M3W2 Deep dive into Avocados
Global demand for Avocados has never been higher.
Avocados are a healthy source of monosaturated fat, or so-called the “healthy fat.” They are also rich in vitamin K, fiber, and antioxidants. Due to its delicate buttery texture, Avocados are used in various dishes including guacamole, the most popular way of Avocados are prepared. They are also served fresh, sliced, smashed or simply cut in half.
Avocados were first introduced to the American market in the 90s and since then, demands have only been increasing. There has always been a steady increase in demand for Avocado in America, the biggest Avocado importer. In 2017, the demand for Avocado began to expand to the global market.
Production Volume Trend of Avocado
In 2017, there was a huge supply shortage from some of the biggest Avocado producing countries. Mexico, the biggest Avocado exporter in the market, was able to produce only 80% of its average production volume due to Avocado’s bi-yearly growth cycle. America also met supply only by half of its average production amount. Peru’s Avocado supply chain was also unstable due to unfavorable weather conditions.
In 2018, Avocado production volume is expected to recover to its average amount both in Mexico and America . Whether supply will actually meet the demand remains uncertain: California farms are still impacted by the devastating wildfire from last fall, and Avocado trees take many years to grow and fruit.
Current Global Price Trend of Avocado
In 2017, Avocado prices spiked due to several factors including the bi-yearly growing cycle of Avocado (2017 being the year of low production), the weather and the unexpected surge of demand in China. China’s middle class is the main consumption party of Avocado, and demand for Avocado in China has been steadily growing in accordance to the growing size of China’s middle class. The price hit its highest in summer of 2017 when the supply was at its lowest, and demand at its highest.
Although the supply chains seem more stable and production amount is expected to meet its average amount, prices are likely to remain high due to Europe and China’s fast growing Avocado market and America’s stable increase in demand.
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