Saturday, September 23, 2023

HAB: Excess supply of avocados will be a challenge for the world industry


Despite the growth of the avocado industry and the exponential increase in the availability of the fruit, its price has remained stable, with the demand curve shifted outwards while keeping the price in check.

Maintaining the value of the avocado has been a concerted effort by industry members to communicate and show consumers that it is a product that is worth more for its health benefits.

“We have invested nearly $30 million over the past ten years – more than any other fruit and vegetable product – into researching the nutritional value of avocados, demonstrating that it has a high content of vitamins, nutrients and also Good for heart health” Emiliano Escobedo, executive director of the Hass Avocado Board, told PortalFrutí

In the 80s, the so-called “low-fat crusade” advertised the avocado as an unhealthy product, very high in fat and harmful to health, which undoubtedly affected its consumption.

Since its inception in 2002, the Haas Avocado Board has worked to change this perception and convince people that it is, in fact, a healthy product that should be part of everyone’s diet.

HAB’s promotional fee for avocados is 2.5 cents per pound, and they’ve invested nearly $700 million over the past decade.

“In addition, other organizations such as the California Avocado Commission (CAC) also invest in the promotion of the fruit. CAC adds $8 million a year, as well as Mexico’s Association of Avocado Exporters Producers and Packers (APEAM) to Avocado de México campaigns. with an additional investment of about $15 million more,” Escobedo said.

“Therefore, approximately $100 million is invested each year in programs focused primarily on the promotion and marketing of avocados in the United States,” he said.

demand seasonal

Avocado penetration in US households is around 60%, which means there is still a lot of potential to continue growing consumption.

There are specific regions, such as the Northeast, where low levels of per capita consumption continue.

Seasonality is also an important variable, as consumption is higher in the second quarter from April to June. Escobedo explained that one of the things they are working on is to take advantage of holidays and special events throughout the year to drive consumption.

Escobedo said, “All sporting events like the Super Bowl or March Madness have a lot of demand because people gather at home and eat a lot of guacamole and chips. These events happen mostly in Q1.”

However, in the second quarter, holidays such as Easter, Cinco de Mayo and Memorial Day generate even more demand for avocados.

Demand is lower in the third and fourth quarters than in the first half of the year.

consumer segmentation

HAB has found the most efficient way to analyze consumer trends in the US is to divide all consumers into four distinct categories based on their level of consumption: light, moderate, heavy and extremely heavy consumers.

They found that heavy and super heavy alone account for 89% of total sales, meaning that half of all US avocado consumers consume only 11% of the total.

“This showed us that there is tremendous potential for growth in the 60% of Americans who eat avocados because their consumption amounts are still low,” Escobedo said.

The volume for the super heavyweight category was so high that they decided to split it into three subcategories: Super, Mega and Ultra, with each segment representing 8.5% of all consumers.

Main challenges of the sector

“The main challenge for the avocado industry worldwide is overproduction. We are producing more avocados than we are consuming,” Escobedo said.

The executive director warned that the only country that has the proper mechanism to generate the amount of demand needed to balance supply and demand is the United States.

Escobedo said, “There is no other country in the world that has a mandatory promotion law and we are raising the amount of money that we are raising here in the United States.”

The average age of trees in production is decreasing and many new saplings are being planted, which means more will be produced in the next two years.

“How are we going to drive demand and convert light consumers into medium consumers, medium consumers into heavy consumers and heavy consumers into ultra heavy consumers, that is the challenge for this sector,” Escobedo said.

Targeted marketing is a priority for HAB, and this year they have budgeted an estimated $75 million, which includes research and promotions to encourage consumption.

HAB was present at the World Avocado Congress in April and spoke to other growers about the importance of investing in ways to increase demand. Local consumption, says Escobedo, is vital to the survival of the industry in each producing country.

Petition for new producers

Avocado consumers are demanding in terms of quality, especially given its price, they expect the product to be in optimal condition.

For Escobedo, it’s important to remind growers, especially those entering the market like Jalisco and Colombia, that they must maintain the quality standard the fruit is enjoyed in the United States.

“People already know the product, so they won’t buy low quality fruit,” he said.

The entire chain has to function smoothly and efficiently, including farmers, workers, exporters, ripening rooms, transportation and distribution.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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