2016

Avocado
Shopper
Segmentatio
n

Avocado Shopper Segmentation

Shopper Groups, Purchase Trends, Demographics
and Growth Opportunities

Using Shopper Insights to Drive Retail Sales of Hass Avocados

 Table of Contents

Objective and Methodology 3

Executive Summary 4

Segmentation 6

Key Purchase Trends - Annual 9

Key Purchase Trends - Quarterly 16

Demographics 24

Appendix 33

2
 Objective and Methodology
Objective
Understanding fresh avocado shoppers and their purchase behaviors can help
marketers and retailers create strategies that build loyalty, drive traffic and grow
sales of Hass avocados. The objective of this study is to better understand
avocado shoppers by developing a shopper segmentation based on their actual
avocado purchase levels (Super Heavy, Heavy, Medium and Light), and to identify
the underlying purchase behaviors and demographics. Additionally, this study
aims to understand how avocado purchase behaviors vary quarterly throughout
the year to identify opportunities for further category growth.

Methodology
• Time Periods:
– Current Year: 52 weeks ending 6/12/2016
• Q3, 2015: 13 weeks ending 9/13/2015
• Q4, 2015: 13 weeks ending 12/13/2015
• Q1, 2016: 13 weeks ending 3/13/2016
• Q2, 2016: 13 weeks ending 6/12/2016
– Prior Year: 52 weeks ending 6/16/2015
• Data source: IRI Consumer NetworkTM - Consumer Purchase Trends
– Household panel data from the National Consumer Panel (NCP), an operational joint
venture between IRI and Nielsen. The panel consists of a representative sample of
approximately 120,000 U.S. households, balanced to the general U.S. population, who
electronically record all purchases
– In this study, “General Population” refers to the total panel
– The NCP captures the dollar value of fresh avocado purchases, not the volume (eaches).
Throughout this report, “purchases” refers to purchase dollars 3
 Executive Summary

Fresh avocados is one of the most successful categories in fresh produce,

with double-digit growth rates fueled by annual household purchases in
excess of $1.6 billion. Driving this growth are the nearly 60% of U.S.
households that purchase fresh avocados throughout the year.
While most households are repeat buyers, a very large proportion of avocado
purchase activity is concentrated in a relatively small slice of households.
This top-spending quartile (25%), designated as Super Heavy households,
accounts for nearly three out of every four avocado purchase dollars. With an
average annual avocado spend of nearly $70, Super Heavy households are
extremely influential and important to the future of the category.
The other three quartiles each account for a smaller share of avocado dollars
than their respective share of households would suggest. As the second-
highest spending quartile (25%), Heavy households account for 18% of
avocado purchases. On a combined basis, Super Heavy and Heavy
households account for 91% of all avocado purchases at retail. These two
shopper groups are the key to the growth that the avocado category has
been experiencing.
In stark contrast, on a combined basis, Medium and Light households
comprise 50% of all avocado purchasing households, yet only 9% of the
4
spend. Light households in particular represent a set of shoppers that are
 Executive Summary

Because of their greater involvement in the category, Super Heavy and

Heavy households may be more apt to respond positively to marketing
efforts to increase their purchases.
Some clues to stimulating purchases by Super Heavy and Heavy
households are revealed in their quarterly purchase patterns. Household
avocado purchases are highest in Q3* and dip to a quarterly low in Q4.
Three percent of Super Heavy households and seven percent of Heavy
households drop out of the avocado category altogether in Q4. Finding
ways to keep these influential shoppers interested in avocados at this time
of year could add as much as $16 million to the category. Improving
purchase frequency and spend per trip could yield even greater gains.
This study also provides demographic detail for each of the segments and
for avocado households in total. In many respects, the four segments
reflect the general U.S. population. In other respects, the figures reveal
distinct skews that may signal marketing opportunities and provide
insights on the future make up of avocado purchasing households.
Building sales and marketing strategies that leverage the segmentation,
seasonality and demographic insights in this study can help strengthen
and expand sales of Hass avocados in the retail marketplace.
* See Methodology for dates 5
SEGMENTATION

6
 Segmentation

Segment Share of Avocado Purchasing Households Segment Annual Household Avocado Spend Range

Super Heavy = $26. 95 or

more

Heavy = $10.45 to
$26.94

Medium = $3.90 to
$10.44

Light = $3.89 or less

• This segmentation ranked avocado purchasing households according to each

household’s total annual avocado spend (high to low). This ranked list was then
divided into four equal segments (buyer groups)
• Households in the top-spending quartile (Super Heavy), spend $26.95 or more
annually on avocados
• Households in the second highest-spending quartile (Heavy), spend between $10.45
and $26.94 annually
• Households in the third highest-spending quartile (Medium), spend between $3.90 7
and $10.44 annually
 Super Heavy households account for one out of four
households, but three out of four avocado purchases

Segment Share of Avocado Purchasing Households

• Super Heavy households account for 73% of annual avocado purchases

• Heavy households account for 18% of annual avocado purchases
• Together, Super Heavy and Heavy households account for 91% of avocado purchases.
These two segments are essentially driving the growth trends in the avocado category
and represent key targets for marketers and retailers seeking to drive continued growth
• In contrast, Medium and Light households comprise fifty percent of all avocado
purchasing households but account for only 9% of annual avocado purchases
8
KEY PURCHASE TRENDS -
ANNUAL

9
 Nearly 6 out of 10 U.S. households purchase
avocados, and spend on average $24 per year

Annual Purchase Dollars = $1.6 Billion*

Household
Penetration
57% of U.S.
households buy
avocados
Spend per Household
Avocado spend per
household averages $23.91
annually

Number of Trips per Spend per Trip

Avocado buying
Household
Avocado buying
X households spend
households average 6.9 $3.49 per trip
trips annually
Data Source: IRI Consumer NetworkTM 2016
All figures are rounded
*Total number of U.S. households = 121MM. Annual avocado penetration = 57% = 69MM households purchasing avocados annually (57% * 121MM = 69MM).
Annual purchase dollars = $1.6B (69MM households with an annual spend per household at $23.91) 10
 Most households that purchase avocados are
repeat buyers

• 78.3% of total avocado households purchase avocados more than once per year
• Nearly all Super Heavy and Heavy households purchase more than once per
year

11
 Super Heavy households spend four times more
per year than Heavy households

4X
Higher!

• Average annual avocado spend per household (All Buyers) is $23.91

• Super Heavy households spend an average of $69.77 per household, more than
four times that of Heavy households

12
 Super Heavy households buy more often and
spend more per trip than the other groups

2X 2X
Higher! Higher!

• Super Heavy households average 15 purchases annually, more than twice that
of Heavy households
• At $4.64 per trip, Super Heavy households have the highest spend per trip of
the four groups, and nearly twice that of the Heavy group
13
 Together, the number of trips and the spend per
trip, account for each group’s usage level profile

Dollars Per Occasion High

All Buyer Average =

$3.49
Low

Low All Buyer Average = High

6.9
Purchase Occasions

• Super Heavy and Heavy households purchase avocados more often, and spend
more per trip, than Medium and Light households
• On these two key purchase metrics, Super Heavy households far outpace even
the second highest group, Heavy households
• These two purchase metrics are key to understanding the underlying shopper
dynamics driving growth in this category, and also help identify developmental
14
opportunities
 The value of a +1% increase in number of purchase
trips or spend per trip for Super Heavy households is
4 times higher than for Heavy households

Number of Trips Opportunity Spend Per Trip Opportunity

• A +1% increase in number of purchase trips or spend per trip for Super
Heavy households represents a +$12MM opportunity for the category
• In contrast, a +1% increase in number of purchase trips or spend per trip
for Heavy households represents a +$3MM opportunity for the category

*See Appendix page 41 for full opportunity calculation

15
KEY PURCHASE TRENDS -
QUARTERLY

16
 Quarterly purchase dollars dip in Q4 for all
buyer groups

Total Q3 Total Q4 Total Q1 Total Q2

$450 $345 $420 $433

• Avocado purchases reach their lowest point in Q4 at $345 million

• This drop in purchases occurs across all four buyer groups
• However, each buyer group’s relative share of purchases remains
approximately the same quarter-by-quarter, with Super Heavy households
accounting for approximately three-fourths of each quarter’s purchases
• Subsequent pages examine the purchase trends driving these results
17
 Not all avocado purchasing households purchase avocados every
quarter, with penetration at its lowest in Q4

44 39 46 46
MM* MM* MM* MM*

• While annual household penetration is 57%, quarterly penetration

is lower: Not all avocado purchasing households purchase
avocados every quarter
• Household penetration reaches its lowest point in Q4, with only
32% of U.S. households buying
*Total # of U.S. households = 121MM. Annual avocado penetration = 57% = 69MM households purchasing avocados annually (57%
* 121MM = 69MM). 18
However, not all of these 69MM households buy avocados every quarter.
 Average spend per household is lowest in Q4 and
does not fully recover in the following two quarters

• Average spend per household is lowest in Q4 at $8.77

• The low Q4 penetration (page 18) and the low spend per
household (above) are the key purchase trends underlying the low
overall Q4 purchase dollars (page 17)

19
 Both the number of purchase trips, and
the household spend per trip, decline
in Q4

• The number of purchase trips hits a low in Q4 at 2.5 trips

• Spend per trip shows a sharp decline in Q4 and continues to
decline steadily throughout the next two quarters
• The next page examines these quarterly purchase trends by buyer
group

20
 Household penetration and spend per household
drop for all four buyer groups in Q4

SH and H $ spend per

household drops more than
other buyer groups in Q4

Household penetration dips

in Q4 across all four groups

• Q4 household penetration drops for all buyer groups, but less so for Super
Heavy households
• While the penetration decline is less pronounced for Super Heavy households,
this group shows the deepest Q4 decline in avocado spend per household

21
 All* buyer groups display a Q4 decline in
number of trips and spend per trip

SH, H and M households

purchase less often in Q4

* L household # trips
increased nominally
after Q4

• The number of trips hits a low in Q4 for Super Heavy, Heavy

and Medium households, with Super Heavy households showing
the greatest decline
• Q4 spend per trip declines for all buyer groups from its high in
Q3, and does not recover in the subsequent two quarters

22
 Retaining Q3 penetration and per household spend levels
in Q4 would result in large sales gains for the category

Household Penetration Spend per Household

Opportunity* Opportunity*

• For example, lifting Q4 penetration to match Q3 for Super Heavy and Heavy
households represents a +$16MM sales opportunity for the category
• For example, lifting Q4 dollar spend per household to match Q3 for Super
Heavy and Heavy households represents a +$72MM sales opportunity for the
category

*See Appendix page 42 for full opportunity calculation

23
DEMOGRAPHICS

24
 Notes on Demographic Groups

Each of the demographic categories presented in this report reflects the

standard sub-breaks available from the IRI National Consumer Panel (NCP)

• Age • Race
– 18-34 – White
– 35-44 – Asian
– 45-54 – Black
– 55-64 – Other
– 65+
• Hispanic/Non-Hispanic
• Income – Hispanic (Acculturated +
– Under $20,000 Unacculturated)
– $20,000 - $24,999 – Non-Hispanic/Unknown
– $25,000 - $34,999
– $35,000 - $44,999 • Household Size
– $45,000 - $49,999 – 1
– $50,000 - $59,999 – 2
– $60,000 - $69,999 – 3
– $70,000 - $99,999 – 4
– $100,000+ – 5+

• Marital Status • Children/No Children

– Married – Households with Children
– Single – Households without Children
– Other (Divorced, Separated,
Widowed)
25
 The two youngest age groups account for 47% of
avocado purchases

% $ $ $
pop Purchases Purchases Purchases

49.2
46.9 %
37.0 41.9
%
% %

• The two youngest age groups comprise 46.9% of avocado purchases but only 37.0% of the
general population
• In the Super Heavy group, the two youngest age groups account for an even larger share of
avocado purchases (49.2%)

Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light 26
households demographic information
 The top two income groups account for nearly
half of avocado purchases

% $ $ $
pop Purchases Purchases Purchases

39.5
% 47.3 48.4 46.4
% % %

• Across many of the income groups, avocado purchase distribution is similar to the
distribution of households in the general population
• The top two income groups comprise 47.3% of avocado purchases but only 39.5% of the
general population
• In the Super Heavy group, the top two income groups account for an even larger share of
avocado purchases (48.4%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light 27
households demographic information
 Married households make up 63% of the general
population but 72% of avocado purchases

% $ $ $
pop Purchases Purchases Purchases

• Married households account for 62.9% of households in the general population, but account
for a greater percentage of avocado purchases (71.7%)
• In the Super Heavy group, Married households account for an even larger share of avocado
purchases (73.6%)

Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light 28
households demographic information
 White households account for 72% of avocado
purchases, slightly less than their share of the
general population

% $ $ $
pop Purchases Purchases Purchases

• White households account for 76.4% of the general population, but they account for 71.7% of avocado purchases
• Asian and Other households account for a larger share of avocado purchases (19.8%) than their representation in the
general population (11.2%)
• In the Super Heavy group, Asian and Other households account for an even larger share of avocado purchases
(21.9%)

Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light 29
households demographic information
 Non-Hispanic households make up 88% of the
general population but account for only 76% of
avocado purchases

% $ $ $
pop Purchases Purchases Purchases

• Non-Hispanic households account for 87.7% of households in the general population, but a
lesser percentage of avocado purchases (76.0%)
• Hispanic households account for a larger share of avocado purchases (24.0%) than their
representation in the general population (12.3%)
• In the Super Heavy group, Hispanic households account for an even larger share of avocado
purchases (26.7%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light 30
households demographic information
 Households with 2 people account for the largest
share of avocado purchases

% $ $ $
pop Purchases Purchases Purchases

• Households with 2 people account for 32.1% of avocado purchases

• Combined, households with 3, 4 and 5+ people account for a larger share of avocado
purchases (49.1%) than their representation in the general population (40.7%)
• In the Super Heavy group, households with 3, 4 and 5+ people account for an even larger
share of avocado purchases (50.8%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light 31
households demographic information
 Households without children account for a larger
share of avocado purchases than households
with children

% $ $ $ $
pop Purchases Purchases Purchases

• Households without children make up two-thirds of the general population, but a lesser share of avocado
purchases (59.1%)
• Households with children account for a larger share of avocado purchases (40.9%) than their representation in
the general population (33.2%)
• In the Super Heavy group, households with children account for an even larger share of avocado purchases
(42.4%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light 32
households demographic information
APPENDIX
ADDITIONAL DEMOGRAPHIC DETAIL

33
 Demographics – Age

% $ Purchases $ Purchases $ Purchases $ Purchases $ Purchases

pop

34
 Demographics – Households Income

% $ Purchases $ Purchases $ Purchases $ Purchases $ Purchases

pop

35
 Demographics – Marital Status

% $ Purchases $ Purchases $ Purchases $ Purchases $ Purchases

pop

36
 Demographics – Race

% $ Purchases $ Purchases $ Purchases $ Purchases $ Purchases

pop

37
 Demographics – Hispanic vs. Non-Hispanic

% $ Purchases $ Purchases $ Purchases $ Purchases $ Purchases

pop

38
 Demographics – Household Size

% $ Purchases $ Purchases $ Purchases $ Purchases $ Purchases

pop

39
 Demographics – Households with Children

% $ Purchases $ Purchases $ Purchases $ Purchases $ Purchases

pop

40
Annual purchase trips and spend
per trip opportunity: +1% increase
valuation
Number of Trips Opportunity

Spend Per Trip Opportunity

41
Q4 vs. Q3 opportunity gap calculation

Household Penetration
Opportunity

Spend per Household

Opportunity

42
Thank You

43