Avocado demand, supplies super strong for Super Bowl Sunday
The avocado’s surge in popularity has defied gravity over the past decade and once again it appears headed in that direction as f.o.b. prices are almost record-breaking even as volume increases.
During the four full weeks of January, Mexico sent more than 222 million pounds of avocados to the U.S. market, and California began its harvest for the season chipping in another 8.8 million pounds. Those are robust numbers and will make January one of the top avocado-producing months of the year, yet the f.o.b. price is red hot.
Rob Wedin, executive vice president of fresh sales for Calavo Growers Inc. in Santa Paula, CA, told The Produce News on Feb. 2 that prices are quite high with 48s and 40s — the two most popular sizes — trading at an f.o.b. price McAllen, TX, in the high $50s. The smaller 60 size fruit was around $50 per carton while the even smaller 70s were returning $40.
The Calavo executive said the demand is being driven by retailers stocking up and placing orders for Super Bowl weekend, which is one of the top two avocado-consumption events of the year (the other being Cinco de Mayo). At these f.o.b. prices, Wedin said retailers are not typically going to put avocados on ad at a red hot sales price, but they are still featuring the fruit in their ads as part of their Super Bowl lineup, and consumers are looking for them.
“I don’t think we are going to see a big drop in price after the Super Bowl,” he opined.
Wedin reasoned that the Mexican avocado industry is methodical in its shipping of avocados to the United States. The industry wants to maintain a strong market price and that is accomplished with steady supplies rather than big peaks and valleys. Immediately after the Super Bowl, Avocados from Mexico, the U.S. marketing arm for Mexican avocados, is launching a coupon promotion for bagged avocados that gives consumers a dollar off at the checkout stand. He said retailers are showing a lot of interest in this promotion, which should help keep avocado demand high.
Wedin revealed that Calavo sold 45 million bags of avocados in 2021, illustrating the dynamic trend toward bagged produce that is occurring all over the United States and for all kinds of produce. Though the bagged avocado trend predated the coronavirus pandemic, it has certainly got a boost during the past two years as consumers were inherently attracted to produce that was touched by fewer human hands.
The Calavo executive relayed that the f.o.b. avocado price may also remain very strong moving forward because it does not appear supplies will be overly heavy for the next few months. It is always difficult to accurately gauge what Mexico growers have on the trees from a U.S. perch, but Wedin appeared confident that the volume from Mexico will be less than initially anticipated as the 2021-22 moves toward its finish line in June. The California Avocado Commission is estimating a crop about 15 percent above last year with more than 300 million pounds this season. That’s a good crop but it will not be difficult to market it during its five to six-month sweet spot running from mid-March into August.
Gahl Crane, sales director for Eco Farms in Temecula, which is The Oppenheimer Group’s avocado arm, noted the strong pricing and strong demand and said it appears “higher pricing is a barrier, but it is not slowing sales.”
He said that during the last week of January, 5,500 stores in the United States had avocados on ad at an average price of $1.33 per piece. He opined that most of those ads would be featuring 60- or 70-size fruit so while that average price is promotable, it certainly isn’t a barnburner.
“I think consumers are seeing high prices on everything they buy and so there is less sticker shock,” he said, adding that the avocado has a great story to tell to consumers as it is a healthy, flavorful product with a lot of versatility.
Crane expects to see a plethora of avocado ads during the Super Bowl with no let down the day after. “Typically, the (avocado) market does not crash after the Super Bowl. I expect it to stay solid and for movement to remain good. Demand is keeping up with supply.”
He said the industry has shown that it has no problem moving 55 million pounds per week at a very good market price. Crane added that it was the good pricing situation that convinced some California growers to open their groves and begin harvesting. He said it is great to have another option and another source to help fill the increasing demand.
Del Rey Avocado Co. President Patrick Lucy quantified just how strong the avocado market price is going into the Super Bowl: “48s are up 100 percent,” he said. “Last year they were in the high $20s at this time and right now the market is $50 to $51.” He added that organic prices are also extremely strong with the early February market returning what he called “summer prices” as the most popular 48-size was selling in the high $60s and low $70s f.o.b. with no drop off in demand.
Lucy agreed that these great prices have resulted in a “surprising volume of California avocados picked over the past two weeks.” He said some growers are size picking, only taking the large fruit off the trees. But others, usually for cultural reasons, are stripping entire groves giving packers a full profile of sizes.
For the California growers themselves, these early sales are the gift that keeps on giving. When California has a crop in the 300-million-pound range, it will market 80 percent or even more in the four-month period running from April through July. When significant pounds come off the tree early at high price points, it adds to the overall value of the crop and means there is less fruit to sell during the heavy demand months, which should also result in a strong marketing situation.
Photo courtesy of the California Avocado Commission