CAC 40th Anniversary

The crop set a new record at $79.7 million and secured the second highest per acre gross returns for California fruits. Total avocado plantings increased by 7,000 acres. As Hass continued to gain dominance, with 49 percent of total volume, the Commission continued to market “other greens” and to conduct market research studies to gather consumer perceptions of non-Hass avocados.

Although U.S. demand for avocados grew and new opportunities in the foodservice market were identified, the industry faced a distribution challenge. Hass continued to capture a larger share of the market (56 percent) and returned 67 percent of total dollars.

With a limited supply of avocados on hand, the Commission identified a strong, loyal West and Southwest customer base willing to pay “nearly any price” for avocados. Black streak disease grew at an alarming rate as CAC continued to lead research efforts to combat the disease.

This was a year of mixed results, as the Commission successfully moved a crop 300 percent larger than the previous year, but reported an unprecedented drop in grower returns. The increase in the number of handlers (96) led to competitive bidding that lowered the price of the fruit and resulted in a grower price that was only 28 percent of retail. The Commission continued discussions about finding a means of securing accurate inventories, price reports and correct crop estimates in order to provide growers with the data they need to time harvests and secure favorable prices. With the West and Southwest markets mature, marketing expanded its reach on the East Coast.

Cognizant that crop volume was likely to increase as the industry expanded to 80,000 acres, the Commission worked on gaining a better understanding of avocados in the marketplace as consumer preference for the high oil Hass variety continued to “squeeze out” the “greens”. Consolidations and mergers in retail remained a concern as the number of handlers and sellers continued to increase (from 16 to 96). While CAC’s marketing campaigns were successful at creating demand, growers did not reach 33 – 35 percent of retail due to competitive price wrangling by handlers. The Commission continued to address the need for f.o.b. price reporting, expanding markets beyond the West Coast, implementing controlled picking and creating maturity and quality standards.

The continued surplus of handlers and packers — coupled with fewer retail chains to sell to — led to an unfavorable “buyers market” (with growers earning about 27 percent of retail) and renewed efforts to establish a price reporting program. Because advertising costs tripled in the last decade and the advertising budget had only increased by 20 percent, the Commission turned its focus to managing Western markets, where consumption is high, and examined new ways to ensure California avocados stand out as “premium.” New efforts initiated to repackage the fruit (currently sent in “drab tan cartons”), establish grades and standards to ensure a quality product, expand the Hass market and grow the Ripe Fruit program to meet year-round demand and increase sales volume.

The Land Report was important because it confirmed what many had been thinking: the high number of handlers/packers had contributed to the downward spiral in avocado prices. After years of advocating for the system, the Avocado Marketing Research Information Center (AMRIC) is launched to help growers gain access to daily market demand data. The report also stimulated a complete restructure of the Commission. A new president/CEO and vice president of marketing were put into place and a new position was established — the vice president of industry affairs, who assumed responsibility for the newly-established AMRIC, industry communications, research and industry relations. The 492.5 million pound crop was the largest ever but the sharp increase in volume (22 percent) negatively affected grower revenue and hindered the Commission's ability to provide ongoing consumer advertising, promotion and foodservice programs.

AMRIC was very helpful in eliminating rumor in the marketplace and provided a factual information base to guide industry direction, as well as destination data and shipment trends throughout the U.S. to help guide marketing decisions. The expanded Ripe Fruit program led to gains for retailers.

The year’s successes illustrated that Commission programs increased consumer demand, and improved harvest timing and market coordination. The Commission’s new streamlined, business-like organization efficiently managed the challenges of the industry and efforts to improve AMRIC led to greater crop estimating accuracy. Export activity focused on Japan, with decreased exports to Europe.

While demand for avocados rose and CAC’s advertising and promotional efforts garnered more results than ever before, the crop returned only 17 cents per pound to growers — a 42 percent decrease from the previous year — due to the large uptick in supply. Shipments of California avocados to Japan tripled to a record-high volume of more than 10 million pounds while European shipments doubled in volume over last year's effort.  Because of government reimbursement for these export promotional programs, they remained viable.

Hass surged to 81 percent of the total crop volume and 91 percent of total revenue. To limit expenses the Commission underwent a major reorganization — CAC staff was downsized, CAC offices were moved to Santa Ana and resources were focused on marketing activities.  The Commission implemented eight business management pillars: steady spending, national advertising, three-year strategic plan, focus on Ripe Fruit merchandising, strong public relations, robust foodservice programs, long-term export development and lean administration overhead.

The Commission took bold steps to reduce avocado thefts by partnering with CDFA’s Avocado Inspection Service. Building off the previous year’s strategic plan, the Commission developed a long-term three-year plan to establish consistent spending to build the market and avoid the rush and volatility of annual plans. With a longer-term vision in mind, strategic planning began in May with fine tune adjustments made to suit upcoming crops.

The high price per pound illustrated the success of the Commission’s demand-building programs that were reorganized three years earlier. Exports to Canada, Western Europe, South Korea and Japan dropped to 2 percent due to a short crop. The industry unified around anti-theft initiatives and efforts to uphold scientific quarantines to protect crops from foreign pests. Continued updates to AMRIC and Avocado Crop Estimating program ensured the Commission and its growers receive timely and accurate crop information.

This was a year filled with challenges — arctic temperatures in December, a fifth consecutive year of drought and an economic downturn slowed down retail orders. Despite those hurdles, the Commission reported the third highest return to growers on record. The Commission established the Issues Management Program to proactively identify and address industry related concerns such as water, pricing, labeling or imports.

Following four short-crop years, this season produced a larger crop but was subject to an uneven and erratic flow of product to market because of late sizing followed by a torrent of mature fruit. In order to better understand the market, CAC commissioned the development of an economic model to measure the effect of economics, crop size and CAC’s programs on the market price of California avocados. The model showed that for every dollar spent by CAC, three dollars were returned to the grower.

Japan, a steady California avocado customer for more than 15 years, received 46 percent more fruit than the previous year and produced an increasing value at $4.6 million. The U.S. Congress passed the North American Free Trade Agreement (NAFTA) after prolonged negotiations and heated public debates.  The Commission succeeded in keeping the USDA quarantine against Mexican avocados out of the text of NAFTA. 

Since its 1988 reorganization, crop values have steadily increased and the consumer perception and consumption of the California fruit have steadily climbed. CAC’s three-year campaign to educate the Metropolitan Water District about grower concerns also led to a historic $137 per-acre-foot reduction in agriculture water rates.

The Commission’s marketing efforts led to a 14 percent increase in household avocado purchases, with a 25 percent rise in Western homes. Demand for California avocados continued to grow in the United States with new data indicating more than 93 percent of all grocery stores stocked California avocados. The Commission continued to address water rate concerns and secured reduced water rates on behalf of growers that amounted to $19 million in saving for the first year.

In light of growing consumer reliance on digital channels, the Commission successfully launched the California avocado website.

Cognizant that Mexican imports would one day become the norm, the Commission launched its Avocado Pest Security System to monitor compliance with USDA import rules. As traditional media channels began to fragment in light of new online tools, the Commission expanded its website with new features to make it the industry standard.

The Commission defined four strategic objectives as part of its three-year plan: pest abatement, defending core markets, leveraging the California brand and building new demand. To expand its reach, the Commission expanded its Internet presence.

Despite the new challenges, the season set a record with $329 million in returns. The 10-year crop value topped $2.3 billion, a nearly 100 percent increase from the previous decade. The integration of information technology is seen as a bulwark — allowing the Commission to quickly respond to challenges, distribute key information, correct misinformation and expand marketing.

Signed by President Clinton, the Act directed the Secretary of Agriculture to issue a Federal Promotion Order, subject to producer and importer referendum approval, that will assess imported avocados and provide for the research and promotion of Hass avocados. The Act also enabled the establishment of a National Avocado Board. The Commission’s instrumental role in passing this Act was a major step in helping develop a robust marketing program to build demand for the fruit and ensure the viability of the U.S. avocado market.

The Commission begins to proactively focus marketing and communication efforts on digital channels as consumers and constituents increasingly turn to online media.

In an effort to adjust to the increasingly crowded avocado market, the Commission continued to focus on strategically collaborating with global avocado players to build year-round consumer demand. This effort was aided by passage of the Hass Avocado Promotion and Research Order that authorized marketing assessments on all Hass avocados sold in the U.S.

Beyond the usual challenges brought by weather, input costs, pests and global competition, this year the Commission also managed the impact of supermarket strikes.

Collaborative efforts on the pesticide, insurance and water fronts helped the Commission acquire protections and savings for its growers. As expected, the U.S. lifted its restrictions on Mexican imports but CAC successfully lobbied to have California, Hawaii and Florida excluded for two years.

As avocado sales by dollar value increased 14 percent and sales volume leapt up by 19 percent, the Hass Avocado Board utilized more than $32 million in promotional dollars to build demand for the fruit in the United States. The Commission launched a “Grower Communication Revolution” making all communications available in electronic format and providing means of telecommuting to meetings.

With increasing imports feeding the market, the Commission launched a multifaceted quality initiative to ensure California growers remained the “preeminent suppliers of quality” fruit in the U.S. Because of the detrimental effect sub par imports have on the category, CAC introduced federal legislation concerning maturity standards.

Growing demand for the fruit (one billion pounds in the U.S. annually), $40 million of generic avocado promotions from the Hass Avocado Board and CAC’s compelling marketing campaigns brought positive results for growers. The Commission began work on a new California avocado branding campaign that will differentiate the brand from an increasingly crowded marketplace.

The Commission established new committees and re-committed to extensive grower communications and transparency. Widespread wildfire damage and a continued drought made this one of the more challenging years on record.

CAC focused its marketing efforts on Western markets in light of a reduced crop volume and renewed its efforts to differentiate the brand with California avocado grower stories and Hand Grown in California thematics. Other priorities included the development of a Vision 2020 plan, the launch of CaliforniaAvocadoGrowers.com, a website specifically geared to industry stakeholders, and securing more modest offices in Irvine.

The year was a solid one with near-record crop volume (534.5 million pounds) at a record overall crop value of $403 million. As consumer demand continued to grow, the Commission worked to reorganize and refocus the production research program to advance the industry toward long-term objectives that improve the industry’s sustainability and profitability. Passage of the Food Safety Modernization Act prompts a renewed call for Good Agricultural Practices vigilance.

For the second year in a row, the annual crop value topped $400 million with a crop worth $460 million on a volume of 302 million pounds. CAC’s marketing team secured the prestigious “Produce Marketer of the Year Award” as the Hand Grown in California thematic continued to move the premium product at record prices.

Faced with the possibility of an advancing Polyphagous Shot Hole Borer beetle infestation, the Commission took swift action and approved emergency research funding. To proactively respond to changing consumer attitudes and reinforce the Commission’s premium brand positioning, CAC advanced its food safety initiatives by implementing a Good Agricultural Practices rebate program and expanding grower education.

Fueled by a UC Davis economics study that indicated the steady increase in avocado sales and stable pricing was attributed in large part to the Commission’s marketing and promotions, CAC forged ahead with its premium brand campaign, completed a labeling research project and launched its American Summer Holidays promotion. Congresswoman Julia Brownley delivered a one-minute speech celebrating California Avocado Month before the House of Representatives. A new demonstration grove was secured to aid in exploring and sharing cultural management practices to help growers optimize their production.

As water prices increased, a sudden influx of imported avocados during the 4th of July promotional season depressed prices during the heart of California avocado season. Despite a year full of hurdles, the Commission successfully launched its California avocado labeling initiative  — linking CAC’s premium messaging with the product at point of purchase.

Early season retail successes spurred demand for the fruit — and premium prices — throughout the season. The Commission’s expansive and integrated digital marketing campaigns reached record numbers of fans with California Avocado Month alone securing 100 million impressions. CAC’s investment in shot hole borer research paid off with insights that armed growers with the tools they needed to inhibit the spread of the pest.

The Commission tightened its fiscal belt, funneling funds to marketing programs and securing more than $270,000 in grant funds for industry affairs and research programs. The CAC Board approved a plan to streamline its composition and reduce the number of alternates and handlers, and modified the definition of a “producer” to assist smaller growers. Research indicated that shot hole borer attacks begin to decrease. Ultimately, because of its proactive measures CAC preserved a balanced budget and returned funds into reserves despite a challenging year.

Tiered marketing and nimble, integrated marketing programs continued to garner high returns and elevated consumer engagement. California avocado FOB prices for fruit shipped within California were, on average, 14 percent higher than imports every week of the season — nearly 25 percent higher than the previous season’s average and an all-time record.