the avocado market

8/3/2019 The Avocado Market

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The Avocado Market: AGrowth Market In a MatureFood Industry

Dr. Roberta CookDept. of Ag and Resource EconomicsUC Davis

For the Avocado BrainstormingSession

October 2003


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US Avocado Production and Imports

1994-2002 (Utilization has doubledsince 1994!)

20,00070,000120,000

170,000220,000270,000

320,000

1994 1995 1996 1997 1998 1999 2000 2001 2002

US

Production

Other

Mexico

Chile

Source: USDA/ERS, Oct. 2002 and Dept. of Commerce, imports CY, production crop year

Import Share38% in 02 vs. 18% in 94

Metric Tons


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Percentof U.S.grocery

storesales

0

10

20

30

4050

60

70

1987 1993 1995 1997 1999 2001

Top 4

Top 8

Top 20

U.S. Food Retail Concentration

Twenty largest food retailers captured 57%of total grocery store sales in 2002P

P PreliminarySource: ERS/USDA and Census, modified by Cook

3145

57

2002P


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2002 Market Share of the Top 5 Retail ChainsPer Selected Country, % of Supermarket Sales

Top 20 Europe-wide share about 60% in 2002

99%

97%

93%

87%

85%

81%

80%77%76%

73%

67%

64%

36%

47%

USABrazilUKSpain

GermanyArgentina and PortugalHungaryMexicoFranceBelgium

NetherlandsSwitzerlandNorwayGuatemala,Sweden, New Zealand

Source: M+MPlanetRetail, Cookand Reardon

Source: M+MPlanetRetail, Cookand Reardon


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Key Drivers global retail players

global retail brands

growing role of private labels

retailersupplier contracts/partnerships

declining role of spot market


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Competing in a Value-Driven Market Grocery retailers have beenlosing share to foodservice for

decades, now to value retailers. Channel blurring has caused theretail landscape to be overstored.

Plus, foodservice channels compete

with all forms of food retailing whichtend to offer ingredients to prepareinstead of meals to eat.


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Competing in a Value-Driven Market

Conventional grocery retailers mustidentify value propositions they can own ifthey are to remain competitive! Fresh

produce can be a point of differentiation(including ripe avocados). Avocados have further room for growth inboth retail and foodservice markets, but

these markets are increasinglycompetitive and buyers will demand moreservices from suppliers, such as categorymanagement.


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Competing in a Value-Driven Market Bottom line: more structural change expected in the US

and global grocery industry and more pressure onsuppliers! But buyers may be more willing to cooperatewith suppliers on information-based programs designedto increase retail sales and profitability.

Avocados are well-positioned in this regard becausemore is spent on market research and promotion thanfor most other fresh produce commodities.

HAPO will further stimulate demand and improveinformation flows and analysis to the benefit of playersat all levels of the system.


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$168

$163

$131

$129

$228

$228

White/Other

African-

American

Hispanic

US Fresh Produce Consumption by Race

Benefits Avocados!, $ Per Household,,

Source: Demographics of Consumer Food Spending 2002, The Food Institute

Vegetables

Fruits


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U.S. HispanicPopulation Projections, Millions

Source: Census 2000, U.S. Census Bureau

2000 2010 2020

35.343.7

55.2


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0

5

10

15

20

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Carrots Bell Peppers Broccoli

Tomatoes Avocado

U.S. Per Capita Consumption of

Selected Fresh Produce, 1985-2002

P=preliminary

Source: USDA/ERS, July 2003 Vegetable Yearbook; Oct. 2002 Fruit Yearbook

Pounds per capita

P


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Factors indicated by US consumersFactors indicated by US consumers

as influencing fresh produce purchases, 1990 vs.as influencing fresh produce purchases, 1990 vs.20002000

Factor 1990 2000

Taste/flavor 96 87Ripeness 96 70Appearance/condition 94 83Nutritional value 65 57Price 63 47

In-season 38 41Growing region/country of origin 17 14Organically grown 17 12Brand name 9 n/a

Rating of extremelyor very important %

n/a =

Not available

Source:Fresh Trends'90 and 2001


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Avocado OutlookAvocados will now beincluded in the National 5

A Day Program due torecent changes in the NCIcriteria!

This should help improvetheir nutritional/healthimage


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Avocado Outlook Demand for avocados willcontinue to rise due to favorabledemographics and consumerpreferences

HAPO should help stimulate yr-round demand and retailer

attention, important formanaging the expansion inimports


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Avocado Outlook Greater Mexican imports willpartly cannibalize Chilean volume

in Aug. and Sept., mitigatingthe net import effect Any lower prices for Ca.avocados will be partially offsetby higher consumption/demand,in part stimulated by lowerprices


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Conclusions


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Two Basic Strategies Low-cost producer/shipper Differentiated producer/shipper

marketing a premium product orproduct with identifiable preferredcharacteristics that arecommercially perceived and valued

First strategy increasingly difficultas buyers push more demands andservices upstream to suppliers must provide consistent quality!


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The US Avocado Consumer

Presented by Jan DeLyser to

Brainstorming 03October 31, 2003


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Presentation Overview

U.S. Avocado ConsumerWho, Where, When

2003 - 04 U.S. Avocado Market &Marketing Plan

Market Size Strategic Considerations Plan


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U.S. Avocado Consumer


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Women 25-54 years of age

$50,000+ income Upscale, college, full/part time work

Health conscious


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Open-minded, adventurous andenjoy a variety of cuisine

Avocados make any dish or mealspecial

Dont want to waste any of the

avocado


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East Central

North East

PacificSouth East

South West

West Central

% U.S. POPULATION / % AVOCADO VOLUME



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East Central

North East

PacificSouth East

South West

West Central

% HOUSEHOLDS PURCHASING FRESH AVOCADOS BY REGION



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Per Capita Avocado Consumption

pounds


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Why they purchase avocados:


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U.S. Avocado Consumer, 1994-2002

Price as a Barrier to Avocado Purchase

26%

31%

0%

10 %

20%

30 %

40 %

1994 1995 1996 1997 1998 1999 200 0 200 1 2002

PriceasaBarriertoP

urchase

- 5 Points

Advertised Markets


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U.S. Avocado ConsumerWays Avocados Used Most Often

Guacamole (91%)

Part of Mexican Side Dish (80%)

In a Salad (75%)

Eaten Plain (74%)

Sandwich/Burger (71%)Part of Non-MexicanEntre (53%)

the avocado market

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