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New Avocado Exporter Lifts Earnings Forecast

2 July 2013

New Avocado Exporter Lifts Earnings Forecast

Newly formed avocado exporter AVOCO has raised its forecast for this season's earnings in Australia and now expects to hit the $50 million mark by the end of the harvest, which starts in late August.

Alistair Young, a director of AVOCO, says latest analysis of the potential harvest suggests there will be a better yield than usual, without it being a brilliant harvest. Formed recently by the two largest avocado exporters, AVOCO represents about 75% of all the growers in New Zealand and holds a similar-sized chunk of sales into the Australian market.

"We were forecasting retail and wholesale sales in Australia of about $40 million when we launched AVOCO. However, the harvest predictions and updated market expectations, coupled with the fact that we are attracting additional growers at a faster rate than we anticipated, have given AVOCO a momentum that should lead to it nearing the $50 million sales barrier for the 2013/14 season in Australia – which is about 20% ahead of our initial expectations.”

AVOCO has emerged as a collaborative venture after decades of fierce rivalry, yet mutual respect, between New Zealand’s two biggest avocado export companies – Bay of Plenty-based Southern Produce Ltd and Auckland-based Primor Produce Ltd.

They have put aside their long-standing commercial competitiveness in the best interests of their growers by creating The New Zealand Avocado Company Ltd, a joint venture company to export into Australia via AVOCO™. This is a bold move that could signal the way forward for other export industries.

“We have realised that it makes complete sense to work as a partnership against foreign competitors rather than fight amongst ourselves,” adds Mr Young, who is also a Southern Produce director. “The interests of the New Zealand avocado industry and its growers are best served by a unified entity that is focused totally on getting the best orchard-gate returns for growers.”

The two rivals had been working together in some markets outside of their main Australian market under the umbrella of AVANZA, but the new entity means they are now collaborating in all their avocado markets – marking a significant turning-point for the avocado industry and providing a role model for other competitive export sectors.

“It is our belief that the way forward for New Zealand’s Avocado Industry is for the two companies to collaborate completely, creating an entity like other primary industries have done successfully,” says Primor Produce director and general manager John Carroll. “It’s the final piece in the marketing jigsaw for us. It marries all avocado export markets under a collaborative model for Southern Produce and Primor Produce.

“Growers have demanded we perform better as an export industry, and this remarkable marketing development is our response,” he said. “AVOCO held its inaugural board meeting at Te Puna, near Tauranga, last month and we have already had to revise our forecast earnings upwards.” (SUBS: June 2013).

On its formation, the AVOCO member growers collectively dominated the export market for avocados into Australia, both retail and wholesale, with about 75% of the market ex-New Zealand. This unified group is now attracting new growers at a healthy rate.

Mr Young, who has worked closely with the country’s biggest grower group Team Avocado, says the new entity is committed to getting the best possible returns for growers by providing outstanding product, information and service to its customers worldwide.

“Given our 20-years-plus understanding of the industry and our commitment to working alongside our ever-expanding grower network, the formation of AVOCO is a real boost for the avocado export industry in New Zealand and its ability to secure its future growth and increase its relevance and prominence on the world stage.”

Mr Young and Ted Thomas, export manager at Primor Produce, are responsible for the day-to-day marketing management of AVOCO and will utilise the resources and expertise within Primor Produce and Southern Produce to conduct its business.

“AVOCO has been formed in time for the 2013/14 harvest,” adds Mr Carroll. “You can’t buy experience, and you can’t create sound commercial history with the flick of a switch. This exercise has started from a base of around 630 New Zealand avocado growers in its supply partnership that flows through packhouses in Northland and the Bay of Plenty, together producing an estimated 1.6 million trays – close to three-quarters of the total New Zealand avocado export production.”

AVOCO will export avocados only. Both companies will continue to operate their respective businesses in other fresh fruit products. All AVOCO exports into countries other than Australia will be handled through their longstanding AVANZA commercial arrangement.

The new avocado exporter has started out as it means to continue, taking a dominant role as principal sponsor of the four-yearly New Zealand and Australian Avocado Growers' Conference to be held in Tauranga in September.


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