Americans have been eating more avocados than ever during the pandemic, but the companies that sell them avocados aren’t necessarily profiting from the growing volume.
Around 70% of U.S. households will have purchased avocados in 2020, with consumption on pace to top 6.25 billion avocados, 64% more than U.S. consumers bought in 2014, according to a recent study by Oxnard-based avocado distributor Mission Produce.
But prices are down this year even as sales are up, so some of the biggest avocado suppliers are not reaping the benefits of the fruit’s popularity.
Calavo Growers, a major avocado distributor based in Santa Paula, released its fourth quarter financial results Dec. 21, revealing a 20% dip in revenue from the same quarter a year ago, down to $234.4 million.
Sales volume was up 3% from the year-ago quarter, the company said, but prices were down much more than that, due in part to a glut of product.
“California and Peru also had strong growing seasons, which led to a 22% price contraction compared to last year,” Calavo CEO James E. Gibson said during the company’s Dec. 21 earnings call.
For the entire 2019-20 fiscal year, Calavo reported total revenue of $1.1 billion, an 11% decrease from the previous year.
Net income was up in the fourth quarter from the same quarter a year ago, from $5.2 million to $6.2 million, but the company reported a net loss for the fiscal year of $13.6 million, or 78 cents per share.
Those losses are in spite of Calavo selling more than 379,000 pounds of avocados in fiscal year 2020, a 6.6% increase from the previous year.
Gibson said he remains confident about the market and sees the current low prices as “a silver lining.”
“It presents an opportunity to lower input costs in our foods division, allowing us to keep comfortable margins even at a lower volume with the lower prices,” he said.
Calavo closed the trading day on Dec. 21 at $72.27. The stock dropped more than 15% after hours once the fourth quarter results were announced, dipping to $61.21 by the evening.
Limoniera, a Santa Paula-based agribusiness that grows and supplies avocados, lemons and other fruit, reported similar trends in the avocado market when it released its third quarter earnings on Sept. 9.
The company noted an increase in volume, selling 6.1 million pounds of avocados compared to just 1.4 million pounds in the same quarter a year ago. Limoniera raked in $6.1 million in revenue as a result, $2.5 million a year earlier.
However, the average price per pound sold was down from $1.80 in the third quarter of 2019 to just $1 in 2020.
Mission Produce, which only began trading on the NASDAQ on Oct.1, has not shared any financial numbers since its initial public offering.
However, the company did say it had $419 million in sales in the six months ended April 30, after distributing 559 million pounds of avocados in 2019.
Mission recorded a net income of around $72 million in each of the prior two years, with around $880 million each year in revenue, but said it had a $13.4 million net loss in the first half of its current fiscal year.
Gibson, Calavo’s CEO, said one way prices could inflate in 2021 is a more stable return of the restaurant industry.
“When Calavo buys avocados they buy the full spectrum that comes off the trees and as we do that, we’re looking to marry those sizes and grades up with the appropriate customers, and certainly food service plays a big role in maintaining margin in that regard,” Gibson said. “Our expectation is that we are going to find our way back to the pre-pandemic U.S. marketplace that is continuing in lockstep to increase in volume as we go forward.”