Article 30 January 2020
Avocado consumption in Europe has grown five-fold since 2000, despite only a fraction of the production coming from within Europe, resulting in a heavy reliance on imports to keep pace with the burgeoning demand. The growth in the European market is such, that 80% of the world’s avocado production is now consumed between the US and Europe. This heightened demand led to exaggerated fluctuations in the EU Avocado prices in 2018 and 2019, illustrating the high sensitivity of prices as a result of import availability. In this article we look at the growing demand in the EU, the factors affecting supply at origin and the relationship between prices and imports in the EU.
European avocado consumption was estimated at 750,000 mt in 2019 by the World Avocado Association, up 100,000mt on 650,000 mt in 2018. In the United Kingdom, annual imports increased in 2018 to almost 6 times what they were in 2000, at 81,140 MT Avocados (Eurostat). In real terms, each UK citizen went from consuming just 1 avocado in 2000; to 7 in 2018.
Spain is the only European nation producing and exporting avocados. Despite 14% annual growth in production output, the 61,000 mt produced only equates to around 8% of EU consumption. Therefore, the EU market is heavily reliant on imports. The major suppliers to the European market are Peru, Chile, South Africa, Israel, Kenya and Mexico, with increasing volumes originating from Colombia and Brazil in the last 5 years. The largest origin is Peru, with 35% of EU Avocado imports in 2019, while South Africa (10%), Mexico (14%) and Chile (16%) also have significant market share. Owing to the huge reliance upon Peruvian avocados, prices fluctuate according to the Peruvian season. European prices for Hass Avocados (CIRAD) over the past 7 years have been 40% higher in April (peak prices) than prices in June, when the market is at its lowest. This peak and trough are centred around the crop cycle of the Peruvian Hass avocados. April is the final month before the arrival of the new Peruvian crop into the European market, which runs from April until October (see figure 2). As a result, the market is at its shortest supply in April, and is awash with avocados by June/July.
This seasonality of prices in the European avocado market is recurrent, however, in 2018, prices fell more sharply and further than usual following the seasonal high in April. Indeed, prices tumbled from an average price of 14.34 EUR/4kg box in April 2018 to just 6.49 EUR in July, as prices hit a 4-year low. This was caused by an unprecedented level of imports from the largest origin, Peru, where a bumper crop had led to a 45% YOY increase. Simultaneously, South Africa’s crop (also April-Oct crop cycle) flourished, resulting in EU imports from South Africa doubling from 2017 figure to 81,000 mt in 2018. Overall, almost 570,000 mt of avocados were imported in 2018, 110,000 mt higher than in 2017. These two factors continued to suppressed prices through until October 2018.
Contrasted with the lows of 2018, the story was quite different in 2019. Shortages at origin, combined with rising prices saw the Avocado market buck the seasonal trend and reach a record high price of 16.81 EUR/4kg box in October 2019. As usual, prices fell following the annual inflow of Peruvian imports into the market from April to July 2019. In this instance, however, prices started to rally in August 2019 as the number of realised imports fell below the heightened EU demand for avocados in the summer months. A combination of increased demand, coupled with a 45,000 mt reduction in Peruvian imports, left a shortfall in large Hass avocados in Europe. The shortfall was exacerbated by a simultaneous fall in imports from South Africa. Ongoing drought and heat stress in South Africa reduced production output by 30%, meaning the EU imported 39% less in 2019 than in 2018. In pure terms, a mismatch occurred between estimated demand for avocados, which increased 15% from 2018 to 2019, and imports falling over the same period by 3%.
As prices reached their peak in October, an unusual origin came to plus the deficit. Mexico’s export regime is extremely US focused, but due to the EU shortage, October and November 2019 exports to the EU equated 30,000 mt. This volume over 2 months is triple the volume Mexico exported to the EU in 2018. As a result of the increased Mexican imports, prices eased lower, falling from the high point in October, to 10EUR/ 4kg box in December 2019.
The EU avocado market has seen significant demand growth over the past decade. This has led to a huge reliance on imports, which in turn has resulted in significant price volatility. Despite seasonality occurring, recent divergence in import origins has led to a lack of predictability in price movements, evidenced by the past two years. The EU’s reliance on imports will remain, but the suppliers and seasonal availability will continue to evolve as the world’s producers increase volumes to meet escalations in demand. The only thing that is certain is avocado prices in the EU will be highly sensitive to supply fluctuations in these changing origins.
Sign up to our newsletter to read the latest news and exclusive content from our industry experts.