Mission Produce Expands in Europe: Smart Move or a Stretch?

Mission Produce’s AVO expansion into Europe aligns well with its broader global strategy, which centers around diversification and operational efficiency. By extending its reach beyond North America, the company is strengthening its ability to offer a year-round supply while reducing its reliance on any single sourcing region, particularly amid unpredictable supply from Mexico.

AVO’s strong first-quarter 2025 results, with record revenues and growth across core categories like avocados and blueberries, suggest it has the operational capacity and capital discipline to support this geographic expansion without overextending.

However, Europe presents a more complex logistical and competitive landscape. The region has established players, stringent regulations and varying consumer preferences. While Mission Produce’s vertically integrated model and sourcing flexibility provide advantages, navigating tariff risks, cultural differences and rising costs could prove challenging. The closure of its Canadian facilities to streamline North American distribution raises a key question: Is this resource redeployment a strategic move from a position of strength or a necessary trade-off to fuel its European ambitions?

Ultimately, the success of Mission Produce’s European push hinges on execution. If the company can replicate its U.S. formula of consistent quality, diversified sourcing and strong retailer relationships, it can unlock meaningful long-term growth. But with margin pressures already evident in the first quarter due to fruit size issues and mango ramp-up costs, any misstep in Europe might strain financial performance. In short, AVO’s European expansion is a bold move with real upside, but not without risk.

AVO Faces Stiff Competition From CVGW & FDP

A long-standing rival, Calavo Growers, Inc. CVGW, directly competes with Mission Produce in the global avocado market. Like AVO, Calavo has integrated sourcing, packing and distribution operations. However, Calavo has made strategic investments in processed foods and diversified produce offerings, such as guacamole and salsa, which provide additional revenue streams beyond fresh fruit. The company’s strong retail and foodservice relationships in North America and increasing emphasis on automation and technology also challenge AVO’s efficiency-driven model. Calavo’s presence in both U.S. and Latin American sourcing gives it leverage in pricing and supply flexibility.
 
Fresh Del Monte Produce Inc. FDP is a major global force in the fresh and fresh-cut produce industry, including avocados. Its competitive strength lies in a vertically integrated supply chain and broad diversification across fruit categories. The company sources avocados from key regions such as Mexico, Peru and Colombia, distributing them globally through advanced ripening facilities and an expansive logistics network. FDP is also actively investing in agritech solutions, including AI-powered crop forecasting and sustainable farming initiatives.

AVO’s Price Performance, Valuation & Estimates

Shares of Mission Produce gained 19.5% in the last three months compared with the industry’s growth of 30.1%.

From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 23.59X, significantly above the industry’s average of 16.71X.

The Zacks Consensus Estimate for AVO’s fiscal 2025 and 2026 earnings suggests a year-over-year decline of 20.3% for both years. The estimates for fiscal 2025 and 2026 have been unchanged in the past seven days.

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research