Looming challenges in Australia and market disruption in Asia caused by Covid-19 has Avoco on high alert at the start of the avocado export season.
While remaining cautiously optimistic about this season’s prospects for New Zealand growers, there are strong signs that the next few months will not be ‘business as usual’, especially in Asia.
Pressure in Asian markets to improve fruit quality has Avoco doubling down on efforts to ensure growers’ fruit is up to expected customer standards. Combine this with high freight costs to Asia and significantly reduced airfreight capacity, and the 2020-2021 season is shaping up to be one that keeps Avoco’s export marketing team on its toes.
Avoco’s marketing and communications manager, Steve Trickett, says improving fruit quality has been an industry priority for some time.
However, in the last two years, Avoco has invested considerable time and energy into developing its own systems to ensure the quality of fruit arriving offshore does not undermine all the work achieved to date in positioning NZ avocados as a premium quality, ready-to-eat product.
“We’ve been successful in rebuilding customer confidence and meeting high quality benchmarks in Australia. This season, we’re turning our attention to our Asian markets where there is growing pressure from customers to improve quality.”
Avoco supplies fruit to nine Asian markets under its Avanza brand. This season, Avoco plans to ship around 13 per cent of its total volume of fruit to Asia, where Steve says retail demand appears steady despite the disruption caused by Covid-19.
“We’re closely monitoring the situation in each market, with all our managers heeding calls to remain vigilant and flexible, ready to respond to changes to flow plans, should customer demand and the overall retail environment change in Asia.”
The main impact on market planning has been due to air freight costs nearly trebling since last year as a result of fewer international flights being available post-Covid-19.
This has led to collaborative efforts by some Kiwi avocado exporters looking to consolidate volumes to selected markets in order to reliably secure cargo space and to negotiate lower freight costs. The only other option is to turn to lower-cost sea freight options, which means fruit takes longer to arrive at its destination and raising the risk of quality issues due to added fruit age.
Given that Asian markets remain highly competitive, Steve says Avoco and its growers cannot afford to be complacent about fruit quality this season.
“Consumers always have options. We’re very aware that Peruvian fruit will still be in the markets until September so we’re planning a later start to promotional activity in South Korea and Thailand.”
The market outlook looks more positive in Australia this season. The Western Australian crop is very light compared to last year and the flow of domestic fruit from Queensland is finishing three weeks early, which bodes well for NZ’s early fruit arriving in Australia.
Strong relationships with leading Australian retailers will see Avoco supply 80 per cent of its total volume direct-to-retail, with the remaining seven per cent planned for the wholesale market.
Avocados from Chile
A looming threat to favourable market conditions, however, is the expected arrival of avocados from Chile. Australian authorities have granted market access to Chilean avocado exporters and this will be the first season their presence will be felt.
Steve says it’s too soon to say how Chilean fruit will impact Australia’s wider market environment.
“The market is already strong in value and has the potential to get stronger. Despite this, we are aware of Chile’s import plans and we’ll be keeping a watchful eye to see how they perform.
“Any impacts caused by an escalation of Covid-19, as seen with the recent six-week lockdown in Victoria, is another factor that tempers our positivity for what is otherwise projected to be a great market.”
This season, NZ’s total industry export crop is expected to be up to 4.4 million trays, depending on the impact of a smaller fruit size profile caused by earlier drought conditions.