The Avocado Market
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Transcript of The Avocado Market
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The Avocado Market: AGrowth Market In a MatureFood Industry
Dr. Roberta CookDept. of Ag and Resource EconomicsUC Davis
For the Avocado BrainstormingSession
October 2003
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US Avocado Production and Imports
1994-2002 (Utilization has doubledsince 1994!)
20,00070,000120,000
170,000220,000270,000
320,000
1994 1995 1996 1997 1998 1999 2000 2001 2002
US
Production
Other
Mexico
Chile
Source: USDA/ERS, Oct. 2002 and Dept. of Commerce, imports CY, production crop year
Import Share38% in 02 vs. 18% in 94
Metric Tons
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Percentof U.S.grocery
storesales
0
10
20
30
4050
60
70
1987 1993 1995 1997 1999 2001
Top 4
Top 8
Top 20
U.S. Food Retail Concentration
Twenty largest food retailers captured 57%of total grocery store sales in 2002P
P PreliminarySource: ERS/USDA and Census, modified by Cook
3145
57
2002P
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2002 Market Share of the Top 5 Retail ChainsPer Selected Country, % of Supermarket Sales
Top 20 Europe-wide share about 60% in 2002
99%
97%
93%
87%
85%
81%
80%77%76%
73%
67%
64%
36%
47%
USABrazilUKSpain
GermanyArgentina and PortugalHungaryMexicoFranceBelgium
NetherlandsSwitzerlandNorwayGuatemala,Sweden, New Zealand
Source: M+MPlanetRetail, Cookand Reardon
Source: M+MPlanetRetail, Cookand Reardon
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Key Drivers global retail players
global retail brands
growing role of private labels
retailersupplier contracts/partnerships
declining role of spot market
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Competing in a Value-Driven Market Grocery retailers have beenlosing share to foodservice for
decades, now to value retailers. Channel blurring has caused theretail landscape to be overstored.
Plus, foodservice channels compete
with all forms of food retailing whichtend to offer ingredients to prepareinstead of meals to eat.
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Competing in a Value-Driven Market
Conventional grocery retailers mustidentify value propositions they can own ifthey are to remain competitive! Fresh
produce can be a point of differentiation(including ripe avocados). Avocados have further room for growth inboth retail and foodservice markets, but
these markets are increasinglycompetitive and buyers will demand moreservices from suppliers, such as categorymanagement.
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Competing in a Value-Driven Market Bottom line: more structural change expected in the US
and global grocery industry and more pressure onsuppliers! But buyers may be more willing to cooperatewith suppliers on information-based programs designedto increase retail sales and profitability.
Avocados are well-positioned in this regard becausemore is spent on market research and promotion thanfor most other fresh produce commodities.
HAPO will further stimulate demand and improveinformation flows and analysis to the benefit of playersat all levels of the system.
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$168
$163
$131
$129
$228
$228
White/Other
African-
American
Hispanic
US Fresh Produce Consumption by Race
Benefits Avocados!, $ Per Household,,
Source: Demographics of Consumer Food Spending 2002, The Food Institute
Vegetables
Fruits
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U.S. HispanicPopulation Projections, Millions
Source: Census 2000, U.S. Census Bureau
2000 2010 2020
35.343.7
55.2
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0
5
10
15
20
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Carrots Bell Peppers Broccoli
Tomatoes Avocado
U.S. Per Capita Consumption of
Selected Fresh Produce, 1985-2002
P=preliminary
Source: USDA/ERS, July 2003 Vegetable Yearbook; Oct. 2002 Fruit Yearbook
Pounds per capita
P
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Factors indicated by US consumersFactors indicated by US consumers
as influencing fresh produce purchases, 1990 vs.as influencing fresh produce purchases, 1990 vs.20002000
Factor 1990 2000
Taste/flavor 96 87Ripeness 96 70Appearance/condition 94 83Nutritional value 65 57Price 63 47
In-season 38 41Growing region/country of origin 17 14Organically grown 17 12Brand name 9 n/a
Rating of extremelyor very important %
n/a =
Not available
Source:Fresh Trends'90 and 2001
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Avocado OutlookAvocados will now beincluded in the National 5
A Day Program due torecent changes in the NCIcriteria!
This should help improvetheir nutritional/healthimage
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Avocado Outlook Demand for avocados willcontinue to rise due to favorabledemographics and consumerpreferences
HAPO should help stimulate yr-round demand and retailer
attention, important formanaging the expansion inimports
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Avocado Outlook Greater Mexican imports willpartly cannibalize Chilean volume
in Aug. and Sept., mitigatingthe net import effect Any lower prices for Ca.avocados will be partially offsetby higher consumption/demand,in part stimulated by lowerprices
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Conclusions
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Two Basic Strategies Low-cost producer/shipper Differentiated producer/shipper
marketing a premium product orproduct with identifiable preferredcharacteristics that arecommercially perceived and valued
First strategy increasingly difficultas buyers push more demands andservices upstream to suppliers must provide consistent quality!
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The US Avocado Consumer
Presented by Jan DeLyser to
Brainstorming 03October 31, 2003
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Presentation Overview
U.S. Avocado ConsumerWho, Where, When
2003 - 04 U.S. Avocado Market &Marketing Plan
Market Size Strategic Considerations Plan
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U.S. Avocado Consumer
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U.S. Avocado Consumer
Women 25-54 years of age
$50,000+ income Upscale, college, full/part time work
Health conscious
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U.S. Avocado Consumer
Open-minded, adventurous andenjoy a variety of cuisine
Avocados make any dish or mealspecial
Dont want to waste any of the
avocado
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East Central
North East
PacificSouth East
South West
West Central
% U.S. POPULATION / % AVOCADO VOLUME
U.S. Avocado Consumer
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East Central
North East
PacificSouth East
South West
West Central
% HOUSEHOLDS PURCHASING FRESH AVOCADOS BY REGION
U.S. Avocado Consumer
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U.S. Avocado Consumer
Per Capita Avocado Consumption
pounds
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U.S. Avocado Consumer
Why they purchase avocados:
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U.S. Avocado Consumer, 1994-2002
Price as a Barrier to Avocado Purchase
26%
31%
0%
10 %
20%
30 %
40 %
1994 1995 1996 1997 1998 1999 200 0 200 1 2002
PriceasaBarriertoP
urchase
- 5 Points
Advertised Markets
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U.S. Avocado ConsumerWays Avocados Used Most Often
Guacamole (91%)
Part of Mexican Side Dish (80%)
In a Salad (75%)
Eaten Plain (74%)
Sandwich/Burger (71%)Part of Non-MexicanEntre (53%)