Wonderful Pistachios literally found $350-million brand in the dregs of its factory process. No-Shell varieties of the healthy nut have exploded over the last couple of years as the California-based grower and packager has made major changes in its processing to accommodate American consumers’ seemingly insatiable appetite for pistachios that already have been de-hulled rather than the traditional variety that requires cracking them open.
“We saw the opportunity with consumers who loved the taste and health benefits of pistachios but didn’t want the shells,” Adam Cooper, senior vice president of marketing for the Wonderful Company, told Chief Executive.
Indeed, in the last couple of years, Wonderful Pistachios has vastly expanded production, product development and marketing for its No-Shells sub brand, resulting in 25 percent year-on-year growth in sales of hull-less nuts for the past few years — and its burgeoning to a $350-million product line in 2020. The brand’s new flavors won recognition by Information Resources Inc. as a “Rising Star” in its annual New Product Pacesetters ranking of the most successful U.S. launches of CPG products in 2019.
Wonderful Pistachios overall was about a $400-million brand in 2018, per Dun & Bradstreet, suggesting that the No-Shells sub-brand may be close to doubling revenues, in just a few years, for an entire brand that has been around for four decades.
The pistachio outfit, adapting domestic cultivation and popularization of the ancient nut from the Middle East, is just part of the $4-billion Wonderful food-and-beverage empire built in Southern California by Stewart and Lynda Resnick over the last generation. Their impact began with the Pom Wonderful franchise of pomegranate juice and has grown also to include has grown to include Wonderful Halos mandarin oranges, Fiji Water and more.
Wonderful Pistachios’ brand identity came to be associated in part with the tagline “Get Crackin’,” which it even celebrated in Super Bowl commercials. But as the brand’s sales grew and the category was popularized, it occurred to Wonderful that perhaps old assumptions no longer applied to an experiential element of consumption always associated with eating pistachios: removing the shell.
For several years, Wonderful had sold unshelled pistachios that happened to collect by accident at the bottom of its bins after the shelled nuts were processed, merchandising them at very high price points in large bags at Costco Warehouse stores, for instance. They recognized there was strong latent demand from snackers who simply didn’t want to bother cracking shells but really wanted to eat pistachio nuts. But Wonderful wasn’t willing to make required investments in its production process to expand supply of no-shelled significantly.
That changed three to four years ago, Cooper said. More no-shells had become available as Wonderful’s overall crop kept growing, he said, but not enough to supply the company’s strategic shift into greatly expanded yield of no-shells. Cooper wouldn’t detail how Wonderful changed production to generate more no-shells, other than to say one step involved diverting more of the nuts that are harvested with completely closed shells and cracking them open; neither would the company explain what it does with the much greater volume of hulls that are newly separated from the nuts before sale.
At the same time, he said, Wonderful “nailed down a competitive advantage by really homing in on quality of no-shells. The roasting process is very delicate, and we came up with a new process that delivers a great-quality product that is the best in the industry.”
Also significant was the brand’s decision to create flavorings for its No-Shells line instead of just selling them at two different salt levels. “People were viewing pistachios as healthy but not necessarily delicious,” Cooper said. “So we upped our game by putting flavor on No-Shells” via Chili Roasted and Honey Roasted varieties, in 2019, and new flavors slated for 2021, BBQ and Sea Salt & Vinegar.
Cooper said Wonderful has no intention to democratize the price points for No-Shelled pistachios even as sales have skyrocketed and supplies have greatly loosened up. They’re available for about $16 to $17 for a 24-ounce bag online. “We’ve kept the prices quite stable over the last two to three years,” he said. “It is certainly a premium product, but what’s great is sales have been growing at 20-plus percent, meaning that consumers are willing to pay for it.” He also said that Wonderful conducts price-elasticity studies and works with retailers to ensure the market will bear such premium price points for No-Shells.
Another part of Wonderful’s pricing rationale is that consumers are paying about the same per volume of the consumable nuts whether they’re purchasing them in shells or No-Shells. The company somewhat obfuscates the issue by offering regular and No-Shells pistachios in different, difficult-to-compare package sizes. “They aren’t apples-to-apples” comparisons, Cooper said.