Commission’s Tiered Account Program Now in its Fourth Year Has Delivered an FOB Price Advantage
The California Avocado Commission’s (CAC) Tiered Account Program plays a critical role in aligning supply and marketing activities to identify and target regions where consumers are willing to pay a premium for California avocados. Throughout the California avocado season, the Commission monitors and measures the overall timing and performance of its retail marketing efforts and adjusts them as needed to improve performance. At the end of each season, the Commission reviews data assembled from the Tiered Account Program and utilizes that data as a guide for the next season’s retail distribution and marketing efforts. The program has been a success — with data from 2018 indicating that California avocados sold within the state received an18 percent FOB premium over imports. The four-year average has been a 14 percent FOB premium over imports.
Figure 1. Creating alignment between supply (retail distribution) and marketing resources.
The Tiered Account Program is a robust data enterprise. At the end of each season, the Commission assembles IRI Point of Sale data (cash register sales from each retailer) that encompasses volume, dollar sales and average price, as well as AMRIC data including FOB pricing for California and imported fruit. That data is then integrated with information including:
- Dates the retailer had California fruit on the shelf
- Dates and details of in-store sales and marketing activities
- CAC-customized social media assets developed specifically for individual retailers
- Retailer advertising of avocados/California avocados
The data is analyzed and a report is prepared for the Commission’s marketing team that help them determine areas of opportunity to increase retail sales and apply marketing resources for the greatest effectiveness. Data includes:
- Best performing retailers carrying California avocados
- Retailers whose shoppers are willing to pay a premium for the California fruit
- In-store retail price of California avocados in season versus prior non-season and prior season
- California retail price versus the price of imported fruit
- FOB price advantage for California avocados versus imports
With this data in hand, the CAC retail marketing directors identify those retailers with the greatest likelihood of sales success carrying California avocados and opt to add them to the Commission’s list of potential Tiered Account retailers.
Figure 2. Aligning supply (retail demand) and marketing activities to geographic areas where customers and consumers are willing to pay a premium for California avocados is the goal of the program. This helps maximize the results of CAC’s marketing activities, which creates value for the grower and all stakeholders.
The Commission also reviews the “report cards” developed for Tiered Account retailers to examine key metrics and identify opportunities and challenges.
The Tiered Account report — which identifies retailers “most likely to succeed” — and report cards for Tiered Accounts are then shared with the Commission’s retail marketing directors and shippers/handlers. Together, they review the list of potential Tiered Account retailers and develop a final list of retailers to be prioritized for the upcoming season. Once the final list is composed, the CAC retail marketing team determines sales and marketing support plans to present to each retail chain, with a clear objective to modify the defined support throughout the season as needed.
The data provides the Commission with a unique opportunity to redefine its list of Tiered Account retailers based on the season at hand. The lists take into consider the season’s California avocado crop size, the location of the retailer’s stores and a variety of other business, sales and marketing attributes.
Figure 3. In 2018, more of the California crop remained in the state than in prior years allowing CAC to focus more marketing resources toward local retailers and consumers.
With the conclusion of each California avocado season, the data review process begins again. Ultimately, the Tiered Account program provides the Commission with valuable information that ensures the Commission can target retailers who can most effectively support California avocados in a given crop year, maximize marketing resources, synchronize the efforts of shippers, growers and retailers, and increase the value of the fruit for all stakeholders.