1. Avocado Shopper Segmentation
2016
Avocado Shopper Segmentation
Avocado Shopper Segmentation
Shopper Groups, Purchase Trends, Demographics and Growth Opportunities
Using Shopper Insights to Drive Retail Sales of Hass Avocados

2. 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

3. Objective and Methodology
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

4. 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 spend. Light households in particular represent a set of shoppers that are only minimally engaged in the category. Light households buy infrequently and their average annual household spend is less than $2. Moving this segment up the ladder may prove challenging.

5. 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

6. SEGMENTATION

7. Segmentation
Segment Share of Avocado Purchasing Households
Segment Annual Household Avocado Spend Range
Super Heavy = $ 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 and $10.44 annually
Households in the lowest-spending quartile (Light), spend $3.89 or less annually

8. 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

9. KEY PURCHASE trends - Annual

10. 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 Household
Avocado buying households average 6.9 trips annually
Spend per Trip
Avocado buying households spend $3.49 per trip X
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)

11. 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

12. Super Heavy households spend four times more per year than Heavy households4X
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

13. Super Heavy households buy more often and spend more per trip than the other groups2X
Higher! 2X
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

14. Together, the number of trips and the spend per trip, account for each group’s usage level profile
High
Dollars Per Occasion
All Buyer Average = $3.49
Low
Low
All Buyer Average = 6.9
High
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 opportunities

15. 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

16. Key purchase Trends - Quarterly

17. Quarterly purchase dollars dip in Q4 for all buyer groups
Total Q3 $450
Total Q4 $345
Total Q1 $420
Total Q2 $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

18. Not all avocado purchasing households purchase avocados every quarter, with penetration at its lowest in Q4 44
MM* 39
MM* 46
MM* 46
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).
However, not all of these 69MM households buy avocados every quarter.

19. 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)

20. 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

21. 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

22. 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

23. Retaining Q3 penetration and per household spend levels in Q4 would result in large sales gains for the category
Household Penetration Opportunity*
Spend per Household 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

24. Demographics

25. 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
18-34
35-44
45-54
55-64
65+
Income
Under $20,000
$20,000 - $24,999
$25,000 - $34,999
$35,000 - $44,999
$45,000 - $49,999
$50,000 - $59,999
$60,000 - $69,999
$70,000 - $99,999
$100,000+
Marital Status
Married
Single
Other (Divorced, Separated, Widowed)
Race
White
Asian
Black
Other
Hispanic/Non-Hispanic
Hispanic (Acculturated + Unacculturated)
Non-Hispanic/Unknown
Household Size 1 2 3 4 5+
Children/No Children
Households with Children
Households without Children

26. The two youngest age groups account for 47% of avocado purchases
% pop
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 households demographic information

27. The top two income groups account for nearly half of avocado purchases
% pop
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 households demographic information

28. $ Purchases $ Purchases $ Purchases
Married households make up 63% of the general population but 72% of avocado purchases
$ Purchases
$ Purchases
$ Purchases
% pop
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 households demographic information

29. $ Purchases $ Purchases $ Purchases
White households account for 72% of avocado purchases, slightly less than their share of the general population
$ Purchases
$ Purchases
$ Purchases
% pop
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 households demographic information

30. $ Purchases $ Purchases $ Purchases
Non-Hispanic households make up 88% of the general population but account for only 76% of avocado purchases
$ Purchases
$ Purchases
$ Purchases
% pop
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 households demographic information

31. $ Purchases $ Purchases $ Purchases
Households with 2 people account for the largest share of avocado purchases
$ Purchases
$ Purchases
$ Purchases
% pop
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 households demographic information

32. $ Purchases $ Purchases $ Purchases
Households without children account for a larger share of avocado purchases than households with children
$ Purchases
$ Purchases
$ Purchases
% pop $
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 households demographic information

33. Appendix ADDITIONAL DEMOGRAPHIC DETAIL

34. Demographics – Age $ Purchases $ Purchases $ Purchases $ Purchases
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases

35. Demographics – Households Income
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases

36. Demographics – Marital Status
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases

37. Demographics – Race $ Purchases $ Purchases $ Purchases $ Purchases
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases

38. Demographics – Hispanic vs. Non-Hispanic
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases

39. Demographics – Household Size
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases

40. Demographics – Households with Children
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases

41. Annual purchase trips and spend per trip opportunity: +1% increase valuation
Number of Trips Opportunity
Spend Per Trip Opportunity

42. Q4 vs. Q3 opportunity gap calculation
Household Penetration Opportunity
Spend per Household Opportunity

43. Thank You