Mango business looks like avocado category ’30 years ago:’ Mission Produce CEO
Yahoo Finance’s Alexis Christoforous discusses the avocado industry with Steve Barnard, Founder & CEO of Mission Produce.
ALEXIS CHRISTOFOROUS: Welcome back. Once considered a luxury, avocados have become part of American's everyday diet, and that is certainly good news for Mission Produce, one of the world's largest avocado distributors, but now the company known for avocados is adding another fruit to their portfolio. Here to talk about that and more is Mission Produce founder and CEO, Steve Barnard.
Steve, good to see you again. So big news here, Mission Produce heading into the mango business. Tell us why you decided to do that, and what's it going to mean for your portfolio?
STEVE BARNARD: Well, the mango business is fascinating. We were in it years ago and got out of it to focus on avocados. But when you look at the category compared to avocados, it's real similar to what the avocado category looked like 30 years ago. People were not ripening them, and they didn't really have the right varieties at the right time, and that has since changed. And obviously, the consumption has gone up.
We think we can do the same thing with mangoes. They are the world's largest consumed fruit. That's just not here in the United States. And I think if we get the right variety at the right time and ripen them and deliver them and give the consumer a great experience, you'll see the same result. The advantage for Mission is we get to use the same facility, the ripening for the avocados. So leveraging the transportation, leveraging the logistics and the facilities, we think will be a great benefit.
ALEXIS CHRISTOFOROUS: So there's definitely, you know, a lot of opportunity, perhaps untapped opportunity for mangoes here in the US. Can you share with us what that might translate into in terms of revenue for Mission Produce looking out the next quarters and years?
STEVE BARNARD: Oh, we don't really have a number on it. We just-- we're going to kind of pull it through the system rather than push it, but I think, down the road, it'll be substantial. It won't be anything like the avocado category, but I think it'll be a great contributor.
ALEXIS CHRISTOFOROUS: Now, you became a publicly traded company last fall. The stock has had a really nice ride. It's up better than 60% since you guys went public. I know, this last quarter, revenue was down for the second straight quarter. Net income, though, was on the rise in the first quarter of 2021, and you were able to do that despite a drop in avocado prices. How are you able to pull that off?
STEVE BARNARD: Well, that's really affected the revenue number. The pricing out of Mexico, they had a huge crop, sent more fruit to the market than the market could absorb. So your only variable at that point is price. So our volume continues to go up. Our market share continues to go up. Our margins remain the same, or in many cases, at least stable, so that, really, the pricing doesn't affect Mission unless we're growing our own, and we're starting to grow our own now, I mean, harvest our own out of Peru here in the next few weeks. So price will be much more relevant at that point than it has been over the last six months.
ALEXIS CHRISTOFOROUS: Where do you expect prices to go? I mean, I know I'm asking you to look into a crystal ball, but for us, going to the supermarket and buying our produce, should we expect avocado prices-- I mean, have they sort of plateaued at the moment, or where do you think they're going to be going over the summer months?
STEVE BARNARD: We think it's plateaued. I mean, it's higher, much higher than it was a couple of months ago, and I think it'll level off. The Mexican crop is getting towards the end of the season. The California crop is down a little bit this year because they're alternate bearing, and that the Peru crop is coming in, and it's got a larger crop. So it'll just level off, we think, but consumption continues to go up not only here, but in Europe and Asia every year.
And, I mean, just today, I saw that a hamburger chain is advertising if you put an avocado on your hamburger, it'll negate the negatives of eating meat. So, I mean, it just keeps rolling. This category is-- we got in the right place at the right time.
ALEXIS CHRISTOFOROUS: It's a miracle fruit, right? OK. I know that you were the first to send avocados to China via Peru, Chile, and Colombia. But just recently, and this is pretty exciting, you cut a deal to send California avocados to China. Tell us about that. What does that mean for the business?
STEVE BARNARD: Right. Well, we air-freighted that over there. There was a need at a specific time. It's all about timing in this business, if you have the right fruit at the right time in the right place. So the California avocado has been approved for a couple of years, but there just really wasn't an opportunity up until recent. There was a little gap in the supply chain out of Mexico and South America, and we had the product here, and we took advantage of it.
We do have a distribution center in China. So we're very close to the market there. We have a daily update on demand and opportunities. So we move pretty quick and took advantage of the opening.
ALEXIS CHRISTOFOROUS: Now, Steve, I know you just released your first ever environmental, social, and governance report. I know being environmentally correct and sustainable with your farming and with your products is very important to Mission Produce. Quickly, can you tell us a couple of key takeaways from that report?
STEVE BARNARD: Well, we've been doing-- we've been practicing ESG for years. We just haven't talked about it. I mean, we're in a farming business that we need to maintain nature, natural resources. We can't contaminate the soil. We can't deplete the water supply. We have to take care of our people. We've been doing it all along, and we're just very proud to announce what we have done, taking that into packaging and reducing plastic over the next few years by 50%.
Our farms are fully automated, and we use less water than the industry average by 40%, and that we automate everything, and there are sensors in the ground and in the tree trunks that tell us when the tree is thirsty and not give it too much or too little, which increases production. So, actually, our water use per avocado is like 40% less than the average. So we're quite proud of that, and we just wanted to share what we're doing and look forward and continue doing it in more places.
ALEXIS CHRISTOFOROUS: What-- I mean, some companies, perhaps, will look to your report as a blueprint for their own. What does being environmentally conscious do to your bottom line? Do you have to operate at a bit of a premium in order to reach some of these ESG goals?
STEVE BARNARD: Well, maybe in some cases, but keep in mind we're reducing usage of water, as an example. We're trying to minimize plastic. These are all expensive items. So it's a double benefit. It makes us reduce waste, reduce water usage, and that's money. So it's a good thing all around.
ALEXIS CHRISTOFOROUS: All right. Steve, last time you were with us, you gave us tips on how to make your avocados ripen a little quicker. This time I'm going to ask you, what's your favorite way to have an avocado, to enjoy that fruit?
STEVE BARNARD: Well, I'm a little older than a millennial, but avocado toast is always good, and guacamole is good, but I like them with scrambled eggs on a Sunday morning. [CHUCKLES] Big slices of them.
ALEXIS CHRISTOFOROUS: Oh, that sounds awfully good. Yeah. And that avocado toast, you knew about it before it was even trending. All right, sounds good. Steve Barnard, CEO of Mission Produce. Good to see you. Thanks.