Avocado production is down, but prices are up and producers are reaping the benefits, even if some entrepreneurs decry the Millennial habit of eating avocado toast.
Avocado growers in California, Mexico and Peru shipped about 44.6 million-lbs. the week of June 4, down from the 47.2 million-lbs. shipped the week prior, according to the Hass Avocado Board. About 47.9 million-lbs. of avocados will be shipped from the three growing regions, according to projections for the week of June 4. The loss of about 3.3 million-lbs. in shipments is certainly affecting prices.
However, there may be some good news on the horizon. The 2017 Florida avocado season looks promising after two challenging years, according to regional growers. Early estimates indicate the crop will be 20% larger than the 2016 harvest, according to Brooks Tropicals. Although the Florida variety is different than the Hass avocados most consumers are accustomed to, Brooks notes U.S. demand is increasing as the Hass avocado supply remains tight, reported The Packer (May 26).
Additionally, the strong avocado market should remain until September, when Mexico's harvest begins in earnest, according to producers, reported The Produce News (May 23). So consumers may need to weather just a few more months until prices begin to drop.
This could be complicated, however. Mexican avocado producers and exporters plan to increase sales to China this year. Avocado exports to China in 2016 reached 10,294 tons, a major increase over the 16.7 tons shipped in 2009, according to Mexico's Ministry of Economy. China is now among the top 10 markets for avocados, reported China Daily (June 7). If Chinese importers are taking more of Mexico's total, U.S. consumers may be left with prices that are well-above the year-ago period.
Despite the increased prices, consumers are still buying the fruit. Calavo Growers reported double-digit sales growth in all three of its business segments in the latest period, largely driven by higher prices in the fresh segment. Although fresh volume shipments dropped 25% to 4.8 million units when compared to last year, value rose 24% to about $155.6 million during the timeframe. At the same time, Henry Avocado Corp. will build a 25,000-sq. ft. cold storage distribution center in Charlotte, NC. The new center is expected to allow the company to expand is East Coast operations, and should be completed in September, reported The Packer (June 6).
Millennials, in particular, are continuing their avocado consumption. I'll let The New York Times take it from here:
"In an interview with Australia’s '60 Minutes' on Monday, Tim Gurner, a 35-year-old real estate mogul in Melbourne, suggested that young adults would be more likely to be able to buy a home if they curbed their discretionary spending, citing that expensive brunch item.
'When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,' he said. 'We’re at a point now where the expectations of younger people are very, very high. They want to eat out every day; they want travel to Europe every year.'"
The internet was predictably set ablaze, with Millennials across the globe sarcastically pondering whether they would pursue the dream of home ownership or avocado toast. The New York Times used data from The Food Institute's Demographics of Consumer Food Spending, 2017 to note that all Americans are spending more on food out-of-home, and that the difference between generations is pretty small by comparison.
So, despite increasing prices, it would appear Millennials, and all generations, will continue to purchase all of the avocados they can get their hands on.
In The Food Institute's recent webinar "Achieving a self-sustaining business model: Top 3 trends companies need to think about post-COVID-19," Greg Wank, CPA, CGMA, partner and leader of Anchin's food and beverage group, as well as David Eben founder and CEO of Carrington Farms, discussed how to have a more successful business while burning less capital and attaining self-sustainability. The following summarizes the salient points highlighted during the webinar.read more
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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