Perfect Storm Accounts For Avocado Success

Jim Prevor - Comments and Analysis

Trying to understand the future actions of consumers brings to mindJim Prevor - Comments and Analysis Winston Churchill’s explanation of the difficulty of predicting the actions of Russia. He said the forecast was “a riddle wrapped in a mystery inside an enigma” — so it goes with consumer data.

It is true, of course, that Millennials behave differently than other age cohorts, but it is also true that age cohorts differ from each other by more than age. They have different family sizes, different ethnicities, different work habits, living arrangements, familiarity with technology, and so forth.

For example, according to the white paper, “Millennials Coming of Age” by Costa Mesa, CA-based Experian Marketing Services, 10 percent of the Baby Boomers are Hispanic, but 22 percent of Millennials are Hispanic.

So this leaves open the question of whether the driving force behind any procurement or consumption differences between these age cohorts is age, or some other factor, such as ethnicity.

Some of these questions are chicken-and-the-egg-type questions. That those consumers who purchase both bulk and bagged avocados should lean toward the high end of purchasing is not surprising.

But do retailers that have these consumers have a propensity toward carrying both bagged and bulk product and promote both with discounts and recipes? Likewise, are those retailers with customers who are not fans of avocados less inclinded to carry both bagged and bulk? If these retailers do carry bagged and bulk without adequate consumer demand, then do they give smaller displays without sales or promotional support?

Geography is also a conundrum. Many years ago, a U.S.-based group of Italian chestnut importers was established with the goal of spending money to increase sales of chestnuts from Italy. The goal was clear, but the effort foundered over geography.

The importers, working with the late Barney McClure, simply could not agree on whether it was a wiser path to promote chestnuts in traditional markets, such as New York, Philadelphia, Boston, San Francisco — places where Italian immigrants and street vendors had long ago established the habit of eating “chestnuts roasting on an open fire,” as the Nat King Cole classic explained — or to go to markets where chestnuts were not widely consumed.

It is a truism among marketers that the easiest sale is to your existing customers.

So, almost certainly, a promotional campaign targeted on markets where consumers are familiar with the item and enjoy the item would be the most effective way to boost short-term sales. The chestnut marketing campaign would remind consumers to buy, suggest additional recipes, and boost top-of-mind awareness. Because all local retailers sell the product, consumers could translate this awareness into procurement.

Moving marketing to the next level will mean studying the research more shrewdly.

Of course, long term, there is a big win in converting areas that do not heavily consume one’s product into high consumption areas.

It is a challenge and, perhaps, not really a function of individual product marketing. As an ethnic group moves into an area where people of that ethnicity were only lightly populated before, one would expect consumption to rise. Indeed, one would expect a kind of triple causation:

First, the ethnic group eats the product and that boosts sales. Second, the presence of the ethnic group leads to ethnic-themed restaurants, which leads consumers who are not members of that ethnic group to try the cuisine and to possibly duplicate it at home. Third, the presence of a core market makes it feasible for retailers to carry the item, and its availability makes it an option for all consumers.

It is also true that due to the popularity of travel, the Food Network, etc., a certain cuisine can become more popular. So we sell more avocados for guacamole as Mexican food becomes more popular.

Plus health news can boost sales. Avocados have surely been helped by the idea that fats and oils are not bad. Healthy monounsaturated fat of the avocados should be consumed, not avoided.

Of course, the marketing by geography is really an issue for producers. Retailers have little choice but to sell to the customers they have in their locale.

One other issue that complicates reading data such as this Research Perspective is that it is based on dollars spent — not volume. Very low prices often accompany very high volume, and thus do not fully reflect the increase in sales of avocados, or any item that moves from a low volume/high price to high volume/low price situation.

Avocado sales boomed because of a perfect storm: A growth in immigration by ethnic groups that love avocados; a change in merchandising to allow the sale of pre-ripened, ready-to-eat avocados; a boom in cuisines that use avocados; a health message encouraging consumption; and regulatory changes that allowed for imports from Mexico to spread across the country. Moving marketing to the next level will mean studying the research more shrewdly.