young legume. Baby Mr. Peanut was shown receiving his first monocle, despite being an infant, followed by his first hat and cane. The spot was an attempt to "contemporize" the brand and spin the mythology behind Mr. Peanut. Commercials released closer to Christmas showed Mr. Peanut with Santa Claus and a reindeer.

Up until 2004 Planters had packaged its nuts inside cans and bags. A few months after Emerald Nuts introduced its sleekly packaged nuts, however, Planters released its own range of multiflavored peanuts called Nutcases, which came sealed in reusable, brightly colored pots. Flavors included sour cream and jalapenño. Rob Woodall, marketing director at Trigon Foods, the primary manufacturer of Planters products, told Brand Republic, "The opportunity was to create a lighter-eating nut-snack, which would appeal to a younger audience."

MARKETING STRATEGY

Two 15-second television spots, "Encouraging Norwegians" and "Exercising Newscasters," kicked off the "Emerald Nuts Marketing Campaign" during the 2004 Super Bowl. The first containers of Emerald Nuts had been released only a few weeks prior, and only in Northern California supermarkets. Because of the brand's limited availability, the Super Bowl spots only aired in Northern California. After Diamond increased the range of Emerald Nuts' distribution, nationwide spots began airing during the Athens Summer Olympics. A total of 15 spots, each 15 seconds in length, were created, all with nonsensical titles, such as "Entangled Nine-Year-Olds" and "Extreme Nurses." The spots depicted their amusingly named groups just long enough for the viewer to understand the title. One spot, "Envious Nomads," showed two dusty, travel-worn nomads standing with a camel on a sidewalk. The out-of-place male nomad snacked on Emerald Nuts while admiring a typical suburban house and yard. The voice-over ending the spot explained that "Envious Nomads love Emerald Nuts."

To compensate for the campaign's limited budget, Goodby, Silverstein & Partners purposely created short television spots. They were then placed as "bookends" on commercial breaks, with one spot airing at the beginning and one at the end of the break. "As a result, we get tickled by the first spot and afterward, given a minute or two to ponder it, we're hit with a second spot straight away to cement the brand name in our minds," ad critic Seth Stevenson explained on National Public Radio.

The television spots primarily focused on brand awareness, and Diamond was criticized for not explaining why consumers should pick their nuts over Planters'. Diamond executives, however, boasted positive results after the campaign's 2004 beginning. "We saw an active response at shelf level and we just had a flood of consumer e-mail that showed a very, very strong response to the campaign and the product," McBride told the Record.

THE ANGRY LEPRECHAUN

In an attempt to increase the staying power of its 2005 Super Bowl commercial, Diamond continued the 30-second spot's storyline by creating a side website, http://www.angryleprechaun.com, that featured a leprechaun character who was angry about being cut from the final commercial. The spot, which Diamond spent a majority of its 2005 advertising budget on, featured a father who avoided sharing his Emerald Nuts with his young daughter by telling her that if she ate Emerald Nuts, unicorns would disappear forever. Magically, a unicorn, Santa Claus, and the Easter Bunny sequentially appeared in the living room to challenge the father's lie. A leprechaun character was filmed for the spot as well but was cut in the commercial's final edit. The agitated leprechaun, Finnegan O'Reilly, had purportedly created the website to urge visitors to E-mail Emerald Nuts and demand the leprechaun spot be added and an extended commercial be aired.

The campaign's boldest move occurred in early 2005, when Diamond placed a majority of its budget into one 30-second nationwide television commercial to be aired during the Super Bowl. The spot deviated from the previous "E.N." format, showing a father snacking on Emerald Nuts next to his daughter. When the daughter asked, "Daddy, can I have some Emerald Nuts?" her father replied, "Honey, if you eat an Emerald Nut, unicorns will disappear forever." A talking unicorn, Santa Claus, and even the Easter Bunny sequentially appeared to admonish the father for lying. The spot ended with the text, "They're kind of hard to share."

According to a Diamond spokesperson, the Super Bowl spot was discounted from $2.4 million to $2 million because of its fourth-quarter game placement. Diamond scored, however, when the fourth quarter became the second-most-watched segment of the game as the losing team rallied during the final minutes. Most of the campaign's television spots, along with deleted scenes, were posted on the brand's website, http://www.emeraldnuts.com.

OUTCOME

The primary objective of the "Emerald Nuts Marketing Campaign" was to establish brand awareness of Emerald Nuts at a national level. Diamond quickly met with success at the local level. Just a few months after the campaign launched, an early campaign survey showed that 77 percent of Northern Californians recognized the Emerald Nuts brand. By July sales for Diamond were $50 million above the previous financial year's sales.

The company took a big risk by sinking a majority of its 2005 advertising budget into one 30-second Super Bowl commercial. Grant Pace, creative director at ad agency Conover Tuttle Pace, which created Budweiser's "Bud Bowl" Super Bowl campaign, approved of the strategy, saying to the Boston Globe, "People aren't going to think hard about it … What you want is for people to see you in the store and think, 'I saw these guys on Super Bowl. It must be pretty decent stuff.' " Diamond was pleased with the results of its Super Bowl advertising. The Monday after the game, the Emerald Nuts website reported 24,308 unique visitors, significantly more than the 1,182 average-per-day reported during the previous October. Sales after the Super Bowl increased 56.3 percent between February and April.