Bring up the avocado, and most Americans likely conjure up guacamole with Mexican fare, or the fabled avocado toast synonymous with hipster cafes. However, most are unaware of the now-coveted fruit’s storied past and the rapid changes taking place within the avocado market by the day.
The avocado’s domestication dates back 4800–6000 years to Mexico, Guatemala, and portions of the Andes. It was a delicacy to the Mayan and Aztec peoples, who held the crop in high regard for its spiritual significance and symbolization of fertility. It was used as an aphrodisiac. Following the arrival of Spanish conquistadors to Central America and Peru in the 16th century, the avocado crop was circulated and eventually exported to numerous parts of the world with suitable conditions, mostly in the tropical periphery. Eventually, it was cultivated in Jamaica, the Philippines, Singapore, and even India; consequently, the avocado adapted and new species were born. The crop’s slow diffusion was later facilitated by international trade, and it was only in the 19th century that it was commercially grown.
In the late 20th century, the avocado gathered steam in the United States, but neither production nor demand was nearly on par with current levels. However, with the ratification of NAFTA, quotas on Mexican goods were removed, inducing a surge in avocado exports to the US. This, paired with effective marketing campaigns, celebrity endorsements, and research lauding its health benefits ultimately lit the spark for the creation of the massive market for avocados that exists today. In just over a decade, avocado consumption has increased fourfold, created 19,000 jobs in the US, and increased the US GDP by $2.2 billion. Also, from a market standpoint, rising demand coupled with constricted supply has led to a hike in avocado prices recently.
Demand has risen for a multitude of reasons. Firstly, the avocado was naturally a sensation given the current virality of clean eating and the “Mediterranean Diet” with Millenials. However, the avocado has not always enjoyed popularity among the health-conscious- when experts began to promote a low-fat diet, the avocado received backlash for its high fat content, demonstrating the susceptibility of demand to marketing and fad diets driven by nutritional concerns. Just a few years later, Superbowl promotions featuring chips and guacamole proved to be massively popular, catapulting the avocado to fame. Additionally, the demand for the avocado is inelastic: buyers’ spending habits are relatively unaffected by changes in avocado prices. Additionally, there are few viable substitutes for the avocado. Moreover, consumers have the financial means to pay for their avocado expenditures- the avocado’s most avid consumers are mostly childless 18–44-year-olds in the top two income brackets.
Avocado supply fails to meet the soaring demand for a number of reasons. Firstly, avocados are difficult to cultivate- they require exorbitant amounts of water (nearly three times more than the potato), require a specific soil salinity level, and can be cultivated in a very narrow range of weather conditions. Farmers in Peru and Mexico have taken drastic actions to meet demand, to the extent of illegally clearing forests and cultivating avocados in barren areas. California, which is responsible for four-fifths of domestic produce, has experienced a plummet in production after droughts, wildfires, and erratic weather- nearly doubling prices. However, natural phenomena are not the only factors responsible for the volatile supply of avocados. Trump proposed placing tariffs on Mexican imports, including avocados. Although this would tighten supply and drive prices up, many producers remain unperturbed- “given the inelastic nature of Americans’ demand for avocado, it is expected that buyers, not Mexican farmers, would bear the brunt of the tariffs. However, this move may be detrimental to small businesses, as it would increase their variable costs, lowering their profit. Overall, the market’s failure to supply avocados to consumers’ insatiable diets has led to the development of cartels such as La Familia, which has gained notoriety for its extortion of farmers in order to traffick the good.
Although avocados are most popular in the west, more producers are aiming to gain traction with Chinese consumers, as the proliferation of the Chinese middle class in the last decade presents bountiful opportunities to marketers. In recent years, China has loosened tariffs on avocado imports, taking in one thousand times more produce than they did a decade ago. The young, urban Chinese- who see the avocado as exotic and healthy- have in fact helped double worldwide total avocado sales in the past year.
The meteoric rise of the avocado has been unpredictable and controversial. Currently, demand is rapidly outpacing supply, and prices remain high. The avocado boom has undoubtedly benefited consumers and producers alike, but some avocado production tactics raise environmental concerns. It is not clear what the future holds for the avocado, but demand is surely unlikely to waver. Perhaps, the avocado market will budge closer to perfect competition; as more suppliers enter the lucrative industry, prices could fall. Maybe, the future lies in GMO: scientists are attempting to produce a type of avocado that can withstand dry conditions. Whatever the case, avocados will continue to be a staple in the diet of millions, and guacamole is likely here to stay.