FERM6301_Uyen_Joy__Nguyen_Final_Report.REPORT
Diamond Foods, Inc.: A Comprehensive Case in Financial Analysis and Valuation
Requirement 1: Industry Analysis and Evaluation of Business Strategy
(a) Determine the approp
...
FERM6301_Uyen_Joy__Nguyen_Final_Report.REPORT
Diamond Foods, Inc.: A Comprehensive Case in Financial Analysis and Valuation
Requirement 1: Industry Analysis and Evaluation of Business Strategy
(a) Determine the appropriate industry group in which Diamond operates, and identify its competitors, input
suppliers, and major classes of customers. Then, evaluate the competitive position of Diamond Foods’
industry around 2011, using Porter’s five forces framework (Porter 1979).
Diamond Foods, Inc. (the “Company” or “Diamond”) is an innovative packaged food company focused on
building and energizing brands. Diamond specializes in processing, marketing and distributing snack products
and culinary, in-shell and ingredient nuts. The company is a player in a highly competitive industry of consumerpackaged food, dominated by some big companies like PepsiCo, General Mills. The other competitors include
J&J Snack Foods, Golden Enterprise, Inventure Foods, and Snyder’s Lance. The company also competes with the
additional regional and national competitors, such as walnut handlers and nut manufacturers, popcorn
manufacturers, potato chip manufacturers, and international food suppliers.
Diamond Foods obtains raw materials from domestic and international sources. They purchase walnuts from
time to time from growers and walnut processors on the open market. Their supply of pecans is sourced from
the United States and Mexico. Concerning the variety of nut types, most of the nut’s suppliers are from abroad.
The popcorn’s source comes from the United States, with additional sourcing capabilities, if needed, from
Argentina. They also obtain potatoes from the United States and the United Kingdom, with additional sourcing
capabilities, if required, from Europe. All other supplies used in the company’s business are from third parties.
Those supplies include, for example, roasting oils, seasonings, plastic containers, flexible packaging, labels, and
other packaging materials.
Diamond sells its products to global, national, regional and independent grocery, drug, and convenience store
chains, as well as to mass merchandisers, club stores, other retail channels, and non-retail channels. Most of our
products are shipped from our production, warehouse and distribution facilities by contract and common
carriers.
Porter’s five forces framework:
1. Industry Rivalry - High level of competition sinc
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