Consistent Mexican avocado supplies lead to more promotions

In the past, the early fall deal has seen inconsistent supplies of Mexican avocados as growers have attempted to influence the market by decreasing production through picking “holidays.” This year, supplies have been a model of consistency and U.S. retailers have responded with lots of promotions.

“We’ve had steady supplies and very attractive pricing for quite a while,” said Ross Wileman, senior vice president of sales and marketing for Mission Produce Inc. in Oxnard, CA. “We’re expecting a little bit of a slow down before Thanksgiving because of decreased demand, but we’ve had a pretty consistent deal so far.”

Speaking with The Produce News on Nov. 4, Wileman said small fruit (70s and smaller) was priced lower than expected at less than $20 per carton, but the popular 48 size had an f.o.b. price of right around $35. He called that a strong price that also left room for promotion at retail.

Rob Wedin, vice president of fresh sales and marketing for Calavo Growers Inc. in Santa Paula, CA, echoed those comments. “We are seeing very good supplies right now,” he said in early November. “We have had too many small-sized avocados [since the new season started in July] and not enough larger ones but that has started to change.”

He added that the situation has created a two-tier pricing structure with the smaller fruit selling for $10 or more per carton below the larger sizes.

The Calavo executive said Mexico is projecting increased shipments of 15-20 percent to the U.S. market for the 2019-20 fiscal year over the previous year. He said at this point, it appears that for the first two quarters of the year (July through December) the projection is that volume will be up in the neighborhood of 11 percent. That means for the first six months of 2020, producers will have a bigger hill to climb to reach the 15 percent-plus plateau, but it is reachable as that is the period when promotions and consumption spike, anchored by the Super Bowl weekend in early February and Cinco de Mayo promotions several months later.

Wedin said the increased production is resulting in more ad pricing with retail promotions up about 16 percent over the previous year during the five calendar weeks encompassing October. The average price of those avocados on promotion during that time period was $1.20, according to the data that Wedin was reporting. That promotional price was significantly better than the average ad price for the same period a year earlier, which was $1.50 per avocado.

Antonio Villaseñor, chief executive of Aztecavo, a packer-shipper in Mexico that is part of the Westfalia Fruit Group, noted that Mexico has a larger crop this year and will send more volume to the United States.

“The Mexican avocado crop for the season 2019-2020 is estimated at around 2.3 million metric tons (5.1 billion pounds),” he said, relaying that 60 percent of that volume will come from the state of Michoacán, which is also responsible for supplying about 80 percent of Mexican avocado exports.

Like the others, he expects heavy supplies of Mexican avocados to the U.S. market well into the spring of 2020. He also weighed in on the pricing situation.

“Prices in the next five months should remain stable, as there is no reason for fruit scarcity,” he said in early November. “Supply will be good throughout the season.”

Villaseñor said the increased volume should result in promotable prices well into 2020, with ample availability of the most demanded sizes in the U.S. market, which are 48s and 60s.

Patrick Lucy, vice president of sales for Del Rey Avocado Co. in Fallbrook, CA, also pointed to the positive impact on sales that steady supplies have had. He said promotions are up and he expects that the volume will continue to be conducive for promotions from November through the Cinco de Mayo holiday. He said that in recent days there has been a normal size curve and he expects that to continue.

Lucy also reported favorable conditions for retail promotions of organic avocados over the next five to six months. Supplies are solid and the f.o.b. price of $40 or lower, depending on size, allows for promotions in the organic aisle. He added that the organic fruit is peaking at a size smaller than the conventional avocados, with the 60 size being the sweet spot.

Market Watch

the source pro-act

Western growing regions getting hit by rain, cooler temps

floral pulse