Avocados are a large and growing fruit category with interesting margins for retailers. European top executive Wim Destoop of market leader Westfalia Fruit points to the potential of additional consumption occasions.
Large growth potential
Of the 2.8 million tonnes of avocados traded worldwide, the United States account for 49 %. The most dynamic region, however, is Europe, accounting for 33 % of the world’s consumption, with an annual average growth rate of 9 % over the past four years. Per capita consumption still varies widely: from 0.7 kilograms in Hungary to 2.6 kilograms in Norway. That opens up prospects.
“If you know that consumption in the US is 4.1 kilograms per capita, you can see that the growth potential is still very high”, says Wim Destoop, regional president Europe at Westfalia Fruit, the world’s largest vertically integrated avocado producer. “In Spain and France, penetration is already over 70 %, in Germany just over 40 % and in Italy only 17 %. The potential is also high in Eastern European countries: Poland grew by 43 % last year.”
Breakfast product
The avocado is the seventh largest fruit category worldwide by volume and may soon overtake the pineapple, which today holds sixth place. In fact, in terms of turnover, it is already the fourth largest fruit category. For retailers, avocados are a very interesting category, Destoop stresses. Penetration is still relatively low and growth will remain significant over the next five to ten years, at 8 to 10 % a year in Europe.
“We need to avoid avocados becoming a commodity product, we do not want them to become the next banana. That is not always an easy trap to avoid, but if we work across the category with strategic promotions, long term pricing and engaging marketing campaigns illustrating the health benefits, versatility and unique taste it is possible. Consumers are willing to pay for quality.”
A focus on penetration and frequency can further develop the avocado category, says the supplier. Focusing on additional consumption occasions offers opportunities: in most European countries, people eat avocados mainly with dinner. Germany is an exception: there, breakfast – think avocado toast with egg – is the main occasion. Recipe inspiration can encourage consumption throughout the day.
Don’t squeeze
Barriers for consumers are price and doubts about ripeness. It is very important to treat the delicate fruit well on the shop floor. “And not squeezing it: we all do it, but it is pernicious. There are solutions: think of the avocado scanner that Jumbo is currently testing. We have to teach consumers not to buy the avocado 100% ripe. If you want to keep them longer, it’s best to put them in the fridge. If you want them to ripen faster, put them next to bananas or wrap them in paper.”
The health benefits are a key selling point: avocados are a source of good fats, vitamins, minerals and fibre. Offering convenient avocado-based processed products will also lift consumption: salads, smoothies, guacamole, sauces, margarine or frozen convenience products that are finding growing uptake in both foodservice and retail.
Trend towards convenience
The recent acquisition of Belgian avocado processor Syros will contribute to this: “It is one of the few sizeable players in northern Europe. Syros supplies just about all major supermarket chains in Western Europe and is also growing in the Scandinavian countries and Eastern Europe. The potential is high and Syros can grow to four times the revenue of today.”
In the trend towards convenience, the UK is already furthest along. “There, avocados are displayed chilled in supermarkets and they do cross-merchandising by presenting avocado spreads alongside the fruit, for example. This stimulates consumption of both products. Through category management, we can expand the category by putting the shopper more in the centre. We want to become the strategic partner for retailers in joint business planning and category management. From a purely quotation-based relationship, we want to move to a fair long-term partnership to further develop the category.”
Persistent myths
The well-functioning World Avocado Organisation promotes the avocado fruit and makes efforts to dispel persistent myths. “That avocado cultivation would be bad for the environment, for example. We grow as sustainably as possible. And we almost never use air transport, transport is mainly by sea.”
Greenhouse gas emissions from plant products are ten to fifty times lower than those from animal products, Westfalia Fruit argues. Mature avocado trees can absorb up to 20 kg of CO2 a year, and avocados grown in regions with high rainfall can get almost all the water they need directly from the rain. In other regions, modern farming techniques help reduce water consumption by up to 40 %. Avocado producers invest in local community projects such as health care, education and training or infrastructure.
Impact of climate change
Originally from South Africa, Westfalia Fruit was founded in 1949 by geologist Hans Merensky, a forerunner in sustainable agriculture. Today, it is the number one globally, operating in seventeen countries and on five continents with a share of about 15 % in a fragmented market. The company produces not only in South Africa but also in Chile, Colombia and Peru, for example. In Europe, there are plantations in Portugal and partners in Spain. Local sourcing is becoming more important as retailers are sensitive to it. Morocco will play a bigger role in supplying the European market.
However, avocado cultivation is experiencing the impact of climate change: this is putting pressure on production in Mexico, Chile and Spain, among others. Moreover, climatic conditions also lead to smaller fruits. “By growing in different regions, we can guarantee year-round supply. Good relationships with our growers are essential. We support them towards better yields and lower environmental impact. We maintain fair relationships, in good and bad years.”
