Price Elasticities of Demand for Fresh Hass Avocados in the United States
This price elasticity study conducted in late 2018 and published in early 2019 was an ambitious analysis of the relationship between sales and pricing of avocados in the U.S. marketplace.
It was conducted by Dr. Rich Sexton and Charlotte Ambrozek and Tina L. Saitone of UC Davis, driven by information supplied by the Hass Avocado Board (HAB).
In an effort to understand the impact of price on the demand of avocado retail sales “The study evaluates price elasticities of demand for fresh Hass avocados in various dimensions of time period, location, geographic market aggregation, and stage of the market chain (retail and shipper/wholesale). Price elasticity of demand measures in percentage terms how sales of a product respond to a one percent increase in its price. Our primary focus is on the price elasticity of demand for fresh Hass avocados at retail. The analysis is based on retail scanner data assembled by IRI for the time period 2013 – 17.”
In conclusion the authors found that “These results have wide applicability to people producing and selling fresh Hass avocados for the U.S. market. They provide insights as to (i) the benefits of holding price promotions for fresh avocados, (ii) where additional shipments can be targeted with minimum impact on prices, (iii) which markets are best targeted for promotion expenditures, and (iv) the likely price implications of supply disruptions to the U.S. market due to harvest issues or other factors.”
What the study concludes is that the estimated price elasticities of demand for Hass avocados vary not only across markets and regions in the U.S., “but that the level of aggregation in space and time, and the market level at which the elasticity is evaluated are important for the size of the effect. These differences can be explained by economic theory, and are important to understand for growers, shippers, and marketers of avocados.” But what that means is that targeting price promotions and excess shipments to areas with more elastic demands, and advertisements and non-price promotions to areas with less elastic demands are strategies for maximizing the effectiveness of promotions.
So please access the full elasticity study yourself, and learn how price and promotion impact the sales of Hass avocados in the US retail marketplace and evaluate how your selling and promotional activities impact the growing demand for avocados and our collective ability to maximize returns for growers and shippers.
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