California avocados: Strong retail demand helping to offset loss of foodservice channels
While the almost-entire loss of foodservice channels over recent weeks has been a blow to the California avocado sector, a significant increase in retail demand has helped to compensate, according to an industry body.
California Avocado Commission (CAC) president Tom Bellamore said that normally around 30 - 35% of the crop would go to foodservice, which shut down around mid-March as concerns over the Covid-19 pandemic were raised in the U.S.
However, avocados have been one of the best performers at retail over the last couple of months, with weekly year-on-year dollar sales up by double digits. In terms of sales growth, they have been far ahead of the growth in fresh fruit overall, outpaced only by citrus fruits.
In the week ending April 26, avocado sales were up by 18.8%, according to IRI data.
"It certainly is a strong market at retail, and we're obviously very encouraged by that," Bellamore said. "And to some extent, I think those retail sales have made up for the lost sales on the foodservice side."
"People are just trying to find their ground with the changes that have occurred. The changes in the foodservice sector in particular were responsible for some instability in the market recently, but it feels like we're working through that."
He emphasized that the increased retail demand had by no means replaced foodservice sales, and the extent of the impact would vary between packers in relation to how dependent they are on the sector.
While some of the avocados that would normally go to foodservice have been diverted to retail, the prices would have likely been impacted.
"I'm sure growers have felt some of that in terms of the overall pricing they've received for their crop," Bellamore said.
"But we have to step back and think about the produce category in general and come away feeling fairly fortunate that avocados sales have been good, the product has moved, and there certainly continues to be strong demand and interest for avocados on the consumer side. So that's a plus compared to many other the other products."
Another benefit for avocado growers is the ability to wait to pick the fruit from the trees, as it doesn't ripen until after harvesting.
Bellamore explained that a ready-to-pick crop could stay on the trees for months, weather permitting. Some growers are doing just that, waiting until the market stabilizes with the resumption of foodservice activity.
The pace of harvests has ramped up recently, following a slowdown in late March and much of April caused first by instability and uncertainty in the market and then a period of rain.
That, combined with higher than expected post-Super Bowl demand and pricing in late February and early March, has led to the California harvest being far ahead of pre-season expectations.
"Over the last couple of weeks California's harvested between 16 and 17 million pounds, which is really ahead of what we thought," he said. "So it's been just a crazy season. We have a crop which we believe is around 370 million pounds, and we've harvested now about a third of that."
Whether or not the market conditions will allow for such a swift pace of harvest to continue is unclear. But Bellamore said that Mexican supplies will likely lessen a bit following Cinco de Mayo, which would aid California growers.
"All of it now remains to be seen. It seems like demand is going to continue to be very solid here into peak season," he said.
He added that the total crop was of good quality and volume, and there'll be adequate supplies for retailers who want to run promotions. As of early May, he said that some retailers are beginning to promote avocados again, and there's more foodservice activity.
"So, given the overall circumstances that everyone faces, we feel relatively optimistic."