June, 2017

Research Perspective and Comments & Analysis

Avocado Category Reflects A Unique Demographic Profile

By Emiliano Escobedo, Executive Director of the Hass Avocado Board

The avocado category is one of the most successful categories in fresh produce. Nearly 60 percent of U.S. households purchase avocados each year, with an average annual household spend of $23.91, driving total annual household purchases to more than $1.6 billion. The actions of today’s avocado shoppers shape the future of this vibrant category. Understanding these shoppers and how their actions impact the category can help marketers optimize strategies aimed at building avocado sales.

To enrich the industry’s understanding of the avocado shopper, the Hass Avocado Board recently released a new shopper insights digital brochure, the Avocado Shopper Segmentation Action Guide. This brochure focuses on selected findings from the Hass Avocado Board’s full segmentation study (2016 Avocado Shopper Segmentation: Using Shopper Insights to Drive Retail Sales of Hass Avocados). Two of the key take-aways highlighted in the brochure are the impact of top-spending households on the category, and the demographic profile reflected in their purchases.

Two analytical methodologies were used to uncover new insights in these areas. The first analysis developed a purchase-level shopper segmentation. This segmentation was based on avocado purchase data from the IRI Consumer Network, a continuous household purchasing panel that captures actual shopper purchases and behaviors. The demographic analysis was drawn from this same data set.

The segmentation was conducted by ranking avocado purchasing households by each household’s total annual avocado spend (high to low), and then dividing this ranked list into four equal segments. The top-spending quartile (25 percent) was designated “Super Heavy” households, and the remaining three segments were named “Heavy,” “Medium” and “Light” households. The analysis revealed Super Heavy shoppers, while comprising only one out of every four households, account for nearly three out of every four avocado purchase dollars. The analysis also showed the average annual spend for Super Heavy households was $69.77, triple the national average and four times the buying rate of the next highest-spending group, the Heavy households. Drilling into the underlying purchase drivers behind this high rate of purchase revealed that Super Heavy households purchase avocados twice as often and spend twice as much per avocado shopping occasion as the Heavy households.

While all shoppers contribute to the category, the findings indicate Super Heavy shoppers also represent a key growth target. For example, a +1 percent increase in the number of Super Heavy annual purchase trips, or a +1 percent increase in the group’s average spend per trip, represents a potential +$12 million in incremental category purchases. The current purchase habits and the growth potential of the Super Heavy segment speak to how important these households are to the category’s success. But who are the shoppers behind these purchases?

To answer this question, the study examined Super Heavy purchase volume with respect to seven demographic variables. Four demographic variables — age, marital status, household size and income level — stood out. Within each of these four demographic variables, one of the variable’s sub-groups was found to account for a surprisingly large and disproportionate share of avocado purchases. For example, within the age variable, the younger household sub-group (ages 18-44) was found to account for nearly half (49 percent) of all Super Heavy purchases, while comprising only 37 percent of the general population. When segmented by household size, the larger household sub-group (3+ occupants) was also found to account for 49 percent of Super Heavy purchases, yet only 41 percent of the general population. A similar pattern was seen in the marital status sub-groups and income level sub-groups. Overall, a Super Heavy profile emerged skewing to households that are younger, married, larger and have higher incomes. 

The purchase patterns of the Super Heavy segment and the demographic profile reflected in their purchases may signal marketing opportunities for retailers and marketers, and provide insights on the future make-up of the households making these purchases. In addition to these insights, the Action Guide highlights other key take-aways from the Avocado Shopper Segmentation study, including quarterly purchase drivers and more in-depth comparative views of the Super Heavy, Heavy, Medium and Light shopper segments. 

To learn more about how these key shopper segments are driving the avocado category, go to hassavocadoboard.com/retail/market-basket-shopper-trends.

 

Knowing Behavioral Habits Is Key To Success 

Many years ago, a gentleman named Barney McLure was an innovator in the promotion of fresh produce, especially Chilean fruit. But one minor project he took on was a voluntary association of importers of Italian chestnuts. The association didn’t last long because the importers could never resolve a question: Was the industry better off promoting chestnuts in markets where they were already known and selling well — mostly big urban markets such as New York and San Francisco that had large populations of Italian descent — or would the industry be better off promoting in areas with few Italians and with low consumption of chestnuts?

Of course, the key here is defining what “better off” means. Does it mean measuring which effort will result in more product being consumed over the next century? Or does it mean which approach will move more product this season?

The implication of this study by the Hass Avocado Board requires thought. Certainly, for any given supermarket, the big win is capturing “Super Heavy” households from their competitors. Yet for the industry as a whole, it is not clear at all that focusing on these consumers is the way to increase consumption.

Perhaps the real win is to conduct follow-up research focusing on what it is about the habits of Super Heavy users that, if adopted by others, would lead to increased consumption. In other words, it is interesting to know the demographic variables that indicate people are high consumers, but we want to know the eating habits of these high consumption users.

There are hints of this in the study.  It is not surprising that the larger household sub-group, composed of households with three or more people, accounts for 49 percent of Super Heavy purchases, but only 41 percent of the general population. What is really interesting, however, is that small households account for 51 percent of the Super Heavy purchasers.

What does that mean? Why do these smaller households buy so many avocados?  Maybe we can find that the habit distinguishing such purchasers is that they incorporate avocado into breakfast — whereas lower consumption people do not. Maybe the Super Heavy purchasers eat guacamole every day when eating chips while watching TV, whereas consumers with lower consumption prefer salsa or onion dip, or don’t eat chips or don’t watch TV.

Here is another thought — are we certain that the Super Heavy purchasers actually eat more avocado? Is it possible they eat at home more, whereas lower-volume consumers eat at restaurants more? Or, is it possible that Super Heavy purchasers make things such as fresh guacamole from avocados they buy in the store, whereas others prefer to buy pre-made guacamole?

One question that also requires further research is whether the various demographics reported are actually serving as proxies for other, more explanatory, traits. For example, other parts of the study point out that while Hispanics account for 12.3 percent of the general population, they account for 24 percent of total avocado buyers and 26.7 percent of Super Heavy buyers. To what degree other demographics, say larger families or more children, are a proxy for Hispanic is difficult to tell from this research.

It is easy, and correct, to say that the win for any given retail chain is to attract the Super Heavy buyers. Understanding their demographics can only help develop a strategy to do that. So this research offers important clues for retailers today.

Because Super Heavy buyers enjoy avocados, it is possible that promotions aimed at customers who are already Super Heavy buyers might lead to even higher consumption and purchases — though this too must be researched carefully. Short-term increases in sales can lead to dips in purchases the next week after the sale or promotion is over. Increased usage also can lead to a kind of taste-fatigue, where consumption and purchasing balances out over a year or other period.

Yes, avocados are a product with the wind very clearly at the back of the industry. One can scarcely read a health report today without finding health professionals singing the praises of eating more fat, especially the monounsaturated fat in avocados. It would be a terrible shame to not use this opportunity, this “learning moment,” to encourage people who rarely or never eat avocados to begin doing so now.

The best way to make this happen is to use the demographics revealed in this study as a foundation for deeper behavioral research. To increase consumption, we have to identify eating occasions where people can eat avocados. A good way to do that is to study current high-volume consumers and see if we can encourage others to try enjoying avocados in many of the same ways — and at as many occasions — as these high-volume consumers currently do.