John B. Sanfilippo & Son Stock

John B. Sanfilippo & Son, Inc. operates as a processor and distributor of tree nuts and peanuts in the United States. The company manufactures and markets the Fisher, Orchard Valley Harvest, Squirrel Brand and Southern Style Nuts brand names and manufacture and distribute numerous private brands as well. In addition, with its acquisition of the Just the Cheese brand, the company has expanded its product offerings to include baked cheese snack products on a branded and private label basis. Through a deliberate strategy of focused capital expenditures and complementary acquisitions, the company has built a generally vertically integrated nut processing operation that enables it to control almost every step of the process for pecans, peanuts and walnuts, including procurement from growers, shelling, processing, packaging and marketing. Vertical integration allows it to enhance product quality and, in most crop years, purchase inshell pecans, peanuts and walnuts from growers at lower costs as opposed to purchasing these nut meats from other shellers.

The company’s brands are some of the most well-recognized in the packaged food industry. The company has increased distribution and launched innovation with its Orchard Valley Harvest and Fisher snack nut brands in many retailers. The company has also expanded into new channels and business models with Southern Style Nuts and Squirrel Brand. The company’s branded and private brand products are sold through the major distribution channels to significant buyers of nuts, including food and other retailers (both brick and mortar and e-commerce), commercial ingredient users and contract packaging customers. Selling through multiple distribution channels allows the company to generate multiple revenue opportunities for the nuts it processes. The company processes and sells all major nut types consumed in the United States, including peanuts, pecans, cashews, walnuts and almonds (major nut types). These are sold in a wide variety of innovative packaging, which provides the company’s customers a complete nut product offering.

Principal Products

The company’s principal products are raw and processed nuts. Including trail and snack mixes, these products accounted for approximately 92% of the company’s gross sales for fiscal 2023. The nut product line includes almonds, pecans, peanuts, black walnuts, English walnuts, cashews, macadamia nuts, pistachios, pine nuts, Brazil nuts and filberts. The company’s nut products are sold in numerous package styles and sizes, and it offers its nut products in a variety of different styles and seasonings. The company sells its products domestically to retailers and wholesalers, as well as to commercial ingredient and contract packaging customers.

The company acquires all of its peanuts and walnuts directly from domestic growers. The majority of the company’s pecans are acquired from domestic growers with the remainder acquired from growers in Mexico. The company purchases the balance of its raw nuts from importers, trading companies and domestic processors.

Furthermore, the company manufactures and markets peanut butter in several sizes and varieties. The company also markets and distributes, and in many cases process and manufacture, a wide assortment of other food and snack products. These other products include nutrition bars, salad toppings, snacks, snack bites, dried fruit and chocolate and yogurt coated products sold to retailers and wholesalers. Baking ingredients are sold to retailers, wholesalers and commercial ingredient customers. Additionally, bulk food products are sold to commercial ingredient users. Moreover, an assortment of sunflower kernels, pepitas, snack mixes, almond butter, cashew butter, candy and confections, corn snacks, chickpea snacks, sesame sticks and other sesame snack products are sold to retail supermarkets, mass merchandisers and commercial ingredient users with a wide variety of toppings for ice cream and yogurt sold to commercial ingredient users. Lastly, with its acquisition of the Just the Cheese brand, the company has expanded its product offerings to include baked cheese snack products.

Customers and Channels

The company sells its products to approximately 260 customers through the consumer, commercial ingredient and contract packaging distribution channels. The consumer channel supplies nut-based products, including consumer-packaged products, to retailers in the United States, including supermarket chains, wholesalers, supercenters, internet retailers and other retail outlets. The company sells products through the consumer channel under its brand names, including the Fisher, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts and Just the Cheese brands, as well as under its customers’ private brands. The commercial ingredient channel supplies nut-based products to other manufacturers to use as ingredients in their final food products, such as bakery, confection, cereal and ice cream. This produces nut-based products that are customized to the specifications of chefs, national restaurant chains, foodservice distributors, fast food chains, institutions and hotel kitchens. The company sells products through the commercial ingredient channel under its Fisher brand and its customers’ private brands. The company’s contract packaging channel produces and packages nut and fruit-based snacks for other food manufacturers under their brand name.

The company is dependent on a few significant customers for a majority of its total net sales, particularly in the consumer channel. Net sales to Wal-Mart Stores, Inc. accounted for approximately 36% of its net sales for fiscal 2023. Net sales to Target Corporation accounted for approximately 15% of the company’s net sales for fiscal 2023 (year ended June 29, 2023).

Sales and Distribution

The company markets its products through its own sales department and through a network of approximately 65 independent brokers, independent distributors and suppliers, including group purchasing organizations.

The company distributes products from each of its principal facilities. The majority of the company’s products are shipped from its facilities by contract and common carriers.

The company operates a retail store at its Elgin headquarters. This store sells Fisher snack and baking products, Orchard Valley Harvest, Squirrel Brand, Southern Style Nut and Just the Cheese products, bulk foods and other products, produced by it and other vendors directly to consumers.

Marketing

Marketing strategies are developed for each distribution channel and focus primarily on branded products. Branded consumer efforts concentrate on building brand awareness, developing, identifying and introducing new products, attracting new customers and increasing distribution and consumption in the snack nut, recipe nut and produce categories. Private brand and commercial ingredient channel efforts are focused on category management, new product identification and introduction, brand awareness and merchandising support.

A significant portion of the company’s branded marketing efforts are focused on compelling consumer campaigns that include advertisements (e.g., online video, social and influencer activations and partnerships, search engine marketing and media partnerships), product sampling and coupon offers. The company’s integrated marketing efforts for the Fisher brand include partnerships with chefs, influencers, media partnerships and professional baseball sponsorships. Additionally, shipper display units and other point of sale promotions are utilized in retail stores in an effort to gain additional temporary product placement and to drive sales volume. The company works with third-party information agencies, such as Circana to monitor the effectiveness of its marketing and measure product growth in comparison to its competition and the product category.

Commercial ingredient trade promotion typically includes periodically attending regional and national trade shows, trade publication advertising and one-on-one marketing. These promotional efforts highlight the company’s processing capabilities, broad product portfolio, product customization and packaging innovation.

Through participation in several trade associations, funding of industry research and sponsorship of educational programs, the company supports efforts to increase awareness of the health benefits, convenience and versatility of nuts as both a snack and a recipe ingredient among existing and future consumers of nuts.

Trademarks and Patents

The company markets its products primarily under name brands, including the Fisher, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts and Just the Cheese brand names. Fisher, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts and Just the Cheese are registered as trademarks with the U.S. Patent and Trademark Office, as well as in various other foreign jurisdictions.

Seasonality

The company’s business is seasonal. Demand for peanut and tree nut products is highest during the last four months of the calendar year. Peanuts, pecans and walnuts, three of the company’s principal raw materials, are primarily purchased between September and February and is processed throughout the year until the following harvest. As a result of this seasonality, the company’s personnel requirements rise during the second quarter of its fiscal year. The company’s working capital requirements generally peak during the third quarter of its fiscal year (year ended June 29, 2023).

Competition

In the nut industry, the company competes with, among others, Hormel Foods Corp. (Planters brand) and numerous regional snack food processors. The company also competes with the Diamond brand, among others.

Government Regulations

The company maintains rigid quality control standards and food safety systems that is evident in its annual Safe Quality Food (SQF) certification at each manufacturing facility; generally inspects its nut and other food products by visual examination, screening, metal detectors or electronic monitors at various stages of its shelling and processing operations; works with the United States Department of Agriculture (USDA) in its inspection of peanuts shipped to and from its peanut shelling facilities; maintains robust environmental pathogen programs; seeks to comply with the Nutrition Labeling and Education Act by labeling each product that the company sells with labels that disclose the nutritional value and content of each of its products; and assure compliance with the United States Food and Drug Administration (FDA) Food Safety Modernization Act (FSMA) through the company’s comprehensive Food Safety Plans, which include following Current Good Manufacturing Practices and control biological, chemical and physical hazards through the company’s Process, Sanitation, Allergen and Supply Chain Preventative Controls.

History

John B. Sanfilippo & Son, Inc. was founded in 1922. The company was incorporated as a corporation under the laws of the state of Delaware in 1979.