By Emiliano Escobedo, Executive Director, Hass Avocado Board
Millennial shoppers are becoming increasingly important to a retailer’s bottom line. The Hass Avocado Board’s Keys to the Cart: Driving Hass Avocado Sales at Retail study reveals how Millennials are impacting one of the largest categories of fresh produce.
Millennial households are one of several “high-value” shopper groups that are particularly influential in driving avocado category growth. Other high-value groups identified in the study include households that buy both bulk and bagged avocados (“Both” households) and households in regions with above average avocado sales relative to the region’s population (“Developed” regions).
This study analyzed two years of data (June 2013 through June 2015) from the IRI Consumer NetworkTM, which is a continuous household purchasing panel that captures actual shopper purchases and behaviors. For this study, Millennials were defined as households in which the head of household was between 25 and 34 years of age. Non-Millennial households were those in which the head of household was 35 or more years of age.
The avocado shopping habits of these two demographic groups were notably different, with Millennial households outperforming Non-Millennial households across a number of key purchase metrics. One prominent difference was household penetration — the percentage of households purchasing avocados. Fifty-six percent of Millennial households purchased avocados in the most current 12-month period studied, compared to 51 percent of Non-Millennial households.
Moreover, the annual Millennial spend of $22.66 exceeded the Non-Millennial spend by $2.43. Millennials bought less often than Non-Millennials (5.6 versus 6.1 occasions) but spent +22 percent more per occasion. The high household penetration and high spend rate for Millennials are evidence of their important influence on category growth.
The benefits of focusing on Millennial shoppers extends beyond the avocado category, with Millennials driving higher overall retail market basket value. Millennial baskets with avocados averaged $76.36 compared to $65.56 for Non- Millennial baskets — delivering an additional +16 percent average sales boost.
For many fresh produce commodities, sales of fixed weight/packaged units are exhibiting a clear retail growth trend. This study examined how fixed weight and bulk purchase options are playing out for the avocado category. The data showed that over the course of the year, the majority of households (82 percent) purchased only avocados sold in bulk. A small percentage (3 percent) purchased only bags. The remaining 15 percent of households purchased both bulk and bagged (not necessarily on the same occasion). Similar to the Millennials, this “Both” group comprises a high-value shopper segment in the avocado category.
Although not the largest group, “Both” buyers have above-average avocado spending habits. At $41.84, the annual spend by “Both” shoppers was twice that of Bulk-Only and three times that of the Bagged-Only shoppers. One factor driving this high annual spend is the frequency of purchase. “Both” shoppers averaged 9.7 purchase occasions per year compared to 5.4 for Bulk-Only and 2.3 for Bagged-Only households. Retailers who offer bulk and bagged avocados may realize an increase in the value of their shopping baskets. At $81.22, the basket value for “Both” shoppers was +32 percent higher than Bulk-Only shoppers.
The study also looked into purchase habits across different geographies. Using the eight standard IRI regions, the study created an index that compared each region’s share of total avocado sales to its share of U.S. population. Regions with a higher index (California, West and South Central) were aggregated into the “Developed” group. Regions with a lower index (Plains, Great Lakes, Midsouth, Southeast, and Northeast) were classified as “Emerging.”
The high index in Developed regions can be partly attributed to the higher percentage of households purchasing in these regions. Sixty-six percent of households in Developed regions bought avocados, compared to 45 percent in the Emerging group. Households in Developed regions also spent more each year on avocados. At $25.85, the annual spend in the Developed group was nearly +$9 higher. The strong household penetration and annual spend rate in the Developed group are indicative of a high level of shopper engagement, which bodes well for continued avocado category growth.
In contrast to the Developed regions, avocado consumption in the Emerging regions indexes lower. Yet the purchase metrics in this group point to ample opportunity for category growth. Currently, less than half of all households in this group purchase avocados. Increasing this rate — bringing more users to the category — could have a notable impact on category growth.
Among those households currently buying avocados, the annual avocado spend is up +32 percent versus the prior year. Retailers in Emerging regions also had higher value market baskets with avocados. At $69.11, the value was nearly +$3 higher than in developed regions. Headroom to expand penetration, and strong annual spend and basket values point to a healthy outlook for growth in the emerging regions.
The high-value segments detailed in this study, are key drivers of category growth at retail. The insights gained in this study can help decision-makers spot prime opportunities for the next big wave of category growth.