$3.5 billion was the approx. total export value of avocado from Latin American countries (LAC) during 2016 – 18 which is further expected to increase due to per capita income growth and changing consumer tastes towards more premium tropical fruits, in particular, avocados, as per FAO estimates. Moreover, the change in consumer preferences shifting towards higher consumption of tropical fruits in developed regions, especially to avocados, is expected to stimulate a further expansion in trade. Additionally, population growth, the increasing awareness of nutritional benefits of tropical fruits that are inclusive of but not limited to avocados; the repeated identification of the same as one of the nutritional super fruits; the growing inclination of supplanting the consumption of refined sugar and widespread availability are few of the factors that are poised to drive the avocado market growth during the next few years. Moreover, according to FAO, around 80% of avocado cultivation in Mexico is carried out by smallholder farmers who are endowed with lands of 5 ha or less, each, which suggests that contingent on fair and inclusive trade conditions, tropical fruit farming is a source of substantial income for smallholder producers, which is looking good for the avocado market.
Nevertheless, increasing occurrences of erratic and extreme weather conditions along with climate-change risks pose a considerable threat to its production, subsequently to the market, especially given that many production zones are located in the LAC regions. Ramifications arising from deforestation, forest fire, irrigation, land clearing, among others add further stress to the production and trade, posing as a possible endangerment to the commercial viability of the food and beverage industry as a whole. Further, factors such as mounting price pressure, phytosanitary restrictions, trade tensions, and volatile freight costs have the potential to deter the global avocado market growth to a certain extent. From the perspective of prices, export unit values of avocados had displayed a downward trend in 2018 as a result of a rapid supply growth facilitated by Mexico, which is the home to leading exporters and producers around the world. There was a registered decline by 17% form the peak annual average of USD 2 900/ton registered in 2017.
On the other hand, owing to a rapidly growing global demand, export volumes of avocado surpassed those of mango in 2017, despite weather-related declines experienced in 2017, and went on to occupy a significant share in 2018. The year 2018 witnessed the prevalence of favorable climatic conditions and lower occurrences of destructive climatic events in the case of tropical fruit-producing regions, like that of avocado. This supported a robust supply of the avocados. Avocado production is principally carried out in Mexico, and it’s the source that caters to global and domestic markets. Avocado production in Mexico reportedly accounted for more than 1/3rd of global output in 2018, which is an estimated increase by 11 % from 2017 stemming from significant investments in yield-improving technologies and area expansion. Further Mexico is advantaged with three factors which give it an edge in the avocado market, which are as follows:
- all-season production
- ability to produce higher quality Hass variety
- proximity to the USA
Further, benefitting from similar investments, production in the Dominican Republic, the world’s second-leading producer of avocado experienced an expansion by an estimated 10% in 2018, reaching approximately 700 000 tons. Further, production in Peru had reportedly registered an estimated 13% increase over 2017, due to an increase in harvested areas that was to the tune of approx. 8 %. The increase was due to strong import demand from the European Union, the largest export destination for Peru. Concomitantly in 2018, Peru was recognized as the 3rd leading avocado producer with an 8% volume share in 2018.
To surmise, in 2018, the world production of avocado was to the tune of an estimated 6.3 million tons in 2018 which reportedly represented 6.7% increase from its 2017 production according to FAO, Further, among the principal tropical fruits avocado has experienced the fastest growth in production during the last decade, at a registered annual average rate of 6 % mainly owing to an increase in the areas of harvest, which in turn has been driven by surging global import demands. The import demand had reportedly expanded at an annual average rate of 13 % over the previous decade as per FAO. Moreover, to put things into perspective, approximately 35 % of global avocado production was destined for export markets, in comparison with approx. average of 3% to 5% pertaining to other major tropical fruits. With respect to the quantum of trade, the global exports of avocado increased to 2.2 million tons in 2018, which was reportedly an industry first, and represented a 15.9% increase from 2017. The volume also reportedly outperformed 12.6% of the average annual growth rate observed over the previous decade. Moreover, Mexico accounted for an estimated 54 % of avocado exports in 2018 which encompassed the shipment of 1 million tons of avocado to the USA, representing a 77% share of its exports. The main export destinations for avocado are the USA, which reportedly accounted for nearly half of global shipments in 2018, followed by the EU that accounted for 28% of the import.
Moreover, the per capita fresh fruit retail availability of avocado was reportedly 3.6 kgs in 2018., and that of the EU was 1.4 kg on average. The principal avocado consuming markets in the EU, which are France and the United Kingdom reached an estimated retail availability of 1.7 kg and 1.5 kg per capita, respectively. Besides, health-conscious and vegan consumption proclivities, demand for avocado is also fueled by marketing activities which are integral to facilitating a healthy avocado market growth. For example, as per FAO, every box of Hass avocado imported from Mexico, Chile, and the Dominican Republic are financed through a fee of USD 0.6 and made commercially available at popular events in the USA. Further, establishing new business entities to cater to the demand of avocado too, has contributed to the market growth, for instance, the launch of a spinoff called The Avocado Company, which is a wholly-owned subsidiary of the Fresca Group Ltd based out of the UK was reportedly announced in June 2018. It was launched with the rationale to offer a year-round supply of avocado to meet the anticipated growth in demand for avocados in the UK.
Further demand for avocado also incentivized the launch of Grade 2 avocados during March the same year, which otherwise are generally sold to foodservice distributors and industrial users in bulk configurations, due to its external scars and blemishes that haven’t been able to facilitate its wide retail merchandising. Unveiled by Mission Produce, a subsidiary of Cabilfrut S.A. making then commercially available in 2lb and 3lb bags, the organization has capitalized on growing consumer awareness of the health benefits and acceptance of visually imperfect produce, thereby facilitating further growth of the market.
Further, avocado chips startup AvoLov based out of Oregon, the USA had reportedly perfected dehydrating avocados in 2018 to produce crispy avocado chips followed by two years of intensive research, ultimately capitalizing on the growing preference for the fruit, which was later made commercially available, the same year during March, in three flavors. The application of avocado has also transcended the boundary of edibles and have moved over to personal care as well. This was exemplified by the launch of Avocado Melt Sleeping Mask by Glow Recipe that comprises 74% of avocado, in November 2018. The product reportedly employs the flesh, extract, oil, and butter components of avocados to facilitate skin nourishment, among others during the winters. Thus to improve large-scale commercialization of avocado, secondary product development has also been a major facilitator for the avocado market growth.