What’s up, guac? - The Packer

What’s up, guac?

04/11/2014 09:29:00 AM
Andy Nelson

Andy Nelson, Markets EditorAndy Nelson, Markets EditorIf you watch as much TV sports as I do, you’ve probably seen those “Messin’ With Sasquatch” beef jerky ads about a million times.

They gave me an idea for a way to pass the time at work. I call it Messin’ With Avocado Shippers.

OK, it doesn’t roll off the tongue the way the other one does.

A recent example:

Me: So how are the avo supplies looking for Cinco de Mayo, Sasquatch? (We’ll call him Sasquatch to mask his true identity.)

Shipper: They’ll be lower than last year. California has a smaller crop, and, with a late Easter, it may be hard to ramp up quickly again for Cinco.

Me: OK. So basically what you’re telling me is that every single Chipotle in the known visible universe will be taking guacamole off its menu for the foreseeable future — and likely forever?

The great thing about this game is not only do I not get manhandled by Sasquatch, I haven’t gotten any deathly silences on the other end of the phone line, and I usually get a laugh.

It’s why the guys and gals who are in produce are in it, and why my delicate psyche isn’t cut out for it.

Market and product volatility — the whims of Mother Nature and the unseen motions of the free market — is the air they breathe, and their response is to laugh it off.

After the laughs, I do try to pry what Chipotle-related observations out of them I can, after swearing on my coworkers’ lives that their comments are as far off the record as Deep Throat’s.

Many shippers are charitable toward Chipotle. They say the burrito giant’s comments in its annual SEC filing about possibly pulling guac because of avocado shortages — due, in part, to climate change — were taken out of context, referred to the distant future, were blown out of proportion by the media, etc.

I respect them for being charitable, and they certainly have a vested interest in placating a company that for many is a huge buyer of their fruit.

But I read the filing and it seemed pretty clear to me Chipotle was considering the possibility of pulling guac in 2014, not five or 10 years down the road.

The shippers less charitably inclined run the gamut from mildly perturbed to pretty upset. One ran the numbers with me, starting with what Chipotle charges for the guac add-on to its burritos ($1.50), moving on to the f.o.b. price, average weekly unit volumes and other numbers and then formulas that reminded me how happy I am never to have to take another math class.

The sum of his equation was this: Chipotle’s making a pretty penny on guac, and now they have the audacity to try to scare suppliers into lowering prices for fear of losing their business?

Another shipper lamented that Chipotle doesn’t quite get the fact that avocado trees, because of how Mother Nature made them, don’t churn out predictably more fruit in a nice even, rising line on a graph, as a factory turns out manufactured goods.

“Supplies climb every other year, not every year,” the shipper said. “That’s the challenge.”

The consensus among those charitable and less charitable to Chipotle, however, is the same: they ain’t pullin’ guac.

They’re just messin’ with ’em.


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