The fear that rising demand for avocados would make the fruit prohibitively expensive seem to have been unfounded. Calavo Growers Inc. said sharply lower avocado prices were a key challenge in its fiscal fourth quarter, weighing on results at its fresh foods division.
“During our fiscal fourth quarter, the industry experienced prolonged and meaningful downward pricing pressure on per-unit avocado prices,” Chief Executive Lee Cole said in the company’s earnings release. “This was a unique situation, reflective of an avocado industry rapidly transitioning to annual consumption well in excess of two billion pounds.”
Calavo packed 22% more fresh avocados in the quarter than in the year-earlier period, he said, illustrating the rapid pace of growth for the fruit.
“Avocado industry growth continues to be fueled by demographic shifts—specifically, the expanding Hispanic population of the U. S.—awareness of the fruit’s healthful properties and formidable marketing,” said Cole. Calavo is expecting that trend to remain intact in 2016 and the company is expanding operations to meet the demand.
The steep decline in prices will surprise those who earlier this year fretted that avocado prices were poised to rocket higher, as demand is met with tightening supply. More than 80% of the avocados grown in the U.S. come from California, according to trade group Hass Avocado Board, a state that is currently suffering a third year of severe drought.
Other big growers such as Chile and Mexico have had their own issues with water, while Mexican growers have attracted unwelcome interest from drug cartels, The Wall Street Journal has reported.
