Great ResignationInflationSupply ChainsLeadership

These 3 Charts Show Why Avocado Prices Are Not Coming Down

May 5, 2017, 8:21 PM UTC

You could be forgiven for thinking your favorite foods and beverages seem to always be in a state of crisis.

The price of avocados soared this week, just months after an avocado shortage last fall. In 2015, the California drought caused a frenzy over the cost of wine and crop predictions set off the great pumpkin shortage rumors leading up to Thanksgiving. There was a chocolate panic in 2014. And back in 2010, the food industry was worried about grain.

These stories, including the current avocado panic, remind us that our favorite foods are subject to all manner of external forces that can wipe out huge swaths of the supply chain. Food trends, like avocado toast, usually start off slow before they take off at a fast and unrelenting clip. But that supply chain, in particular for avocados, will always get pushed and pulled by things like harvests that vary season to season, persistent droughts in California, and workers’ strikes in Mexico.

What’s more, the U.S. has to contend with more competition for the harvests because avocados have started becoming more popular in China and Europe.

So while the current price spike is untimely because of Cinco de Mayo, it isn’t all that surprising.

Leading up to Cinco de Mayo this week, the price of a 22-pound box of Hass avocados from the state of Michoacan, Mexico’s biggest producer, was $27.89 according to the government.

The average American consumed 7 pounds of avocado in 2014, up from 1.1 pounds in 1989 according to the Agricultural Marketing Research Center.

Avocados are everywhere now — even Starbucks announced last month that it will cash in on the trend and begin selling avocado toast. And in an effort to keep up with demand, the U.S. has seen a 1,342% increase in availability from 1970 to 2014 according to the USDA.

Avocados are an alternate-bearing crop, with plants producing large yields one year. That depletes the resources in the soil, which results in a smaller harvest every other year. USDA data shows that imported avocados have increased tenfold over the last 15 years as U.S. growers struggle to keep up with demand.

Grace Donnelly

Consumers expect avocados to be available year-round in restaurants as well as the supermarket. Mentions of terms such as “avocado” and “guacamole” in restaurant reviews on Yelp react to some seasonal changes, but “avocado toast” has seen a steady increase since 2014.

“Looks like peak avocado, nationally, was 2010. Though the drop since then hasn’t been all that steep,” said Yelp data scientist Carl Bialik. The data he shared shows that roughly one in every 100 reviews on Yelp mentions the word “avocado” or “guacamole.”

Grace Donnelly

When he looked at regional popularity, Bialik said that mentions of avocados are still climbing in northern cities. Of the 20 cities with the highest percentages of reviews mentioning avocado menu items, five are in California.

Unfortunately, the outlook for the coming months isn’t good. The California Avocado Commission expects to see a low-yield harvest through the late summer. California’s avocado yield, the largest in the U.S., will drop about 44% from last year, according to the state’s avocado commission forecast.

With so much demand and low domestic production, don’t expect prices to drop after Cinco de Mayo. Picking up Hass avocados at the grocery store in April cost you about 77% more than a year earlier according to the USDA and high prices might stick around.

“It could be all the way through summer,” Roland Fumasi, an analyst at Rabobank in Fresno, California, told Bloomberg.