Editor’s note: This is the third report in a three-part series on tree nuts. (Part 1 — Almonds; Part 2 — Walnuts)
The Nichols family has been growing pistachios in the Central Valley of California for four generations and more than 60 years.
Jared Lorraine, president and CEO of Nichols Farms, said he and the Nichols family — with third-generation James Nichols, vice president of farming, and Jeff Nichols, vice president of supply chain — have seen firsthand the exponential growth in California pistachios. Lorraine estimates the state produces roughly 63% of the world’s supply of pistachios.
Growing pistachio supply
“The total plant acreage across California moved from 271,000 acres back in 2013 to now it’s at 605,000 acres in 2023,” Lorraine said. “So, [that’s] a 123% increase in acreage just over the last 10 years.”
Lorraine said the critical figure within those acres is the total bearing acre — trees in pistachio production. He said the state has experienced a 127% increase in bearing acres from a little more than 200,000 acres in 2013 to 461,000 acres.
“The concerning part in the industry is that there’s another 144,000 acres of nonbearing that will come online in the near future with additional plantings likely to come,” Lorraine said.
And he said the California pistachio industry is concerned about what that means for the total supply produced in the state.
“When you look at it from a pound basis, we’re about 470 million pounds of pistachios supply in the 2013-14 season,” he said. “That number moved up this season to just shy of 1.5 billion pounds, under 216% increase in the actual sellable supply of pistachios out of California just in the last 10 years.”
Lorraine said with all these potential bearing acres coming online in the next few years, the question is will the industry be able to gauge supply and demand — and keep demand in step with supply.
Current pistachio market
Mike Hohmann, executive vice president and chief financial officer at Wonderful Pistachios and Almonds, said pistachio pricing has remained relatively stable among other tree nuts.
However, Lorraine said as more acres begin production, he’s seen a gradual decline in the price of raw pistachios. Pistachio price per pound has dropped from $4.50 or $5 per pound to $3.30 a pound.
“It’s become more competitive for raw in-shell, which really sets the season’s pricing for roasted, salted and for domestic and export,” he said. “That [price reduction] puts a constraint on the business and also impacts the grower’s bottom line.”
Pistachio domestic and export market
Lorraine said about 80% of the pistachios grown in the state are exported. But, for Nichols Farms, the export market is more of a faucet that it can turn off and on as needed — keeping about 70% of the pistachios it grows in the domestic market and exporting only about 30%.
Lorraine said Nichols Farms decided to private-label brand its pistachios for domestic consumption about five years ago.
“The value we bring to the consumers here in the U.S. and the partners that we work with on the private label really sets us apart and has allowed us to really capture a lot of the domestic market,” he said.
At a recent International Nut and Dried Fruit Council’s Congress, Lorraine said the pistachio industry saw a huge boost in China, a 240% increase and surpassed the U.S. in consumption. Lorraine said some of that increase was largely based on price. But American Pistachio Growers, a nonprofit association representing 800 pistachio growers in California, Arizona and New Mexico, has really touted the health benefits in China, he said, and it’s paying off.
“They call it the smiling nut. Some people call it the happy nut because of the in-shell shape,” he said.
Hohmann said Wonderful Pistachios and Almonds has grown its export market for the last 15 years.
“We’ve had a strong presence in Europe, the Middle East and China and will continue to look for opportunities to reach new consumers and expand the pistachio category in those regions,” he said. “In 2024, we will expand our efforts in Mexico and India, driven by rising disposable income and increased health consciousness.”
Lorraine said sales have remained relatively flat, dipping slightly during the global pandemic, but he’s seen a bit of a rebound, now leading the other tree nut and snacking nut categories.
“This year alone, there’s been a 15% increase in distribution of kernels,” he said.
Pistachio market trends
Christine Trageser, senior brand manager for Nichols Farms, said the organic pistachio market continues to grow for retail.
“Consumers want to know where their food comes from,” she said. “It’s been great to see how the sustainability side of it is in line with where consumers want to be.”
Hohmann said consumers also look to pistachios for a healthy snack option — offering protein, fiber and better-for-you saturated fats.
“A combination that may help keep people feeling fuller longer to curb snacking between meals,” he said.
Consumers are also seeing new flavors, and both Nichols Farms and Wonderful Pistachios offer many different flavor combinations to entice consumers to select pistachios as a healthy snack.
“We’ve come up with a full line of organic flavors,” Lorraine said. “We had just done a roasted salted kernel and in-shell for a long time so we’re just launching four unique flavors for the kernel side, and two of those same flavors on the in-shell side and trying to spark some interest.”
Lorraine said Nichols Farms has also transitioned to more shelled pistachios for easy snacking.
“I think consumers are looking for that easability of a quick snacking option,” he said. “It is easier for consumers to consume a kernel than it is for an in-shell.”
Future or pistachio market
Lorraine said he sees pistachio production reaching 2 billion pounds within the next 10 years. However, that’s not without some challenges.
“In the coming years, California’s agriculture industry is going to face water limits under the requirements of the state’s [Sustainable Groundwater Management Act] regulations,” he said. “I see it potentially reaching a 2-billion-pound industry, but I think SGMA is really going to slow that pace down, just [based] off of what the numbers look like.”
The Sustainable Groundwater Management Act was passed in 2014 and requires local agencies to adopt groundwater sustainability plans for high- and medium-priority groundwater basins, and they must meet those sustainability goals within 20 years of implementing the plans.
Lorraine said about 5 million acres of pistachios are irrigated within the San Joaquin Valley. He estimates about 20% of those acres will be taken out of production due to the Sustainable Groundwater Management Act.
Hohmann said another key to the industry’s future is how to market and manage the larger crops.
“On the marketing side, both our short- and long-term goals are to create demand for pistachios through sales and marketing strategies that also grow distribution,” he said. “While innovative marketing is certainly one of the keys to being successful in the pistachio industry, it is also imperative to be an efficient processor with the size and scale needed to handle ever-larger crops.”
Another X factor, Lorraine said, is a newer variety called Golden Hills, which has been the predominant variety going into newer planting in the state. Unlike the kerman pistachio, Golden Hills does not have alternate bearing years and has a more consistent yield. Lorraine said more acres coming into production and a more consistent yield year after year will have a huge impact on the state’s overall pistachio crop size.
“We are going to have some acres pulling out. We’re going to start seeing much higher yields per acre, moving forward,” he said. “So that 2-billion-pound bar will be achievable within the next seven to 10 years.”
Your next read:
