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AVOCO launches campaign to increase market share
4 May 2015

New Zealand’s largest avocado exporter, AVOCO, has launched a campaign to increase its market share following a season which has seen Orchard Gate Returns far exceed grower expectations.

AVOCO’s 700-plus growers received returns for 2014-15 in the mid-teens, a result which is likely to spark interest among non-suppliers – all of whom have contributed to a record-breaking year for the industry.

About 4.5 million trays were exported out of a national crop of over 7 million trays. New Zealand’s previous high was 6.2 million trays total crop in 2011-12 when 3.7 million trays were sent offshore.

AVOCO exported 2.8 million trays, accounting for about 63% of the industry’s total exports. About two-thirds of shipments went to Australia while the remainder was split between Asia and the US and marketed through AVANZA.

Over the next three months, avocado growers will be asked to commit to new supply contracts for the 2015-16 season. AVOCO director John Carroll expects the company’s “stellar” final returns will motivate many non-suppliers to choose AVOCO over its competitors.

“We’ve developed something special at AVOCO in just two seasons and this year’s result is proof of that. Make no mistake, there were challenges – we had to carefully manage Australia which was experiencing its own bumper crop and trade under some prohibitive foreign exchange conditions.

 “But despite all that, our estimate of the shift in OGR between this season and the last heavy one is a lift of 50%. As a result, AVOCO growers will receive 50% more money per tray.”

John says AVOCO is a commercial force that has the critical mass to manage harvest volumes and fruit flow better than ever before. However, more growers would help to further consolidate AVOCO’s supply and maximise returns to growers, especially during years of heavy volume.

AVOCO was formed in 2013 after a disastrous season when the Australian market was oversupplied by some Kiwi avocado exporters and growers received pool prices for different grades less than $10/tray.

Market diversification critical to success

Lessons learnt during 2011-12 were a catalyst for industry change, with growers calling for more information-sharing among exporters. Former export rivals Southern Produce and Primor came together to form AVOCO and in doing so, became New Zealand’s largest avocado exporter.

AVOCO’s strategy for this season was market diversification and allowing Australia “to breathe” during potential periods of oversupply. The US, especially, served as a “release valve” with significant volumes being shipped to the US through AVANZA in a programme run in conjunction with US-based Mission Produce.

AVANZA, which handles 93 per cent of the industry’s shipments outside Australia, also invested in marketing activity across Asia where consumption grew in several markets.

AVOCO director Alistair Young says this season’s result proves that AVOCO is a business that can succeed in all market conditions.

“Our inaugural season saw our growers enjoy tray prices in the mid to high 20s due to high consumer demand and low volumes. This season was always going to be different but our consolidated supply gave us efficiencies that ultimately led to more money in growers’ pockets. We’re actively encouraging more growers to join us.”

Te Puke avocado grower Ron Bailey, who has spent 40 years in the industry, agrees this season’s financial returns will prompt non-suppliers to take a second look at AVOCO.

“AVOCO hasn’t just helped our growers – it’s lifted value for the whole New Zealand industry and secured its future. But in real terms for growers, being a part of AVOCO means they’re adding financial value to their own businesses - both in income and in the capital value of their properties.

“Growers considering their options should be mindful of that.”

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Partners: Southern Produce, Primor, Team Avocado