Costco Wholesale has revealed that avocados are the number three item in their fresh produce department, in terms of sales - both domestically and internationally.
Senior Buyer, Mark DeCosta, took part in a presentation involving three major United States-based retailers and food service providers the World Avocado Congress in Colombia. He says that the key to the company's growth, especially in fresh produce, is focusing on quality.
"How does that relate to avocados? We buy what we believe are the best quality avocados," Mr DeCosta said. "So, in terms of size; 40s and 48s, and the richest oil avocados. In doing so, we offer an extreme value proposition to our members. Costco is a top line company; we want to drive sales and drive sales in avocados. We do that by selling a 5-6-pound bag, and buy both conventional and organic."
Mr DeCosta explained that Costco has a member base of 53 million households, and a 91 percent renewal rate. The retailer has 783 locations across 12 countries, and while it is heavily focused in North America, the company recently opened its latest store in Shanghai, China.
"We like to have steady expansion," he said. "Costco doesn't want to impact the market with a bunch of locations at the one time. So, we have basically a 50-50 growth in domestic (US) and international. In this coming fiscal year, we plan to open 20 new locations; 10 in the United States and 10 globally."
He added that Costco buys the fruit from all countries of origin, which have access to the United States market.
"We feel that it is very important to buy from every source available, to meet our demand," Mr DeCosta said. "Then, how do we increase consumption? We use educational platforms, as well as key promotional pricing, sponsored by us or our partners."
Avocados are also an important part of the business strategy for major restaurant chain, Chipotle Mexican Grill. Vice President and Head of Supply Chain, Carlos Londono says that the fruit is the single biggest source of risk for the company.
"Chipotle has a totally global supply chain, meaning we import from all over the world; China, Asia, Europe - everywhere," he said. "There is nothing that takes up more of my time than avocados. My challenge is how do we maintain the continuity of supply, and stability in the pricing?"
The company is based primarily in the United States, but has locations in Canada and Europe. Mr Londono describes Chipotle as an 'avocado grower's dream', adding that it caters mostly to millennials and has a strong digital platform. It was launched in Denver, Colorado, but after reaching a stock price of more than $750 in 2015, it was hit hard by a string of 'food-safety issues', resulting in the price falling to $250.
In 2018, with the food safety issues behind it, Chipotle relocated its headquarters to California, and essentially "started from scratch". Since then, Mr Londono says the stock price has soared to $850, and avocados played a major part in the recovery.
"People just love guacamole," he said. "We are a very significant user of guacamole, and obviously avocado is a main ingredient. Chipotle is what we call a values-based company. We firmly believe in doing the right thing, and everything we do has to fall into our mantra of 'food with integrity'. All of my stuff might be more expensive, but it is because of this reason."
Fresh produce was also a major driver for Walmart, with Senior Buyer Guillermo Aguirre telling the Congress that the company's revenue last year was $500 billion, on the back of the grocery category. The US retail company has three main forms of stores; Super Centres, Discount Stores and Neighbourhood Markets, and Mr Aguirre added that Walmart is in the process of a major transition, combining the bricks and mortar stores with the digital space.
"So, it will be a seamless experience for the customers to use the mobile devices in our stores," he said. "But our prices are the main message to the customers, and a major part of our strategy, so that our 'price-focused' customer base is getting stronger."