Global Avocado Oversupply: Will AVO's Diversification Shield It?

Mission Produce, Inc.’s AVO third-quarter fiscal 2025 performance comes at a pivotal moment for the global avocado industry, which is entering a phase of oversupply as harvests from major producing regions, particularly Mexico and Peru, rebound after years of weather-related disruptions. Prices are expected to decline 20–25% year over year in fourth-quarter fiscal 2025, driven by strong Peruvian yields and a larger Mexican crop. 

For AVO, this environment presents both risks and opportunities. The company’s vertically integrated model and global sourcing capabilities have long been its core strengths, enabling it to balance volume and pricing dynamics across geographies more effectively than competitors. Its record third-quarter revenues of $357.7 million, up 10% year over year, highlight how Mission Produce’s scale and operational agility have helped it maintain momentum despite the commodity headwinds facing the broader avocado market.

Amid the oversupply challenge, Mission Produce’s diversification strategy continues to act as a stabilizing force. Beyond its core avocado business, the company is rapidly expanding into adjacent categories such as mangoes and blueberries, applying its proven “global sourcing and marketing” playbook to new growth avenues. The mango segment is gaining traction through year-round retail programs and innovative packaging formats, while blueberry production has surged to more than 700 hectares, a 25% increase from the prior year, positioning Mission Produce for meaningful volume and margin expansion in fiscal 2026. These diversified crops not only reduce dependency on avocado price cycles but also create synergies within AVO’s existing farming, distribution and customer networks, enhancing its resilience amid fluctuating market conditions.

International growth further bolsters Mission Produce’s defenses against avocado oversupply. The company’s European business saw sales rise 37% in the third quarter, propelled by robust demand and the ramp-up of its U.K. facility, which strengthens its ability to serve retail customers with consistent quality and supply. Expansion in Asia also continues, supported by strategic partnerships and improved logistics that broaden market access. Together, these efforts reinforce Mission Produce’s transformation into a global produce platform capable of turning cyclical avocado gluts into opportunities for share gains and customer growth. As the global market grapples with excess fruit, AVO’s diversified portfolio, disciplined pricing and operational excellence position it well to sustain earnings stability and long-term growth.

AVO Faces Stiff Competition From CVGW & FDP

Calavo Growers, Inc. CVGW and Fresh Del Monte Produce Inc. FDP are two key competitors in the fresh produce industry, each leveraging distinct strategic advantages.

Calavo remains a major player in the global avocado and fresh produce markets, known for its vertically integrated operations and strong partnerships with growers across California, Mexico and other key sourcing regions. Recent efforts to optimize its supply chain and enhance automation have begun to yield improved margins, even amid volatile avocado pricing and elevated logistics costs. Calavo’s balanced mix of fresh avocados, prepared guacamole and value-added produce items gives it a diversified revenue base that helps cushion against commodity price swings, positioning it to gradually strengthen its earnings profile in a more stable demand environment.

Fresh Del Monte distinguishes itself through its broad, globally integrated portfolio spanning fresh and value-added fruits, vegetables, juices and prepared foods. With operations in more than 100 countries, FDP leverages its expansive distribution network and in-house logistics arm, including one of the largest privately owned refrigerated shipping fleet, to maintain cost efficiency and supply reliability. The company continues to emphasize product diversification and innovation, particularly in its fresh-cut and convenient food categories, which cater to growing consumer demand for healthier, ready-to-eat options. FDP’s strategic focus on sustainability, automation and expanding high-margin segments, such as pineapples and bananas, supports long-term growth potential and margin resilience, even as it faces cyclical pressures in global produce markets.

AVO’s Price Performance, Valuation & Estimates

Shares of Mission Produce have gained 19.9% in the last six months compared with the industry’s growth of 18.5%.

From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 23.82X, significantly above the industry’s average of 13.57X.

The Zacks Consensus Estimate for AVO’s fiscal 2025 and 2026 earnings indicates a year-over-year decline of 9.4% and 28.3%, respectively. The estimates for fiscal 2025 and 2026 have moved northward in the past 30 days.

AVO stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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