"The avocado industry in Mexico is still very fragmented and non-institutionalized," says Pedro Somarriba, President of Avoworks. Despite a value of about $6 billion in the U.S., it operates very much like a mom-and-pop store, offering tremendous opportunities to increase economies of scale. Turning the lack of processes into structure has allowed Avoworks to develop into one of the largest vertically integrated avocado players in Mexico within a time frame of less than five years. Next year is expected to be the company's best and biggest year yet.
© Avoworks
Vertical integration
The story started about eight years ago when Somarriba became involved with Michoacan's avocado industry. "I was in a different role and in an attempt to find guacamole, I met three avocado growers in Michoacan (Avohit, ADEAC and La Viña) who were in the process of forming a sales and distribution company in the U.S. They asked for my help, and we shipped the very first truckload of avocados to the U.S. Thanksgiving 2021." The first few months were trial and error, but when Somarriba met Mark Smith, VP Sales at Oppy, things accelerated rapidly. The companies started a partnership in 2022 and since then, Oppy has been the largest distributor of avocados for Avoworks.
"What is unique about our model is that it's the first time three growers work together under one umbrella," Somarriba commented. The three partners all have their own orchards and each one of them owns a packing house in Michoacan. "That's probably the most critical as it allows us to have more control over the quality of our product." For retailers, it is crucial to receive a high-quality product, delivered on time, and in complete status. "Being vertically integrated gives us the confidence to meet their requirements." In addition to supplying fruit from their own orchards, Avoworks also buys avocados from third parties, packing them in one of the company's three packing houses.
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Consolidation
"In my view, owning and controlling your own farms is the future of the avocado industry," commented Somarriba. "My partners were real visionaries and took the first step by consolidating three different packing houses that jointly have the capacity to pack 200 loads per week." It has offered opportunities on a much bigger scale with national retailers paying attention. "I believe consolidation is the way forward for this fragmented industry."
Upcoming season Mexico
Mexico's new avocado season is about to start up and will continue through May. Last season's crop size was relatively small, illustrated by small size fruit and very high prices. The new crop is expected to be the opposite with an abundance of supply. As a result, prices have started to come down and are expected to stabilize in the coming months. "While prices at farm level will be lower, stable prices allow retailers to promote avocados and drive consumption."
Demand for avocados in the U.S. continues to grow with about six percent annually. "I don't see that slowing down anytime soon as people will continue to find new ways to use avocados," said Somarriba. From toasts to smoothies, there now is an effort to include avocados in desserts. Outside the U.S., significant growth is expected from the EU and Asia in the coming years. "We witness a growing presence for Mexican avocados in Europe, offering opportunities beyond the U.S. market." Avoworks has the ability to pack for any market.
IFPA show Anaheim
Interested in meeting Pedro Somarriba and the Avoworks team in person? They will be co-exhibiting with Oppy at IFPA's Global Show in Anaheim, California on October 17 and 18. Stop by booth # 1039.
© Avoworks
For more information:
Pedro Somarriba
Avoworks
[email protected]
www.avoworks.com