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Employee Retention of Mauna Loa Macadamia Nut Corporation

Employee Retention of Mauna Loa Macadamia Nut Corporation

Discuss Employee Retention of Mauna Loa Macadamia Nut Corporation within the Human Resources Management (H.R) forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; The Mauna Loa Macadamia Nut Corporation is the world's largest processor of macadamia nuts. The American company has been a ...

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Employee Retention of Mauna Loa Macadamia Nut Corporation
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Pratik Kukreja
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pratikkk
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Employee Retention of Mauna Loa Macadamia Nut Corporation - April 14th, 2011

The Mauna Loa Macadamia Nut Corporation is the world's largest processor of macadamia nuts. The American company has been a subsidiary of The Hershey Company since 2004. The company takes its name from the volcano Mauna Loa. Their headquarters and main nut processing plant are near the mountain, south of Hilo in the Puna District of the island of Hawaiʻi, known as the Big Island.

The first Mauna Loa macadamia nut plantation was planted in 1946, and the first commercial crop was harvested in 1956.
The visitors center is a tourist attraction with its self-guided tour of the processing plant (viewed from the outside on a second-floor walkway due to safety and sanitation concerns) and large gift shop with homemade macadamia nut ice cream for sale and free samples of every flavor variation sold by the company. It is located at the address One Macadamia Road, near the town of Keaʻau

We buy companies with leading consumer brand names and strong growth opportunities, and we invest heavily in the marketing of those companies," Esserman said.

Shansby spent more than $10 million a year to expand Mauna Loa's retail presence, he said. In recent years Mauna Loa brought out products such as cookies and chocolate-covered macadamias and increased distribution through retail chains including Wal-Mart Stores Inc. and Costco Wholesale Corp., Esserman said.

Through its "Taste of the Tropics" ads, the firm "positioned Mauna Loa as a brand that could go beyond macadamia nuts," Esserman said. It also emphasized the supposed health benefits of macadamias.

Mauna Loa runs a processing plant in Hilo, Hawaii. The company, which started its original plantation in 1946, today gets its nuts from nearly 10,000 acres of orchards on the Big Island of Hawaii.

Company President Darrell Askey will continue running the operation for Hershey Foods, Esserman said.

In Thursday's trading on the New York Stock Exchange, Hershey shares eased 37 cents to $56.21.

Shansby, which was founded in 1987 and has more than $800 million under management, has invested in a number of Southern California companies over the years. Its current portfolio includes Don Miguel Mexican Foods Inc., an Anaheim-based maker of refrigerated and frozen food, and Meguiar's Inc., an Irvine-based maker of car wax.

Mauna Loa was Shansby's second sale in 2004, leaving the firm with eight companies in its portfolio. So-called private equity firms such as Shansby typically invest in companies whose shares are not publicly traded, aiming to sell them at a profit years later.

In February, Shansby sold Medtech Holdings Inc., which retails health and beauty care products such as Denorex shampoo and Cutex nail polish remover, to GTCR Golder Rauner, another private equity firm, for $240 million. Shansby spent $30 million to acquire Irvington-N.Y.-based Medtech in 1996.

1881: Australian Tourist Loves Hawaii - In 1881, the first macadamia tree came to Hawaii. It was planted on the Island of Hawaii at Kapulena near Waipi'o Valley, where it thrived.

1921: The First Plantation - By 1921 a far-seeing Massachusetts man, Ernest van Tassel, thought there might be commercial potential in growing macadamias. He planted the first Hawaiian macadamia plantation on government land near Honolulu. Unfortunately, he was ahead of his time. Back then, seedlings from one parent tree couldn't produce nuts of consistent quality. By the 1930's a small amount of nuts were sold commercially, but large-scale commercial production was yet to come.

1922: University of Hawaii - 20 Years of Research - The University of Hawaii embarked on 20 years of testing and research. Some 60,000 trees were observed and tested in a painstaking process of selection and grafting. Eventually nine strains were developed that could consistently produce a high quality nut. That was the beginning of a long partnership between MAUNA LOA and the University of Hawaii, which continues today.

1946: Our Original Plantation - The original plantation of what was to become Mauna Loa Macadamia Nut Corporation was established in 1946. The very first macadamia nut trees were planted early that year near Kea'au on the Big Island of Hawaii (where we still make our home).

1956: Our First Commercial Crop - You have to be patient with macadamia trees. They take seven years to produce a commercial crop, and 15 to really pick up steam. But the original investment paid off, and the first commercial crop was harvested in 1956.

1976: Lots More Trees! - By 1976 the old sugar plantation business in Hawaii was waning. Mauna Loa Macadamia Nut Corporation began converting five old sugar plantations to macadamia plantations at the rate of 1000 acres a year. Most of those trees are still producing the premium macadamia nuts you enjoy today.

1980's: We Crack Nut - Cracking Problems - We worked with scientists to find better ways to crack the world's hardest nut. Our goal was to preserve more nut kernels whole. It worked, and we were able to supply the growing demand for premium, whole macadamia nuts.

1984: Mauna Loa Volcano Blows Her Top - In 1984 a big eruption made headline news. Our namesake volcano, Mauna Loa, became famous overnight. And with it our nut company, and our macadamia plantations nestled on her slopes. Now more visitors were coming to Hawaii, discovering the delicious taste of MAUNA LOA macadamia nuts, and demanding the same premium nuts from stores back home on the mainland.

2004: HERSHEY'S Buys a Taste of the Tropics - The Hershey Company acquires the MAUNA LOA brand.

TODAY: One of the Largest and Most Experienced Processors in the World - Our primary nut processing plant is still in Hilo, Hawaii (come see our Visitor Center there when you're on the Big Island). Our attention to quality at every step of processing has earned MAUNA LOA its premium reputation as the leader in the macadamia nut industry.

ML Macadamia Orchards, a grower of macadamia nuts in Hawaii, has signed contracts which will extend its nut purchase commitment from Mauna Loa Macadamia Nut Corporation, covering almost 80% of the company's macadamia nut production.

The company landed three nut purchase contracts with Mauna Loa Macadamia Nut Corporation on 31 January 2011, and each one will be effective 1 January 2012.

These contracts will replace the existing Macadamia Nut Purchase Agreement with Mauna Loa, which expires on 31 December 2011. The new contracts are identical except for the term, which is one, two and three years, respectively.

Each contract requires that Mauna Loa purchase and the company sell 1/3 of all its macadamia nut production (or approximately 6.5 million pounds of wet-in-shell nuts annually) excluding production from the newly acquired IASCO orchards.

Prior to the expiration of each contract, the company and Mauna Loa have agreed to endeavor to negotiate new three year pricing for that contract.

In the event any nut purchase contract is terminated, the company has the option to require Mauna Loa to use commercially reasonable efforts to process the nuts previously covered under the contract into kernel at a fee equal to Mauna Loa's average nut processing cost.

Hershey has agreed to buy Mauna Loa from the Shansby Group, a California-based private equity investment firm, for $112.4 million plus assumed debt of $17.6 million.

The deal, which is projected to close by the end of the year, is expected to boost revenues for Mauna Loa and other Hawaii-based macadamia nut suppliers and producers. However, local companies were concerned about whether Hawaii would have enough nuts to feed a potential increase in demand.

Hershey did not release detailed plans for Mauna Loa and its 300 employees, though Hershey will add Mauna Loa's portfolio of premium macadamia nuts, nut-based confections and cookies to its stable of iconic brands, said Judy Hearth, spokeswoman for Hershey.

"We're proud of Mauna Loa's performance, and our strong sales growth shows the momentum and significant marketplace potential of our brand," said Darrell Askey, president of Mauna Loa. "Now, with the addition of Hershey's expanded channel and marketing expertise, we can take Mauna Loa's portfolio of premium macada-mia nut offerings to new heights."

Last month, Mauna Loa, the state's largest macadamia nut processor, dropped a plan to merge with MacFarms of Hawaii LLC, Hawaii's No. 2 processor and grower. A competing grower and nut processor had sued to block the deal.

With revenues of more than $4 billion and more than 13,000 employees worldwide, Hershey offers a veritable sin city of products such as Hershey's, Reese's, Hershey's Kisses, Kit Kat, Almond Joy, Mounds, York, Jolly Rancher and Twizzlers.

Hershey also offers products developed to address the nutritional interests of today's health-conscious consumers, many of whom believe macadamia nuts help cut cholesterol and promote heart health.

A shortage of macadamia nuts, increased demand due to the Atkins health craze and an ever-growing fascination with Hawaii as a tourist destination made this the perfect time for Hershey to enter the state's macadamia nut industry, said Michael Purdy, chairman and president of Island Princess.

"Five years ago we couldn't give macadamia nuts away; now it's an untapped market," Purdy said. "There is a worldwide shortage of macadamia nuts, and we have the largest demand ever -- Hershey had to see the opportunities."

Purdy said the market is strong enough to support Island Princess, Hershey and other macadamia nut candy makers as long as they differentiate their products.

"Hawaiian nuts are at a premium, and we are riding that roller coaster up," he said. "We offer higher-end products, so I don't think Hershey will be a direct competitor."

A larger concern is what will happen if Hershey begins using more macadamia nuts, said Dennis Simonis, president and chief operating officer of ML Macadamia Orchards LP, a chief supplier for Mauna Loa.

"Hershey's marketing and distribution network will certainly give macadamia nuts more exposure, but will the industry, which produces less than 50 million pounds a year, be able to support it?" Simonis said.

Hawaii is under the gun in terms of being a macadamia nut producer because there are land shortages, and the cost of production is high, Purdy said.

While the acquisition should help further introduce macadamia nuts to consumers and boost sales, it is unlikely to have as large an impact on Hawaii's agriculture, Purdy said.

"Most of the farmers are very happy right now. In general, prices are sky high, and growers are fat and happy and making more money than they've ever seen," he said. "The acquisition won't probably register much of a blip on their radar screen."

Acquiring Mauna Loa, which has annual sales of approximately $80 million and a 40 percent share of the local macadamia market, will allow Hershey to strengthen its presence in the broader snack industry, said Richard Lenny, chairman, president and chief executive officer for Hershey.

Hawaiian Host, which has competed with Mauna Loa in the past, said it is too early to tell how Hershey's entry into the market will affect the company. Sales are strong, and Hawaiian Host is looking forward to a robust holiday season, said Keith Sakamoto, the company's executive vice president of sales and marketing.
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