Fallbrook-based Del Rey Avocado Co., expanded its operations this year by opening up a new facility in nearby Vista that added 43,000 square feet of cold storage and ripening room space to its existing footprint in San Diego County.
Since 1969, Del Rey Avocado Co. has operated from the same facilities in Fallbrook, California (northern San Diego County). For the last several years, the company knew that they would out grow their current facility and would need to begin searching for a suitable location in the surrounding communities to keep up with customer demand.
The decision to purchase a new facility in Southern California follows in the footsteps of the company’s expansion when Del Rey Avocado purchased their new facility in Vineland, New Jersey back in January 2017, and then had to double its capacity thanks in large part to increased avocado consumption and outstanding customer relationships.
For several months the partner families (the Lucy’s and the Siemer’s) searched for suitable land in which to build a new facility. As fate would have it, their exhaustive search lead to the discovery of a very functional and modern existing warehouse facility a short drive away from their Fallbrook headquarters, in Vista, California (also in Northern San Diego County).
This new facility would allow the company to become operational in less than half the time of building a new facility, additionally the new facility is conveniently located to major transportation routes. The Vista facility will add an additional 43,000 square feet of Cold storage and ripening rooms to the existing footprint in San Diego County.
Company President Bob Lucy told The Produce News in late July that the new facility is working well but he did admit that it is quite a job to add a new facility. “The hardest thing is finding people to work and fill the positions,” he said.
That sentiment is being felt up and down the state as agricultural employers try to find sufficient labor to harvest their crops, and work in packing, processing and cooling facilities.
Turning his attention to the current avocado marketing situation, Del Rey’s top executive said the big question over the next couple of months is how quickly Mexico will ramp up its volume and send large volumes of fruit to the United States. “We like to talk in truckloads. When will Mexico start sending us 1,000 truckloads a week (approximately 40,000 pounds per truck)?” he asked.
California and Peru added an average of a combined 625 truckloads per week during June and July. The U.S. consumption rate is, on average, between 1,200 and 1,300 truckloads per week.
The Peruvian/California volume will be out of the marketplace by September. If Mexico ramps up and starts sending in excess of a 1,000 truckloads per week, the demand and supply situation will be in good shape. If the number of truckloads only reaches 500 per week, Lucy indicated that would represents a big shortage problem.
Of course, he said another big factor in the demand equation is the size of the individual fruit. In late-July, Lucy noted that the market for 48s (the most popular size) at the Mexico-Texas border was $61. That price indicates a demand exceeds supply situation for that size.
While demand was still robust for smaller sizes, he said size 60 fruit was being sold at $44-$46, while 70s were close to $40 and the small 84 size fruit was in the $30s. He indicated that it is rare to have such a large dollar spread between 48s and 60s.
While Mexico will be the dominant supplier in the fall, Del Rey will begin importing Chilean avocados for a couple months beginning after Labor Day to help augment Mexico’s weekly shipments. By then he expects the market to drop from its current spot but he wouldn’t predict where it would settle.
Del Rey is typically the last shipper in the California deal as it represents a cadre of growers in the Morro Bay region of California that market their fruit under a label designating that region as the source. The growers from that region swear that by the end of the summer they produce the best tasting avocado there is due to the extra time it spends on the tree. Morro Bay has a cool, foggy environment allowing the fruit to hang on the tree for 12-18 months before being harvested.
Lucy said California growers have had such a high field price this year for the fruit, it has tempted some of the later growers to pick their fruit early and not market it under the Morro Bay brand. They reasoned they should not add risk by keeping the fruit on the tree when the market is so high.
Lucy said Del Rey still will have about 30,000 cartons of Morro Bay-labeled fruit in the program, which is only about one-third of what it anticipated. That fruit will most likely stay in California and be sold by high-end retailers in the September/October time frame.
The new facility will service customers the Western United States (primarily west of the Rocky Mountains) as well as imports from Mexico. The market in the Western and Southwestern United States continues to grow as avocados become a staple in the American diet.
More and more retailers are adding additional SKUs where they traditionally carried only bulk avocados. Many retailers are carrying at least three different pack options, which research has shown increases consumer purchases. The addition of the SKUs has not taken away from the bulk sales, rather it has increased the overall sales of avocados. This is a proven merchandising strategy in produce departments as evidenced by Nielsen market research conducted on “berry patch” merchandising, and other specialty commodities like artichokes.
“Our growth an expansion would not be possible without the support of our customers and the tremendous relationships we enjoy with them. In addition to our customers, our employees are the key to our growth and success. Not a day goes by that we don’t counting our blessing,” said Bob Lucy, President.
Del Rey Avocado is one of the few California based companies that owns its facilities on the West and East Coasts, which gives the company total control over operations. The company employs 85 full-time professionals who are experts in avocado ripening and handling out of the Southern California facilities.
“Opening a new facility has long been our goal and desire to streamline our operations, improve efficiencies and offer us an opportunity to be innovative in meeting the need of our customers. The new Vista facility will also provide our growers many benefits as it will allow us to receive fruit faster and get products to market faster,” said Bob Siemer, Chief Agronomist/Partner.
Del Rey Avocado expects the demand for its fruit to continue to increase over the next five to seven years and is well positioned with strong growers and international procurement to keep up with the demand from retailers, foodservice, and ultimately consumers who love avocados.