Challenging full season U.S. debut for Peruvian avocados

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Challenging full season U.S. debut for Peruvian avocados

When Peruvian avocados first entered the U.S. without cold treatment late in the peace in 2011, a gap in supply made for a fortuitous warm-up. The terrain has not been so kind this year. With a Mexican overhang and a slightly larger Californian crop, Peruvian exporters have had to contend with tougher market conditions, not to mention the fact their fruit is larger than the average consumer's preferences. At we hear from two industry execs about how Peru has risen to the task despite these hurdles, with retailers responding positively to the new deal.

Hass Avocado Board (HAB) executive director Emiliano Escobedo describes the total avocado supply in the U.S. since early June as "remarkable", with more than 30 million pounds pumped through the system weekly.

"Putting that into perspective, that’s 13,000-14,000 metric tons (MT) per week, which is a tremendous volume - when you look back to 2007 the industry was selling 7,000-9,000MT per week," he says.

"The Peruvian deal was highly anticipated, and they waited until mid-May to sell fruit into the U.S. because they wanted to ensure the quality their receivers were getting was good, and since then Peru’s shipments to the U.S. have increased gradually.

"The market is dominated by California with over 50% and then Mexico with around 35%, while the remainder is Peru; they have reached a level that is about 12-13% market share, and initially they projected it to be about 11-12%, so it’s in line."

Mission Produce VP of business development Jim Donovan agrees that Peru has met its expectations in terms of volume and good quality, but the surprises have come from elsewhere.

"It has been probably a little more challenging than everyone expected," he says.

"Probably the big surprise has been the overall amount of fruit in the industry from all sources; Peru has a very large size curve in general because of the growing conditions and the young trees, so you’ve got that which we all knew, but then we have a larger than normal Mexican crop that is carrying over past the normal finish date, and that has a large size curve.

"Then of course you have California that has a little better than normal size crop, and when you add it all together it’s been a little bit of a challenge in the last three or four weeks."

Both Donovan and Escobedo emphasize this experience is part of the learning curves that new entrants tend to go through in this industry, with Peru working towards acceptance both with retailers and consumers.

"In fresh fruit it's always a learning curve and when you put a new source of substantial volume into a given marketplace, it takes a while for things to rebalance," says Donovan.

"It's one of those things where if someone’s been using fruit from Chile or Mexico or California or anything else that they know, and they're not having any issues with that source, if suddenly there's a new source then it takes a bit of time.

He adds the reception for the Peruvian deal has perhaps been best in the Northeast.

"In general a lot of retailers there are used to seeing various sources, really for all their products, as opposed to say out here in the west where with a lot of products, as is the case with avocados, it’s where it’s grown, so a lot of retailers are well sided with the regional supply."

The European trade-off

Donovan expects the Peruvian industry will play a different strategy for the next campaign, but it's always important not to go overboard in its reaction.

"This year Europe is still going to get the larger share of the fruit, that was planned, and with the market conditions there has been a little bit of shifting from the U.S. market to the European market.

"But there’s a limit there too, so each year is different - you’ve got to be careful not to look back and say ‘well that didn’t work last year, I’ll do the opposite this year’.

"Alternate bearing with avocados is something you can always count on. Typically they don’t set big crops back to back, so it could very well be in the case of California for instance that it could have a little smaller crop next year, although it’s a little early to tell.

Trying Peru on for size

Peruvian 'paltas' have pounds aplenty when it comes to sizing, which means the industry will need to drum up more demand for bigger avocados or somehow change the size curve at the production level.

"At the retail level in the U.S. in 2011, 6% of total retail sales were for sizes 32 and 36, but in 2012 that number is down to 2.3%," says Escobedo.

"Peru has a big role in the larger fruit market, and that’s something the industry needs to be aware of.

"What Peru needs to do is develop demand for their fruit in the United States, as the issue of sizing is very important, and they will not only need to work with retailers to move those sizes, but also with receivers that have experience with retail to make sure returns are maximized."

Escobedo says the 'Monumental Taste' campaign from the Peruvian Avocado Commission has been going well so far, with a good opportunity to make its mark on the U.S.

"In general there are some good promotions going on with retailers to move avocado volumes, while in foodservice you see Subway has a promotion with athletes like Michael Phelps promoting the health benefits of avocados."

Donovan says the adjustment of getting consumers to eat more large-sized avocados is not going to happen overnight, but experience in other countries shows it is possible.

"Peru has been going to Canada for instance which is closer than Europe is for years, and again it was the same learning curve.

"The first few years it was frustratingly slow to get the retailers to accept it and now around six or seven years later it’s second nature, it's just part of their programs, so I’m sure it’s coming along in the States."


The luck on Peru's side comes from the product itself with demand that has proved resilient to date. Donovan says despite the high volumes it is still a profitable industry.

"Other than any real disaster sales or issues someone might have, in general this market even at slightly lower values is a good alternative for the growers.

"Of course, right now Peru has two major markets, Europe and the U.S., so now at least they’re analyzing both and for lack of a better word can ‘outguess’ the best return.

"The only only question would be 'oh, should I have shipped more here, less there, that sort of thing?' But it's still a good business to be in."

He adds it will be very interesting to see how avocado consumption grows in other parts of the world as well.

"It's going to be really interesting to see the growth of consumption of avocados in South America, in places like Brazil and maybe Argentina or elsewhere."

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