Market loosens for Mexican avocados
After a tough summer avocado deal characterized by high prices and tight supplies, the U.S. market has opened up significantly this fall as plenty of good-quality, reasonably priced avocados make their way across the Mexican border.
By late October, the rain in Mexico, which started later than usual, was over and the regular crop was beginning to harvest, said Rob Wedin, executive vice president of fresh sales for Calavo Growers Inc., Santa Paula, Calif.
November through January should see “pretty clear sailing, similar to last year,” he said.
The Mission Viejo, Calif.-based Hass Avocado Board projected 2021 volume from Mexico, including projections for November and December, to reach about 2.4 billion pounds. That’s up slightly from 2.2 billion pounds in 2020.
Donny Lucy, vice president of procurement and East Coast sales for Del Rey Avocado Co. Inc., Fallbrook, Calif., anticipated a strong season out of Mexico.“We’re looking forward to another solid year,” he said, with volume similar to last year.
College and professional football games, holiday parties and promotions by Avocados From Mexico all should contribute to strong demand at retail, he said. Lower prices compared to summer should lend themselves to more supermarket promotions, he added.
Pricing
F.o.b. prices for two-layer cartons of size 48 hass avocados from Mexico were mostly $44.25-45.25 on Oct. 27, according to the U.S. Department of Agriculture.
Size 36s were mostly $55.25-57.25, 60s were mostly $32.25-34.25 and 84s were mostly $19.25-20.25.
That was quite a drop from September, when 48s were mostly $63.25-64.25, 60s were mostly $40.25-42.25 and 84s were mostly $23.25-24.25.
This year’s California deal is over, and some avocados are coming up from Chile and Colombia, Lucy said, but Mexico will be the primary player until early February, when California gets going again.
Quality of Mexican avocados was “solid” in October, he said, and was expected to get even better in November and December.
Mexico’s fall/winter crop is producing more small sizes than is typical, said Doug Meyer, senior vice president for sales and marketing at West Pak Avocado Inc., Murrieta, Calif.
“This is primarily due to drought conditions in Michoacan dating back to late 2020 through mid-2021,” he said.
An increase in avocado consumer packs is a trend that started a few years ago but gathered steam during the pandemic and should continue this season with ample supplies of size 60 and 70 fruit.
Packaging
Consumer packs offer the ease of a grab-and-go purchase together with a value price, said Gahl Crane, sales director for Eco-Farm Corp., Temecula, Calif., the avocado division of Vancouver, British Columbia-based The Oppenheimer Group. “We’re seeing strong numbers every quarter,” he said.
Eco-Farm is increasing the number of stock-keeping units for organic and non-organic avocados, he said. Calavo also continues to see an increase in requests for bagged avocados from retailers, Wedin said.
“We keep adding (bagging) machines, and we keep exceeding capacity and we keep adding more machines,” he said.
Data from Chicago-based IRI indicates that year-to-date bag sales are up 22%, while bulk fruit is trending down by about 10%, said Hector Soltero, senior director of sales planning for Oxnard, Calif.-based Mission Produce Inc. “Our avocado intel shows us that 36% of U.S. households purchased bagged avocados in the last three months, and consumers perceive bagged avocados as a good value and convenient option,” he said.
The shift to consumers shopping less frequently with higher basket rings has benefited bagged sales, West Pak’s Meyer said.
The food safety perception of fewer consumers handling bagged fruit versus fruit in open displays also has helped boost bagged sales, he said.
On the labor scene, challenges sparked by the COVID-19 pandemic seem to be dissipating.
“In the industry, labor shortages and other effects from the pandemic appear to be cleaning up, although not back to levels prior to the pandemic,” Soltero said.
But transportation is an ongoing challenge for avocado suppliers.
“Freight costs in the U.S. continue to go up,” said Gary Caloroso, regional business development director for Los Angeles-based The Giumarra Cos. “At Giumarra, we are proud to have our own transportation company that helps with our deliveries across the U.S.,” he said. Calavo has not had a problem getting fruit to its value-added depots, but delivery to customers has been tougher, Wedin said. “That’s where the costs have been driven up.”
Lucy of Del Rey Avocado agreed. “For the most part, we’ve been able to get fruit where it needs to go,” he said. “Definitely, the cost has increased; we have seen inflation when it comes to transportation.”
The industry is experiencing driver shortages, a dilemma that has worsened over the years as seasoned drivers retire and the next generation shows little interest in driving, said Soltero of Mission Produce.
“Because of this, the industry is feeling the pain points of hiked rates in North America,” he said.
