South African avocado producers are in a confident mood as they look to consolidate their position in core markets, while exploring opportunities elsewhere.
That’s the view of Subtrop’s Derek Donkin, as the industry enters the 2015 season with prospects of a slightly lower crop than last year.
“We will be shipping around 13.5 million cartons this year,” Donkin says. In what he terms as an off-season after last year’s record crop of 15m cartons, Donkin claims the industry is nevertheless pleased with the crop forecast because it is not the same percentage drop compared to past off-seasons.
“We are only 10 per cent down on last year, and this is due to new plantings coming into production. These plantings reflect the confident mood in the business, and are an indication of a new phase of growth in our industry,” he says.
Donkin tells FPJ that almost 98 per cent of the exports are destined for the UK and the EU, although he notes: “We know that there are some trans-shipments to other destinations in eastern Europe, but it is difficult to provide statistics about that.
“For us the UK remains one of our most important markets and we have made great strides there since the first exports back in the 1980s.”
He says promotions played a major role in these advancements, with consumption doubling between 1996 and 2000. “The penetration of avocados into British households increased from 12 per cent to 25 per cent between 2000 and 2006.
“While we have taken a strategic decision to scale down our promotions and awareness programmes in the UK in favour of trying to open up new markets elsewhere, the UK remains crucial to us and we cherish the relationships we have built up there. We are marketing 19 per cent of our total volume to UK consumers.”
Donkin adds that the South African industry is extending plantings by about 500ha a year, and there are now around 15,000ha under production. “To keep on growing we also have to grow our markets, and we can only do so by opening up new marketing regions for our fruit. Gaining access to the US is a priority and we are channelling a lot of our resources in negotiating the product protocols required to get in there.”
One of the major changes in the South African industry during the past decade has been the switch from being almost a totally green-skin-producing industry to a majority Hass producer. “This, along with developing our local market for avocados, has brought about new options for the industry. It is part of the reasons why we are so optimistic for the future,” Donkin says.
Apart from expanding into the North American market, South Africa also sees great potential in markets in the Far East. “We are working to get access to China as well, which will be crucial for us to sustain an industry which will also remain a strong player in our core markets,” he adds.
As for the views on the ground in the UK about the avocado market over the last few months, Mark Everett, business unit manager for avocados at Worldwide Fruit, says: “There has been good demand, with our key customers showing year-on-year volume and value growth.
“Raw material prices have generally been high due to the wider European market showing good demand, and the main producing regions – particularly Chile – having a smaller export volume than in the previous year. Consumption is on the increase with the main avocado markets showing good year-on-year growth. In general this product is performing well for our grower base who can produce the desired quality, with good yields in a very cost-efficient way. We are encouraging additional plantings, but in the right strategic locations.”
The weather, as ever, has played its part in proceedings. Chile had significantly less export volume than the previous year, according to Everett, and in recent years there have been concerns about available water for irrigation due to droughts in some regions of the South American nation. Elsewhere, Everett says Israel has seen some cold snaps in the last year, with frost and storms affecting the quality of avocados in various locations.
Robert Cullum, of UK-based avocado supplier Pacific Produce, adds: “Israel has been fairly consistent with regular arrivals, and, importantly, not flooding the market and then starving it. At the start of the season there were some oversupply issues resulting in low prices in the market, but that seems a long time ago now.”
Ine Potting, MD of Netherlands-based avocado supplier Mission Produce Europe, also points to problems caused recently by heavy rain in Peru, and “bad weather” in South Africa. Potting tells FPJ that this isn’t the best time of year for avocados: “March and April are usually undersupplied because of some origins ending supply, and others not ready to supply, and this means prices go up too,” she says.
Demand for avocados in the UK is currently outstripping supply, although Cullum cautions: “This situation can reverse very quickly if market prices get too high – it can attract higher volumes through lower-quality exports.”
As for what is behind this demand, Everett suggests: “In general, the quality of the product is now far more consistent, and most of the growth has been seen in the ripe and ready sector of the category. Avocados seem to be more widely recognised and available in a wide range of formats, and are being more widely used in products like sushi, sandwiches and as a salad ingredient.”
Sales can still be boosted, though, with the aid of retailers and improved marketing: “In some stores, avocados are only allocated a small area of the fixture, and with avocados still being an impulse purchase for many, increasing shelf space should help drive sales. There are significant nutritional benefits gained from eating avocados, but there is still confusion regarding this. Clear communication of the health benefits and inspiring usage ideas should help.”
Cullum, meanwhile, also thinks it is at retail level where the avocado market still has work to do: “Talking from a UK perspective, as we price per piece in the majority of retailers, we focus our attention on a narrow range of sizes within the crop, and this can make the UK unattractive for growers who want or need to sell the whole crop,” he says.
“I am not sure of the answer, but if there is a way to sell all the sizes, this would be a major change for us as farmers, and enable larger and more accurate programming.”
As for product innovation, Cullum is clear in what he’d like to see in the near future: “True long shelf-life guacamole without any additives would be a fantastic innovation – if it can be done through packaging alone.”
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