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Retail View: Cinco de Mayo continues to spur avocado sales

Cinco de Mayo continues to be a magnet for avocado sales -- led by guacamole -- as sales in 2013 jumped almost 25 percent over already-robust sales in 2012.

"This is a big holiday for avocados, and it keeps getting bigger," said Emiliano Escobedo, executive director of the Hass Avocado Board, based in Irvine, CA.

But make no mistake about it. Despite its Hispanic name and Mexican origin, this is an American holiday.

20-CalAvos-CropAvocado sales in 2013 were up by nearly 25 percent over 2012. (Photo by Rand Green)In Mexico, the fifth of May marks the Battle of Puebla, which was an important turning point in the Mexican Revolution, but it is not a major holiday.

"In Mexico, it's marked by a day off from school but that's about it," said Escobedo. "There is not a lot of partying or celebrations" around this holiday.

Mexico celebrates its Independence Day on Sept. 16, which is a much more important day. But in the United States, Cinco de Mayo has become synonymous with partying, tequila, cerveza, Mexican food and, of course, guacamole.

For the Hass Avocado Board and the other organizations charged with promoting avocados, it is a perfect time to promote that fruit and see significant increase in sales.

Escobedo said the huge increase in sales in 2013 over 2012 was partly due to increased supplies at the time, which resulted in a lower retail price. That lower retail price did react, as any economic model would predict, with an increase in consumer buying.

But the numbers indicate that not all of the volume increase can be attributed to a lower price.

The HAB executive said that in 2012, the average retail price during the Cinco de Mayo period was about $1 per avocado. In 2013, the price dropped 11 percent to about 89 cents per avocado. That 11 percent drop resulted in a 24.5 percent increase in sales. Those are dream-like numbers to any marketer.

And the great news is that these increases in sales are coming mostly because of the increasing interest by Anglos of consuming avocados around Cinco de Mayo.

Hispanics already eat a lot of avocados, so if this holiday helps introduce avocados and their value-added products to consumers with a lower per-capita consumption, so much the better.

Backing up this scenario was Alfonso Cano, director of produce at Northgate Gonzales Markets, a Southern California chain that was founded by Hispanics and caters to that community.

"Cinco de Mayo is not special in our stores," Cano said. "It is not a cultural holidays for Mexicans. The beer companies play it up [with promotions], so we see a little bump in sales, but not much."

He said traditional American holidays such as Fourth of July and Super Bowl weekend have a much greater impact on avocado sales in his stores.

Mexicans do celebrate those periods with more parties and so they buy more avocados, more beer and the like. That is not to say that avocado sales are disappointing for the Cinco de Mayo period in the Northgate stores.

Cano said Hispanics like to party and celebrate, so basically "every weekend is Cinco de Mayo for our customers."

A retailer that wants to duplicate Northgate's success, where avocados are one of the top items, could certainly use their demographics, but they also might tear a page out of their merchandising playbook.

While most traditional supermarkets in Anglo-dominated communities sell one size of avocados, Northgate sells three.

"We sell a large 32-40 count avocado as well as a small 70 count and a four- count bag," Cano said. "And all of them do very well. Everything sells equally."

One reason might be that Northgate takes special care to ripen its avocados at its own distribution center. Its customers want ripe avocados and that's want they get.

Customers also have many different opportunities to buy them. Besides the display in the produce department, Northgate also often cross-merchandises avocados with meat and/or beer.

"And we have also sold them at the checkout stand where the checker asks the customer if they need an avocado," Cano said. "That has worked very well."

Because avocados are such a staple in the Hispanic diet, Cano said movement is not dependent on price.

"It's not like strawberries, grapes or melons for our customers," said Cano. "It doesn't matter what the price is, they buy them."

Cano estimated that about 75 percent of the customers in the chain's 42 stores spread from San Diego to Los Angeles are Hispanic.

This year, as is typically the case, a variety of points of origin will be supplying the United States with avocados during the Cinco de Mayo period.

Chile is still expected to have some fruit in the marketplace, and there may be a few avocados from Peru as that season gets started. California's season is getting underway in a big way in April in an effort to capitalize on the big Cinco de Mayo pull. And Mexico, which has been the dominant supplier since the end of the California season late last fall, still has plenty of volume on a weekly basis, as it does all year long.

For the Cinco de Mayo period, the marketing organizations for these points of origin are expected to be offering several different promotional opportunities for retailers and foodservice establishments.

For example, the California Avocado Commission is kicking off its promotional campaign in April specifically to capitalize on the strong sales around Cinco de Mayo. In fact, for the last several years, CAC's promotional efforts have focused on the holidays that coincide with the state's production.

CAC Vice President of Marketing Jan DeLyser said that California has a smaller crop this year, so it will be marketed in a tighter time frame, but it will still encompass all the holidays stretching from Cinco de Mayo to Labor Day weekend.

DeLyser said avocados -- and especially guacamole -- have become synonymous with celebrations, so CAC encourages use of avocados anytime people get together to celebrate.

Escobedo said one sports event that offers a great opportunity this year to promote avocados is the World Cup, which is being held in Brazil from June 12 to July 13. He already has Mexico's first game circled on his calendar - June 13 vs. Cameroon - and he said people all over the United States will be watching this year as the games will be played in our same time zones. The first game for the United States team is June 16 against Ghana. He fears that it is under the radar for some retailers and they will miss this chance to give their produce departments a boost.

Byron Bellows, produce merchandiser for Coleman's, a Canadian chain of 12 family-owned stores in Newfoundland in the easternmost part of the country, comes to the avocado marketing concept from a different vantage point - but still a very valid one, and one that also points to marketing opportunities.

Growing up on that island, Bellows never ate an avocado. And he admits that up until 10 years ago, it wasn't on the family shopping list. "Now avocados and mangos are on there every week.

"When I started as a produce manager about 20 years ago, we ordered six avocados at a time just to carry them, and we ended up throwing out five of them," he added.

Today, he said it has become a mainstream item with room for lots of growth. He tends to order very large avocados and sells them for the multiple of two for $3 when they are on promotion. Otherwise, the retail price is $1.89-1.99 apiece.

"We are about to try 3 for $5 and see how that works," he said.

Bellows said Cinco de Mayo is not celebrated in his area and so it offers no extra opportunities for promotion. But in general he is bullish on avocado promotions all year round. He said it is a great piece of fruit that is very versatile and reacts well to promotional pricing.

Still another retailer, Dan Avakian of the single-store Dan's Fresh Produce in the city of Alameda in Northern California, has another avocado experience.

Avakian has had a long career in the retail, foodservice and wholesale end of the produce business but switched to retail ownership eight years ago when he bought his local market and then renamed it.

Like Northgate in Southern California, Dan's Fresh Produce sells lots of avocados every day. "We get a slight increase for Cinco de Mayo, but every day our customers come in here and buy four or five avocados. The difference is around Cinco de Mayo a lot of them come in and buy 10 pounds."

Located in an upscale and diverse neighborhood of many different ethnicities, Avakian said his customers are well educated. He sells two size of avocados on a daily basis: a 32- count and a size 60. He purchases his avocados off the Northern California produce markets of Oakland and San Francisco.

"Avocados are a big item in my store and sales are increasing every year," he said, mirroring the comments of every one interviewed.