Australian avocado industry responds to reports that demand is declining

Avocado Feb. 3, 2019

Avocados Australia says there is no evidence of a reduced demand trend, rather it has been increasing year by year.

It follows a report in the Wall Street Journal suggesting stocks are falling dramatically because avocado demand has gone markedly down. It reported the Costa Group’s stock is down 38 per cent and has warned investors that it may miss its targets as demand for tomatoes, berries, and avocados has declined.

However, domestic demand for Australian avocados continues to be steady, according to the industry body, with Australians consuming 3.5kg of avocado per person in 2017/18, off the back of a steady upward trend for the past 20 years. CEO John Tyas says it is the industry’s job to ensure it continues to grow existing domestic and international markets and develop new ones.

“The rapid rate of increase in avocado production will put pressure on the domestic market and makes it imperative for the industry to access and develop new markets,” he said. “The expected growth in supply is well above previous consumption growth and the expectation is that significantly more fruit will be marketed to offshore markets as the domestic market approaches saturation.”

The latest available data from Nielsen (to September 2018) does indicate a small decrease in the average amount spent ($39.90 compared to $41.80) and average weight purchased (5.1kg compared to 5.7kg) compared to the previous year. However, the percentage of households buying avocado grew 1 per cent, to 71 per cent. Figures from the quarter ending in December are yet to be released, however Mr Tyas says the records indicate a large amount of fruit on the market.

“To illustrate how this is reflected in the current market, there was 26 per cent more fresh avocado (Australian and New Zealand combined) in the market in December 2018, compared to December 2017,” he said. “Australian avocado production has increased significantly from 34,515 tonnes in 2005/06 to 77,000 tonnes in 2017/18, in response to domestic demand. We are very confident that Australia will be producing about 115,000 tonnes of avocados per year by 2025.”

He does admit that existing and potential new growers need to carefully consider their future plans based on the best information available. Avocados Australia invests heavily in industry data collection, analysis and reporting, and the 2018 annual OrchardInfo Report indicated Australia now has more than two million avocado trees in the ground.

“About 1.25 million trees were planted in the past five years,” Mr Tyas said. “This information has been the base for the industry’s moves to continue its strong domestic marketing campaigns, work with the relevant national and government bodies to gain access to additional international markets, for example Japan where the first Australian fresh avocados landed in December 2018, and supporting growth in our existing markets including Malaysia, Singapore and Hong Kong. The Australian avocado industry has the potential for a strong, sustainable future based on delivering consistently high-quality fruit to our consumers, no matter where they are. The key for the industry is to continue to improve quality, given it is very challenging to get fresh product to the retail shelf in that pristine condition every time but that’s our goal.”

As production increases, Mr Tyas says the industry cannot be content with flat growth, and needs to continue to increase sales volumes across the board. “Avocados as a product tick a lot of boxes for consumers,” Mr Tyas said. “It’s a very unique product, and there’s nothing else quite like it. The avocado can take you from breakfast to dessert and it already has a place in the shopping baskets of about 70 per cent of Australian households. Marketing and promotion efforts will need to work even harder in the future.”

Source: Fresh Plaza

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