The head of one of the industry's leading avocado companies expects fresh operations will continue to track positively this year with double-digit gross margin growth, and is also upbeat about the impact of a U.S. opening for imports from the Mexican state of Jalisco.

In Calavo Growers' results announcement for the second quarter, CEO Lee E. Cole highlighted total avocado consumption was set to reach at least 2.5 billion pounds this year.

"Underscoring that point, our new Mexico packinghouse in Ciudad Guzmán, Jalisco, will come online during the current quarter in conjunction with government approvals enabling the importation of avocados from Jalisco, Mexico to the United States," he said.

"Authorization of Jalisco avocado exportation is a highly significant development: it is a harbinger of future volume growth for the industry and, by extension, for Calavo.

"As our substantial capital investment in Jalisco signifies, the company is committed to building a strong operating base in this dynamic growing region."

The announcement came on the back of a 14% year-on-year rise in net income for the California-based company, reaching US$9.7 million.

The result came despite an 8% drop in the group's fresh segment sales, occurring even though the company physically sold 16% more cartons of avocados. Calavo was still able to excel in the area however as the cost of sales declined by a higher rate, leading to an almost US$4 million uptick in gross margin.

Two of the company's other segments also performed particular well, with processed business Calavo Foodds punching above its weight.

"In our Renaissance Food Group, LLC (RFG) business segment, top-line growth registered nearly 15 percent year over year—another strong showing—and helped substantially offset the aforementioned lower fresh avocado revenues," Cole said, clarifying gross margins were in contrast lower due to the impact of "raw-material challenges".

"Calavo Foods remains a bright star. The highly profitable business segment once again contributed about seven percent of the company’s second quarter revenues but delivered approximately 25 percent of our total gross profit, benefitting from favorable fresh avocado pricing conditions to grow its margin over 530 basis points in the most recent quarter versus the second quarter last year."

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Avocado traders look forward to new origin for U.S. market

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