Expanding SKUs, innovative and unique promotions will encourage avocado sales.
The avocado industry is in a unique situation these days, with demand often outpacing supply. This is because, in recent years, this fruit has become more of a staple in many Americans’ diets.
“For the past five years, demand for avocados increased 10 percent annually; and in the past year, it increased 14 percent, which is the growth we predict moving forward,” says LeighAnne Thomsen, marketing manager at Mission Produce, headquartered in Oxnard, CA. “However, supply is only increasing 3 percent.”
This is the case despite the fact that there are a variety of sizes of avocados now available in the U.S., the most common classified by PLUs as large Hass avocados 4225 sizes 40 and 48, according to the Irvine, CA-based Hass Avocado Board’s 2015 Shopper Path-to-Purchase study. Small Hass avocados 4046 sizes 60 and smaller are the next most available classification. The 4770 PLU code refers to jumbo-size Hass avocados 36’s and larger.
Consumers do not necessarily follow the same definitions as the PLU system. In a recent quantitative survey by the Hass Avocado Board, 59 percent of heavy users of avocados preferred large avocados, 25 percent medium, 13 percent small and 3 percent mixed.
Those who purchase avocados the most, including heavy, super and mega users, tend to be well educated and higher income consumers, according to the 2015 Avocado Tracking Study by Bovitz Inc., a Los Angeles-based research firm. The category is more developed in the western part of the country than the east.
“Heavy Users” purchase 37 to 119 avocados per year, while “Super Users” buy 120 to 209 avocados annually and “Mega Users” purchase 210 or more avocados per year, according to the Hass Avocado Board report.
In emerging markets where share of avocado sales is less than the share of U.S. population (roughly the eastern half of the U.S.) household penetration of avocados is just 45 percent. And in developed markets (roughly the western half of the U.S.) including the markets where the organization concentrated its marketing support, household penetration is at 66 percent, according to Hass Avocado Board research.
Size availability is often a factor of Mother Nature; therefore, experts say consumer preference isn’t always the key driver of sales by size. There are three groups of avocado sizes. Jumbos are 32’s and 36’s; mid-range are 40’s and 48’s and where the size curve peaks; 60’s, 70’s and 84’s are the smallest sizes. Most bulk business is with 40’s and 48’s.
The majority of bagged avocado business is with the smaller sizes, while retailers are more likely to use jumbo avocados as a value-added offering, since this type offers more fruit. Research demonstrates the value of merchandising two sizes of avocados simultaneously to drive category sales at the retail level.
“The larger sizes preferred by many consumers can be marketed based on versatility of use, and a great display of beautiful California avocados adds to the overall appeal of a produce department,” says Jan DeLyser, vice president of marketing for the California Avocado Commission, based in Irvine, CA. “The smaller sizes appeal to consumers who want an individually-sized avocado as well as to some consumers who either are used to small sizes or prefer their yield. Small sizes can be marketed at a more aggressive price point or for hot multiple pricing.”
“We’re encouraging customers to consider carrying more SKUs and experiment with increasing display space. The data continues to show that it promotes a higher sales velocity.”
— Doug Meyer, West Pak
According to Avocado from Mexico’s (AFM) Source of Growth — Segmentation by Usage Study from 2015, sandwiches are one of the Top 5 use occasions for avocados. Avocados from Mexico built the “Fanwich” campaign with Arnold’s Healthfull bread brand to promote these meal options.
“Fanwich was [a campaign] designed to target consumers looking to include better options for health and wellness in the grocery cart and to inspire them to incorporate Avocados from Mexico on sandwiches,” says Maggie Bezart Hall, vice president of trade and promotion for Irving, TX-based AFM.
Avocado promotional discounts drive greater volume lifts than equivalent declines in everyday price, according to St. Louis, MO-based research firm Fusion Marketing’s 2015 Price Elasticity Study. And, contrary to some opinions, changes in everyday price generate only minimal interaction between large and small avocados. Interaction between the sizes is more evident with promotional discounts than with declines in everyday price.
It is important to note that avocado pricing is generally not a barrier to purchase, impacting only 15 percent of consumers, according to the Hass Avocado Board’s report. Suppliers are noting that one of the biggest trends in result of this price insensitivity is that retailers are now carrying more avocado SKUs in the bulk section.
“We are seeing stores carrying as many as four SKUs of avocados,” says George Henderson, marketing manager at West Pak Avocado, headquartered in Murrieta, CA. “It is very encouraging to see the additions of bagged and organic SKUs being offered.”
There are typically two sizes in conventionally-grown arenas, with a larger sized offering as well as a smaller size. Also, more organic and bagged SKUs are popping up in today’s produce departments. “We’re encouraging customers to consider carrying more SKUs and experiment with increasing display space,” says Doug Meyer, West Pak’s senior vice president of sales and marketing. “The data continues to show that it promotes a higher sales velocity.”
The most popular avocado sizes across all areas of the country and retailer types are the 48’s and 60’s, which encompass the highest percentage of sizes available on a year-round basis. But suppliers say there also is an opportunity to fill in and complement these programs with larger fruit, such as 32’s or 36’s, or smaller fruit like 70’s and 84’s. “This can present a good value opportunity for retailers’ customer base and is something we’re seeing more attention drawn to,” says Meyer.
In terms of sizes, all are merchandised differently, depending on the retailer. “For example, Whole Foods Market often goes for the bigger avocados, since that’s what their customers are looking for,” says Thomsen of Mission Produce. “While the chains with Hispanic demographics are more apt to choose the smaller sizes.”
Mission Produce offers avocados in different sizes for its bulk and bagged program. Because prices fluctuate almost daily, the company’s focus is building avocado business on value-added and quality product. Retailers understand the price volatility and will typically ride it out. While wholesale customers are more apt to buy based on price, so these purchases will fluctuate between large and smaller sizes.
“Because retail is the base of our customers, and they can’t switch avocado sizes each week, we try to keep prices as stable as possible,” says Thomsen. Mission Produce supplies fruit year-round and sources its avocados from five countries of origin that have different peak months to work through seasonality issues. While its winter avocados are sourced from Mexico, the California season begins in February, and Peruvian avocados are best at the end of May or early June.
Calavo Growers Inc., based in Santa Paula, CA, is currently producing avocados in record volumes. “We improved our customer demand forecasting as well as our fruit costs,” says Rob Wedin, Calavo’s vice president of sales and fresh marketing. Since July of 2015, its avocados have been large and extra-large, rather than the 48’s and 60’s that were previously popular. “Price plays an important role in wholesale and retail sales,” says Wedin. “Other key factors are ripeness, packaging and dependable service.” Buyers of Homestead, FL-based Brooks Tropicals’ SlimCado brand are attracted to its larger size and cost per pound. “This tells the novice buyer that it’s not just a huge Hass avocado,” says Mary Ostlund, Brooks Tropicals’ director of marketing.
Retailers are getting creative with avocado promotions that provide added visibility for this fruit, along with usage information. King’s Food Markets (a 24-plus store chain headquartered in Parsippany, NJ) features avocados on its big bin stacks and promotes the fruit with guacamole ingredients during football season. This includes limes, garlic and large Mayan sweet onions. The stores also have a wooden cart to merchandise avocados with flatbread, tomatoes on the vine, limes and onions, along with dipping chips.
According to one store’s produce manager, promotions are centered around ripening, and stores will bring in extra cases to ensure ripe fruit is on hand. It’s important to plan ahead, since customers will typically shun unripened or overly ripe avocados. “We like to cross-merchandise avocados if we get a lot of bins and point-of-sale material from wholesalers,” says Brian Gibbons, produce director at Highland Park Market, a five-store, Connecticut-based chain.
The markets carry bulk and 48-count Hass varieties as well as organic bulk and bagged product. Highland Park Market held a big avocado contest last January surrounding the Super Bowl, creating a football field display for the fruit. “I’ve heard 140 billion pounds of avocados sell during Super Bowl season,” says Gibbons. “Still, this is not a seasonal item, and pricing has been great for the past two years.”
Avocados are on ad for the stores at least once a month, and typically every other week all year long, due to a strong supply out of Mexico. With marketing and merchandising this fruit, it’s important to be aware of supply. Generally, avocados from Mexico have three selling seasons. The season opens with a summer bloom that lasts from July through September. In October, the early season boom is ready. This selling season usually extends through December. The normal crop season runs January through June. Super Bowl promotions are often the peak volume for Mexico.
“Because retail is the base of our customers, and they can’t switch avocado sizes each week, we try to keep prices as stable as possible.”
— LeighAnne Thomsen, Mission Produce
“This year, California avocados will maintain a steady promotable volume through Labor Day,” says Wedin of Calavo. Even though this fruit is a strong seller year-round, it’s important to target the major selling occasions with store promotions. In addition to the Super Bowl, these include Cinco de Mayo, the Fourth of July, Labor and Memorial Days, Halloween and Thanksgiving.
Filling in the gaps between these events is also key. “We encourage retailers to work in promotions specific to their stores that involve traditional advertising combined with other tie-ins, such as increasing display size and secondary display bins, cross-promotions, and in-store and digital couponing,” says West Pak’s Meyer. AFM uses shopper insights when selecting promotional opportunities and partnerships. “Opportunities exist to help shoppers find balance without sacrificing taste through Fanwich,” says Bezart Hall of AFM.
“Sandwiches have so many opportunities as they are eaten at home, on the run, at school, work or before and after practices,” she says. “Avocado displays can be placed in front of dry or refrigerated cases to tie in fresh items from lettuce, tomatoes, onions, cucumbers, sprouts, dressings in the produce department to CPG items such as mustard, ketchup, drinks like bottled water, pickles, meats etc.” With the current healthy supply of this product, retailers can now more easily map out future promotions for avocados, which wasn’t the case years ago. Some also are enhancing packaging programs with custom labeling.
For the current California season, Mission Produce is debuting its California Heritage sticker. This will be a small callout for the state’s fruit. “Another thing we’re experimenting with is a sticker printer that prints on demand,” says Thomsen.
As avocados run through the packing line, this sticker will be printed with the size and barcode as well as different callouts. These messages can include ripening tips, specific holiday promotions or customizations for retailers.
Mission Produce continues experimenting with different technologies, which can be tougher with bulk fruit since there’s virtually no packaging. “We’re always working with customers to help them display [product] properly and [provide] in-store communicate about ripening practices,” says Thomsen.
Expanded Eating Occassions
What has helped drive avocado sales in the U.S. is the fact that consumers are more aware of the fruit’s versatility. “Each customer has a sweet spot to drive sales volume, with avocados being a major part of produce programs,” says Meyer. “If these products are on ad or at a reasonable every-day price, product generally turns more quickly. It’s about figuring out the formula that works best for the individual retailer.”
The biggest benefit is the ability to tout the healthful aspects of avocados, which helped propel its growth. Versatility is also a prime merchandising tactic. Avocados are not just associated with guacamole, but have been incorporated into many recipes. “What’s helped accelerate growth is the versatility of avocados and the nutritional benefits they offer,” says Meyer. “Avocados apply to all meal occasions, from breakfast, to lunch, to dinner, to appetizers, to desserts, and even cocktails. It has appeal that spans the spectrum.”
Avocados are also in the media more often. Recent coverage touts avocados as good food for nursing mothers and ideal as a first food for babies. “Many pediatricians recommend avocado as a perfect first food for babies, so supermarket registered dietitians (SRDs) could include that information in new parent packages,” says Brooks Tropicals’ Ostlund.
This fruit is even one of the most pinned food items on the popular Pinterest social media platform. Although top uses continue to be in guacamole and salads, the California Avocado Commission is seeing lots of new breakfast applications as burger toppings and blends as well as smoothies. In recent years, the CAC developed programs promoting California avocados for breakfast and snacking. The result has been a decent jump in usage — particularly for breakfast.
Brooks Tropicals’ SlimCado’s season runs June thru January. During the summer, promotions focus on how SlimCados are geared for outdoor eating as a mayonnaise alternative. In the fall, avocado marketing highlights tailgating and school lunches. “When people think about their kids’ lunches, they start thinking about their own,” says Ostlund. “So lunch-to-go displays can be gourmet, with adults giving their own work lunches some thought.”
Brooks Tropicals’ online SlimCado recipes have the biggest hits during the holiday season. “SlimCados and tomatoes are a perfect combination, whether as additions to salads or topping a sandwich at lunch or an omelet for breakfast,” says Ostlund. “Also, SlimCado and tomato displays delivers results.”
“SlimCados and tomatoes are a perfect combination, whether as additions to salads or topping a sandwich at lunch or an omelet for breakfast.”
— Mary Ostlund, Brooks Tropicals
The company promotes its line as an ingredient for salsas, relish and chutneys. Each summer, Brooks Tropicals and Concord Food Mix put together a guacamole sweepstakes. Last year, the entries quadrupled, according to Ostlund. “Demand is universal, and packaging innovations will be big in the next year,” says Thomsen.
Many suppliers are expanding their avocado programs to bring added attention at the store level. For example, bagged avocados are becoming a bigger part of Mission Produce’s business, which used to be primarily bulk. This factor is attributed to the increased usage by consumers. As a result, the company is working on a variety of bagging options.
The California Avocado Commission built a foundation of marketing support to encourage consumption of avocados overall since 1978 and recently enhanced its promotions of this fruit. “This year, we will be expanding our target audience and reaching them wherever they are to encourage them to purchase more California avocados,” says DeLyser.
The CAC will utilize traditional media and innovative, tightly-targeted new digital and experiential tools over the next several months. Its integrated marketing program continues to provide public relations support, nutrition communications and customer-specific promotions for retailers and foodservice operators. The CAC works with SRDs on a variety of programs, and this year will include content with ideas for busy Millennial moms, encouraging using California avocados in easy, appealing meals for children.
While avocado sales and consumption growth has been impressive during the past decade, there remains a lot of room for expansion. The growth of avocado consumption is anticipated, and this includes purchases of both bulk avocados and multi-avocado packages. There is room in the category for increases in household penetration, purchase frequency and units per purchase.
Bovitz’s tracking study found that 56 percent of adults (ages 25 and up) said, “I love avocados.” In the California Avocado Commission’s ad markets, that number jumped to 75 percent. As long as the market continues to deliver quality avocados to consumers there is a bright future in store. “We foresee continued growth of bulk and bagged avocado sales,” says West Pak’s Meyer. “The projections for increases in consumption continue to look very promising all across the U.S., with the highest increases coming from the east.”