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Westfalia expects growing demand & supply

westfalia (Editor’s Note: Following is a Q&A interview with Paulina Theologou, Group Commercial Executive, Westfalia Fruit. It has been edited for space considerations.)

The Produce News (TPN): Currently, what are the major sources of supply for Westfalia avocados?

Paulina Theologou (PT): In Mexico we operate one of the biggest packhouses in the world with year-round supply. We are in Chile and Colombia during the winter months, Peru in summer and pre-summer, and South Africa in the summer months, though the GEM avocado has lengthened our season to almost year-round. We are in Mozambique in winter with GEM also lengthening the season. We also source from Costa Rica, other Latin American countries, Israel, Spain, Morocco and Kenya.

TPN: Are there specific limiting factors or positive factors that inform the future for these sourcing regions?

PT: Overall we expect expansion in every origin we deal with. Given that market dynamics are dictating continued demand growth, contractions will only be due to environmental factors such as water/drought and urbanization. We see this possibility in Chile, Spain, Israel, and California. Expansion will otherwise continue. Market growth will dictate this, and it will be linked to land and water availability.

I expect Peru will still grow. We continue to believe in Africa and expect growth in this region. Further development is expected in China though vast suitable land and environment are limiting factors. While it is unlikely to achieve Peru or Mexico status in the next decade, I expect China to develop its own smaller local production base as local consumption grows.

Colombia and the rest of Latin America will continue to grow, including Brazil, which has very good potential for production. The will to succeed is also there as we are seeing ambitious projects being developed.

Overall, we have faith in Asia and Africa where data is scarce but Westfalia’s intel and leading plant material position show us an exciting picture. South Africa will also continue to invest and grow. A key advantage in South Africa is logistics, and the quality of the product throughout the industry is world renowned. We will also continue to invest in Mozambique.

TPN: Will the Hass avocado continue to dominate?

Hass will continue to dominate for the next 20 years, but the potential of GEM – especially in California – should not be discounted. Times are changing. It won’t be a revolution and won’t be quick but new cultivars are coming on and becoming more consumer relevant. GEM’s ability to lengthen seasons and withstand greater climatic challenges and its proven success with consumers mean it will continue to grow in relevance.

Avocados are no different than other fresh produce. Consumer trends are clearly showing demand for diversity. Consumers are more open to differences in taste, to niche, trendy and premium offerings. There is huge potential in my opinion for niche offerings that will be very successful in avocados. But this certainly won’t displace the Hass variety. We expect GEM plantings to continue to generate very attractive yields and to offer this niche for consumers and therefore to grow disproportionately to other varieties.

TPN: Currently, where does Westfalia sell most of its avocados and which production areas service which markets?

PT: We have large sales out of Mexico into the USA, complemented by our presence in Peru, Chile, and Colombia. Working together to provide year-round programs, our operations in Mexico, Peru, Colombia, Chile, South Africa and Mozambique, as well as other country partner networks, focus on the European Union, United Kingdom and Asia.

In terms of our physical facilities, large state-of-the art ripening and logistics facilities in the EU, UK and USA help us to deliver seamlessly across the world from our production sources.

TPN: In which of the current markets do you see the most growth?

PT: We have seen massive and continued growth in EU and Eastern Europe, where some consumption characteristics remain at low levels. Asian countries are sure to also continue growing at strong rates.

The USA still has a lot of scope for growth, predominantly on the East Coast where our Peruvian supply has significant competitive advantages to further develop this market.

All growth in other markets like Asia however will be directly correlated to marketing dollars, which is not yet as formalized as in more mature avocado markets. There is a significant limiting factor which is market access for producing countries! If only two or three countries have access, then growth will be limited.

TPN: Will China emerge as a major consumer and producer over the next decade?

PT: They will certainly become a significant producer. Westfalia has test plantings in China and across the Southeast Asian region as well as strategic alliances in the region. The limiting factor is that avocados can only be planted on the West border for climatic reasons. Consuming regions are on the East Coast.

TPN: Will the supply demand-curve remain in sync?

PT: Supply will certainly fall short of demand in certain parts of the year, but through the Northern Hemisphere’s summer months we can continue to expect some excess supply in isolated periods. I expect this oscillating pattern to continue for the next decade. Of course, market access will be a consideration as well as pricing in different markets. For example, Peru can swing supply with relative ease into a market that makes more sense. Mexico and South Africa can’t switch as easily and, as such, even though global demand and supply continue to be favorable, the dynamics each country faces may be different at unique periods in time.

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