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Avocados to remain steady in volatile times

In this time of uncertainty, we take comfort in the things we can count on.

By that, we mean continued avocado growth in the United States.

A report out this week from Rabobank projects increasing growth in the avocado category, both in retail sales and per capita consumption.

Not only that, but David Magana, senior analyst at Rabobank, said the pandemic hasn’t harmed avocado sales nearly as much as some other commodities.

“Some restaurant chains using avocados are doing very well, even better than before the pandemic,” he said May 7.

He said quick serve and fast casual restaurants, such as Chipotle, continue to sell avocados in take-out and delivery meals.

In the retail channel, sales the last five weeks have been 20 percent higher than this time last year, he said. And considering last summer saw unusually low avocado supplies and more than double average prices, this summer should see year-over-year growth.

“Retail demand has more than compensated the lack of foodservice channel,” Magana said.

He said 2020 will be a much stronger year for avocado supplies than 2019. For starters, California’s crop should be about 70 larger than last year. Planted acreage in Peru is up 8 percent, and production should increase more than 30 percent over last year, he said.

Mexico should also produce more than last year, when supplies struggled during the crop transition in May, June and July.

“We will not see the price spike this summer,” Magana said.

He said even with the COVID-19 pandemic, per capita consumption should increase slightly this year and even more in 2021.

From the report:
“Demand channels have been drastically impacted by lockdowns and shelter-in-place guidelines, especially foodservice, as consumer buying patterns radically switched. We expect that consumers will continue to make healthy choices during virus-stressed times, favoring avocados. The related economic downturn may pull demand for avocados in a non-positive direction. But as a reference, avocado consumption and prices remained firm during the 2009 economic and H1N1 sanitary crises. Controlling for trend, U.S. GDP and prices, our average estimate is that per capita consumption in 2020 will show a modest but positive annual growth, whereas consumption in 2021 may reach 9 pounds per person, as the US economy rebounds.”

Magana said avocados continue to win over consumers with flavor, versatility and health. He even said he’s seen that they are a recommended food for people ill with COVID-19, but he admits, he hasn’t seen the science behind that.

He wrote in the report that as the economy improves, avocado marketers will look to push the product in new ways.
“Efforts to diversity value-added avocado product options through retail channels could intensity during and after lockdowns to take advantage of the increased retail sales. Seeing strategic partnerships with food processors, such as ice cream makers or firms that sell hummus or salsas, an exploring non-food avocado items, such as avocado oil for beauty products, will be strategies to boos demand for avocados in the longer run. However, continued promotion of fresh avocados as a great tasting healthful and extremely flexible food item will continue to be the cornerstone of demand expansion, especially in newer, global markets.”

Greg Johnson is Director of Media Development for Blue Book Services