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Avocados and the European market: excellent development potentials

Potentials and trends. A look at the latest data, in the run-up to the Tropical Fruit Congress

European demand for avocado is growing steadily. Increased volume in the market will continue to drive consumption and in 2030 avocado will in all probability be the second-best selling tropical fruit in the world, right behind bananas. This is what emerges from the Agricultural Outlook 2021/30 report by the OECD (Organisation for Economic Co-operation and Development) and the FAO (Food and Agriculture Organization of the United Nations), which states: “Avocado will overtake the export volumes of pineapple and mango. Growing global demand and large investments in production form the basis for this expansion”.

Even though avocado has the lowest production level among tropical fruits, its growth outperforms that of the other fruits. Production volume is projected to reach 12 million tonnes, three times the value of ten years ago. Mexico, the world’s largest avocado producer, experienced a drop in volume in 2020 but in the long term Mexican supplies could increase by 5.2% per annum to meet the growing demand from the United States. Countries like Peru, Colombia and Kenya are continuing to achieve double-digit growth, with the majority of their exports earmarked for the European market.

The United States and the European Union are expected to remain the key importers. Also according to the OECD/FAO, these areas will account respectively for 40% and 31% of global imports in 2030, in spite of growing trade with other regions, such as China and the Middle East. It will be important for producers and exporters to focus on specific areas where demand has room to grow, but they will also need to diversify their markets.

These are some of the trends set to be scrutinised at the new Tropical Fruit Congress taking place on 6th May at Macfrut in Rimini. Myfruit.it is the media partner for the event and in the coming weeks will publish data and trends relating to exotic and tropical fruit, with a particular focus on the European market. We begin with a study conducted by ICI Business for the Center for the Promotion of Imports from Developing Countries (CBI), which is part of the Netherlands Enterprise Agency and is financed by the Ministry of Foreign Affairs of the Netherlands.

Europe can absorb growing imports of avocado

Avocado has been the most dynamic fruit in the past few years, thanks to an insatiable demand and, at times, a mismatched supply. For its part, Europe can absorb higher volumes of avocado. This already happened during the production peak in 2018 and, to some extent, in 2020.

After the peak volumes of 2018, the main suppliers (Peru and South Africa) reduced their export potential and, as a result, the overall price for 2019 was higher. In 2020, with the COVID-19 pandemic, there was a sudden increase in demand. This demand was satisfied mainly by the retail sector, given that hospitality was closed. As soon as the Peruvian supply season was underway, strong supply drove prices down again, and they reached the lowest level in five years. Thanks to lower prices, consumption remained high. Overall, imports have increased, reaching a volume of 700 thousand tonnes and a value of almost 1.7 billion euro (see figure below).

The advantage of avocados is that they are programmed, i.e. contractually planned by retailers, and promotions can help sell additional volume. This way, a much larger volume can be pushed into the market, boosting consumption. As already mentioned, this is what happened in 2018 and 2020, when it triggered a price fluctuation of 30% . Despite the strong demand for avocado, there is a limit to the Old Continent’s capacity to keep up with the rate at which avocados are grown in order to be exported around the world.

Supply volumes have a great influence on European imports. Import volumes are set to increase further in the coming years, but price drops are also to be expected when supply outstrips demand. These drops will be notable above all during the Peruvian season, but other suppliers from Colombia, Mexico and Kenya are also achieving volumes that can flood the market in the latter part of the year. As a result, new markets, both in and outside Europe, will be needed to make this growing supply sustainable. In the long term (more than three years from now), avocados will become a standard product for retailers in the majority of European countries, with higher volumes throughout Europe, but also a slower growth rate.

ICI Business advice

ICI Business gives producers and exporters a number of suggestions, such as: in addition to European exports, develop new non-EU markets, for example in Asia. Diversification will help to spread the commercial risks and will lessen dependency on a single region. In addition, ensure access to new target markets by checking that your country has a phytosanitary agreement in place with the market in question.
Make sure you can offer a sufficient volume with at least weekly shipments of full containers, as importers favour larger producers in order to guarantee certainty of supplies. Nevertheless, do not prioritise quantity over quality. In the end, wholesalers and retailers want good quality products and reliable suppliers.

Still room for growth in consumption

Avocados are popular because they are a unique, healthy fruit (they are rich in oil) with many uses in the kitchen. But compared to other areas, consumption in Europe is still underdeveloped.

Average consumption in Europe is around 1.33 kilos per capita. In the United States it is 3.8 kg and in Canada 2.5 kg. Mexico, the world’s largest avocado producer, actually consumes 6.5-7 kg per capita. According to FruiTrop magazine, published by Cirad, between 2019 and 2020 avocado consumption in Europe increased by 11%. Scandinavia and France have the highest consumption rate per capita, but growth is most notable in those countries where consumption is still relatively low, namely Germany, Italy and Eastern Europe.

The differences in consumption within Europe and the gap with the most developed consumer countries such as the United States and Canada, show that there is still great development potential. However, with current growth rates, market maturity could be achieved within five to eight years, when consumption becomes more stable. According to the World Avocado Organization (WAO) avocado consumption in Europe could reach the same levels as in the United States in the space of eight years.
Next week we will analyse in detail the European countries that offer the greatest opportunities for avocado.

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