AV07024-Market-Opportunities-For-Avocados-Beyond-Fresh-Fruit-Sales.Pdf

Market Opportunities for Avocados Beyond Fresh Fruit Sales

Jenny Margetts p2p business solutions pty ltd

Project Number: AV07024 AV07024

This report is published by Horticulture Australia Ltd to pass on information concerning horticultural research and development undertaken for the avocado industry.

The research contained in this report was funded by Horticulture Australia Ltd with the financial support of the avocado industry.

All expressions of opinion are not to be regarded as expressing the opinion of Horticulture Australia Ltd or any authority of the Australian Government.

The Company and the Australian Government accept no responsibility for any of the opinions or the accuracy of the information contained in this report and readers should rely upon their own enquiries in making decisions concerning their own interests.

I SBN 0 7341 2156 3

Published and distributed by: Horticulture Australia Ltd Level 7 179 Elizabeth Street Sydney NSW 2000 Telephone: (02) 8295 2300 Fax: (02) 8295 2399

Avocados Australia HAL Project AV07024 Market Opportunities for Avocados Beyond Fresh Fruit Sales

Prepared by:

Jenny Margetts p2p business solutions

31 Kinnaird Street Ashgrove QLD 4060

B: 07 3366 2710

E: [email protected]

August 2009

Project details

Project Name: Market Opportunities for Avocados Beyond Fresh Fruit Sales

Project Number: AV07024

Date: August 2009

Project Purpose: The purpose of this project is to identify potential market development opportunities for the utilisation of low grade fruit in the Australian avocado market.

Project Leader: Jenny Margetts p2p business solutions pty ltd 31 Kinnaird Street Ashgrove QLD 4060 B: 07 3366 2710 E: [email protected]

Other contributors: Anne Larard Produce Pathways

Funding: This project was funded by levy funds from the Australian avocado industry and by Horticulture Australia Limited

DISCLAIMER Any recommendations contained in this publication do not necessarily represent current HAL Limited policy. No person should act on the basis of the contents of this publication, whether as to matters of fact or opinion or other content, without first obtaining specific, independent professional advice in respect of the matters set out in this publication.

CONSULTANT’S DISCLAIMER This report has been prepared for the exclusive use of Avocados Australia for the purposes stated in the report. The report is provided in good faith and reflects the abilities and experience of the consultant involved in its preparation. In preparing the report, p2p business solutions has gathered data and information from various sources which it believes to be reliable and the best information available at the time the project was undertaken. p2p business solutions has used its best endeavours to ensure accuracy of the data, information and research materials, however it does not warrant the accuracy of any of the data or information provided by third parties or of research materials not created by p2p business solutions. p2p business solutions accepts no responsibility for any error contained in, or any omission from the report arising from, the data or information provided by third parties, or from the research materials not created by p2p business solutions. p2p business solutions accepts no responsibility whatsoever to any third party in respect of the whole or part of this report.

Media summary

Over recent years Avocados Australia has invested significant funds in projects investigating industry supply chain management and efficiency. The impact of inferior quality avocado fruit, particularly in seasons of high supply, has been seen as one of the key factors impacting on supply chain efficiency and related profitability. One of the main reasons that inferior fruit reaches the fresh market is because growers have limited opportunities to access other supply chains where lower quality fruit may be acceptable, in order to gain some returns to offset production costs.

Although some processing of avocado fruit does occur in Australia, the volume of products absorbed through these supply chains is limited. Furthermore the range of avocado value added products is also limited. There are a number of reasons this occurs, including the inconsistent supply of fruit at appropriate price levels; lack of viable markets; underdeveloped market opportunities for various value added products; and limitation and costs of associated processing technologies.

This project provides a detailed report which identifies potential market development opportunities for the utilisation of low grade fruit in the Australian avocado market. It examines the limitations of the major value added market segment with respect to a range of criteria including threat of substitution, threat of new entry, supplier power, buyer power, competitive rivalry; current segment performance and forecast segment growth.

Case studies from the Australian olive oil industry, functional foods sector and processed avocado sector in the United States are also presented in the report. These case studies investigate other comparable industry / product development models and identifying key attributes of success (or failure) in the creation of viable supply chains for value added products.

This project will provide guidance to industry stakeholders in regard to future investment in value adding projects. It does not provide detailed business development plans, as it is expected that individual industry members would independently undertake more detailed investigation (including specific research and development and financial modeling) prior to commercial investment in product development.

Table of contents

Media summary ...... ii Table of contents...... iii 1.0 Introduction...... 1 2.0 Materials and methods...... 2 3.0 Results...... 3 3.1 Avocado oil market segment ...... 3 3.2 Avocado oil market segment potential ...... 9 3.3 Processes avocado flesh products market segment ...... 13 3.4 Processes avocado flesh products market segment potential ...... 18 3.5 Plant extracts market segment ...... 25 3.6 Plant extracts market segment potential ...... 30 3.7 Avocado waste products market segment ...... 34 3.8 Avocado waste products market segment potential ...... 36 4.0 Case Studies ...... 38 4.1 The Australian olive oil market segment ...... 39 4.2The functional food market...... 44 4.3 Processed avocado products in the US market ...... 49 5.0 Discussion ...... 54 6.0 Industry recommendations...... 55 7.0 Technology transfer ...... 55 Appendix 1: Code of Practice (Australian olive oil)...... 1 Appendix 2: Calavo promotional material...... 1

iii

1.0 Introduction

2.0 Materials and methods

The study has involved desktop research and some stakeholder interviews to:

• Identify and investigate potential value added avocado products from avocado flesh, seeds, skin and leaves.

• Identify the potential for market development for each major value added sector. Where information is available, this involves consideration of a range of criteria including threat of substitution, threat of new entry, supplier power, buyer power, competitive rivalry; current segment performance and forecast segment growth.

• Develop case studies from other industries with comparative attributes and examine the methods used to develop their value added sectors

The case studies developed include:

- The Australian olive oil industry

- Functional Foods: focusing on key attributes of successful products

- The U.S. processed avocado sector

• Provide recommendations to the Australian avocado industry on further investments in relation to the utilisation of low grade avocado fruit.

A summary report suitable for publication in ‘Talking Avocados’ so that interested parties are aware of the research findings of this report, will also be provided.

3.0 Results

3.1 Avocado oil market segment

3.1.1 History

In 1918 the British Imperial Institute in England drew attention to the possibility of using avocado oil as a source of oil being suitable for edible purposes1. Preliminary ideas on extraction processes were reported from the 1930’s, involving heat and pressure to press the oil out of avocado pulp2,3. Extraction by centrifuge was then reported in 19584. Little more was researched until the 1970’s when French, Italian and Portuguese researchers examined extraction technologies in more depth. During the 1980’s a prototype extraction unit was developed and published5 and the chemical characteristics of avocado oil were researched further worldwide. The use and challenges of solvents were explored, and further refining stages were trialled.

The two types of extraction processes that became common were organic solvent extraction, and centrifugal extraction.

• Organic solvent extraction. This process uses hard, mature whole fruit (no removal of the seed) and involves drying, mechanical pressing at high temperatures, and oil extraction with an organic solvent.

• Centrifugal extraction. This technique involves ripening, which allows softening of the fruit prior to mechanical pressing6. It then involves pressing the avocados to a pulp, which is subjected to a curing process and heat, before the centrifugation removes most of the solid materials due to differences in densities with the oil and water7. In addition, the centrifugation method uses only fruit pulp (no seed, no skin) and is reported to more effectively extract and keep the quality of the crude oil in terms of oleic acid content.

1 Human, T.P. 1987; South African Avocado Growers’ Association Yearbook, Oil as a byproduct of the avocado 2 Eaton and Ball. 1934; American Vefumer, June. 3 Dean, H.K. 1938; Utilising of Fats. 4 Turatti, JM, Santos, LC, dos Tanqojs & Arima, KK. 1985; Oletim do Institute de Technologia de alimentos Brazil 22(2), Characterisation of Avocado oil extracted by various methods. 5 Aparato, A.R. 1981; NSTA technology journal - National Science Development Board. July/Sept v.6(3), Prototype of a pilot scale model of an avocado oil extraction unit. 6 Werman, M. J. and Neeman, I. 1987; Journal of American Oil Chemists’ Society 64(2), Avocado Oil Production and Chemical Characteristics. 7 Smith, H. and Lunt, RE. 1981; South African Avocado Growers’ Association Yearbook, Avocado Oil, the Cinderella of the Avocado Industry?

Much of the early research identified obstacles for commercial avocado oil production. The challenges identified included8:

• That the crude oil had high amounts of chlorophyll, which accelerated the oxidation of the oil, and meant that it had to be protected and stored away from light

• That the crude oil had undesirable colour and odour for some uses

• That refining processes (bleaching, deodorising and winterising) developed to minimise the oxidation problem (and odour problems), unfortunately removed the natural antioxidant tocopherol (Vitamin E)

• That solvent extraction processes caused air pollution concerns, and the removal of solvent from oil extracted could not be completely guaranteed

• That processing waste contained toxic compounds making it non-usable as animal feed. Waste water management from the process was also identified as a management concern

• That avocado oil produced from processing the whole fruit developed bitter flavours because of compounds in the avocado seed

These challenges resulted in commercial avocado oil initially having limited uses. The oil was primarily utilised by the cosmetics and pharmaceutical industries, because it could be effectively used for its healing and penetrating properties, with limited concerns over oxidation, odour, flavour, antioxidant and residual solvent issues. For cosmetic use, chemical extraction or high temperature extraction is acceptable and has been the standard manner of commercial extraction. The high cost of the fruit itself has also contributed to its limited use, as the oil is an expensive product that has been more easily justified as an ingredient in cosmetic products. Avocado oil continues to be primarily used in the cosmetics and pharmaceutical industries. It has been shown to penetrate the skin quickly and shows unique properties in its ability to transport active substances into the skin, which other oils do not possess9. Avocado oil has demonstrated the highest rate of skin penetration (similar to lanolin); faster than corn, soybean and olive oils. Its very high unsaponifiable fraction gives the avocado oil the first place for its sunscreening properties and faster skin penetration characteristics into the skin against popular oils from almond, sunflower, peanut, olive and coconut10. Avocado oil continues to be used in the formulation of cleansing creams, lipsticks, moisturisers, hair conditioners, suntan lotions, bath oils and make-up bases.

In the last decade, the use of the cold pressing extraction method has seen the uses of avocado oil expand. Southwell et al. first obtained avocado oil by means of cold pressing with a small scale expeller in 1990 using peeled and unpeeled fruit as raw material11. Modern 'cold-press' equipment does not involve

8 Requejo-Tapia, L.C. 1999; International trends in fresh avocado and avocado oil production and seasonal variation of fatty acids in New Zealand grown cv. Hass (Massey University Thesis). 9 Human, T.P. 1987; South African Avocado Growers’ Association Yearbook, Oil as a byproduct of the avocado. 10 Ricks, D, J. 199X. Functional Natural Oils. Coronado Natural Oils Ltd. Biologicals and Botanicals. 11 Southwell, K.H, Harris, R.V. and Swetman, A.A. 1990; Tropical Science; 30, Extraction and Refining of Oil Obtained from Dried Avocado Fruit using a Small Expeller.

pressing oil from the fruit. Instead it involves maceration of the fruit flesh by a high-speed grinder, followed by mixing of the pulp in malaxers. After this process, oil, water and solids are separated by a three-phase decanter and then polished using multi-cone centrifuges12. Food processing companies in New Zealand were the first to develop viable commercial cold pressed extraction techniques and these oils have been examined. Oil produced by cold pressing retains both a distinctive avocado flavour, and the health components desired; including tocopherol, sitosterol (reduced cholesterol absorption), carotenoids and lutein (eye health benefits). It also has been found to have good shelf life stability, and a high smoke point over 250°C13, which makes it able to withstand high cooking temperatures without forming fatty acids that may be harmful to health. Additionally beneficial as a food product, avocado oil is very high in monounsaturated fats (oleic acid concentrations around 80 per cent), which have been shown to give protection against the development of coronary heart disease14. With these product benefits in mind, cold pressed avocado oil became available at retail level in 200015.

3.1.2 Current Profile

There are now numerous producers of avocado oil worldwide. Companies currently servicing the food industry include Olivado (New Zealand/Kenya), Grove (New Zealand), Serra Vita (Mexico) Westfalia (South Africa), Edmon Global (South Africa), Da Gama (South Africa), San Pietro (Chile), Pucara International (Chile), Terramater (Chile), Olivos del Sur (Peru), Grinfeld (Israel) and Proteco (Australia). The Australian market also supports a number of smaller farm based processors.

In addition to processors servicing the food industry, there are a large number of manufacturers of crude and refined avocado oil for cosmetic and pharmaceutical uses. Further countries selling avocado oil include Kenya, Cameroon, Argentina, Dominican Republic, Brazil, Ghana, Italy, Turkey and India.

Although well-published data is not available for production and international trade of avocado oil, the US volume is said to be around 1000 tonne. The main outlet for this trade is into the cosmetics industry16. Based on the small amount of public commercial information on avocado oil products being traded, the industry appears to be continuing to strengthen. Cosmetic and pharmaceutical applications appear to be utilising the majority of production, predominantly from the supply of bulk crude and refined oil from developing countries. Food industry use has increased markedly with the introduction of cold pressing extraction. The world’s leading extra-virgin avocado-oil producer is New Zealand, but Chile has great

12 Eyres, L., Sherpa, N. and Hendriks G. 2009; http://www.olivado.com/studies4.htm Avocado Oil: A New Edible Oil from Australasia. 13 van Heerden, I. 1997. http://www.mweb.co.za/health/diet/food/food17.html, Avocado oil, Food of the Month. 14 Lichtensein, et al., 1998. 15 Anderton, J. 2000; http://beehive.govt.nz/release/chef+anderton+opens+avocado+oil+facility Chef Anderton opens avocado oil facility. 16 Eyres, L., Sherpa, N. and Hendriks G. 2009; http://www.olivado.com/studies4.htm Avocado Oil: A New Edible Oil from Australasia.

potential and created 14 different brands in the four years from 2004 to 200817. South Africa also appears to have established several lines of cold-pressed oil.

Avocado oil products currently being wholesaled internationally include:

• Crude avocado oil (whole avocado extraction, no refining)

• Refined oil

• Extra virgin oil (cold press extraction)

• Organic avocado oil

• Avocado butter (hydrogenated oil)

• Oil blends (avocado/olive oil blend, avocado/olive oil spread, avocado/macadamia oil blend)

There is limited current research in oil production from avocados. From the 1990’s until recently, the bulk of research has concentrated on two subject areas; improving oil extraction for cost and quality purposes, and health benefit studies. From 1990 until 2004 the topics researched can be summarised as studies on:

• Characteristics and comparisons of oils produced from different avocado varieties18, 19, 20, 21, 22

• Avocado oil extraction methodology 23, 24, 25, 26, 27, 28

• Cosmetic benefits of avocado oil29, 30

• Health benefits of avocado oil31

17 El Diario (newsmedia) 19 November 2008, Chile: Avocado oil catching on. 18 Mostafa, F. M. A. and Ramadan, S. A. E. 2004; Assiut Journal of Agricultural Sciences (35), Evaluation of Fuerte and Duke avocado cultivars as fruit trees for oil producing. 19 Polana. M. et al. 1999; Rivista Italiana delle Sostanze Grasse (76), Avocado oil. Changes in the constituents of the lipid fraction during ripening of fruits of some cultivars grown in the south of Italy. 20 Lozano, Y. F. 1993; Journal of the American Oil Chemists' Society (70), Unsaponifiable matter, total sterol and tocopherol contents of avocado oil varieties. 21 Tango, J. S., Carvalho, C. R. L. and Soares, N. B. 2004; Revista Brasileira de Fruticultura (26), Physical and chemical characterization of avocado fruits aiming its potential for oil extraction. 22 Bora, P. S. 2001; Grasas y Aceites (Sevilla) (52), Characterization of the oils from the pulp and seeds of avocado (cultivar: Fuerte) fruits. 23 Bizimana, V., Breene, W. M. and Csallany, A. S 1993; Journal of the American Oil Chemists' Society (70), Avocado oil extraction with appropriate technology for developing countries. 24 Southwell, K.H, Harris, R.V. and Swetman, A.A. 1990; Tropical Science; 30, Extraction and Refining of Oil Obtained from Dried Avocado Fruit using a Small Expeller. 25 Dunford, N. T. and Dunford, H. B. (ed) 2004, Nutritionally enhanced edible oil and oilseed processing. AOCS Press. 26 Requejo, C. 2003; Orchardist (76), Cold pressed avocado oil - a healthy development. 27 Moreno, A. O. et al. 2003; Journal of Agricultural and Food Chemistry (51), Effect of different extraction methods on fatty acids, volatile compounds, and physical and chemical properties of avocado (Persea americana Mill.) oil. 28 Ortiz, M. A. et al. 2004; Plant Foods for Human Nutrition (59), Effect of a novel oil extraction method on avocado (Persea americana Mill) pulp microstructure. 29 Danhof, I. E. 1993; Phytotherapy Research (7), Potential reversal of chronological and photo-aging of the skin by topical application of natural substances. 30 Huang CaiPing, Huang An and Chen MeiGu. 2004; Chemistry and Industry of Forest Products (24), Preliminary study on the application of extract from baccae of Persea americana L. in cosmetic industry. 31 Birkbeck, J. 2002; Food New Zealand (2), Health benefits of avocado oil.

• Economic analysis of an avocado oil extraction plant32.

In the last four years (2005-2008) there has been a continuing focus on the need to fine tune extraction and refining processes. It is significant however, that three of these four studies are focused on retaining characteristics relating to the health benefits of the oil product.

• Extraction of both oil and sugar (Mannoheptulose) using shorter extraction time, lower extraction temperature, and reduced amount of solvent33

• Current research suggests preventive and health beneficial effects of a rare seven-carbon sugar called Mannoheptulose commonly found in avocado. The unusual ability of this naturally occurring sugar has been researched since more than sixty years, whereby the focus has been lately on the inhibition of insulin secretion (hypoglycemia), obesity and anti-cancer activity of Mannoheptulose

• Techniques for controlling the oxidative deterioration of avocado polyunsaturated fatty acids in bulk oils so that they can be used for health supplements34

• The consumption of long chain -3 fatty acids is effective in treating coronary heart diseases, type-2 diabetes, hypertension, immune response disorders and mental illness35

• Maximising the levels of pigments (carotenoids and chlorophylls) as an important contributors to the appearance and healthful properties of avocado oil36

• Extraction using supercritical carbon dioxide (SC-CO2) as a biological safer alternative to organic solvents37.

Three of the remaining studies during this period were focused on confirming significant health benefits of consuming avocado products (involving oil). Another two expanded on knowledge regarding the characteristics and composition of avocado oils.

• Increasing carotenoid absorption through the addition of avocado products to meals38

• Effect of an avocado oil-rich diet on blood pressure response39

• Arthritic benefits of avocado oil40

32 Freitas, S. P., Lago, R. C. A. and Qassim, R. Y. 1998; Rivista Italiana delle Sostanze Grasse (75), Economic analysis of enzymatic extraction of avocado oil. 33 Meyer, M.D and Terry, L.A. 2008; Journal of Agricultural and Food Chemistry (56), Development of a Rapid Method for the Sequential Extraction and Subsequent Quantification of Fatty Acids and Sugars from Avocado Mesocarp Tissue. 34 Logaraj. T.V. et al. 2008; Food Chemistry (106), Rheological behaviour of emulsions of avocado and watermelon oils during storage. 35 Djordjevic, D. et al. 2005, Inform 16(1), Adding the n-3 fatty acids to foods. 36 Ofelia, B. O. et al. 2006; Journal of Agricultural and Food Chemistry (54), Pigments in avocado tissue and oil. 37 Mostert, M. E. et al. 2007; Journal of the Science of Food and Agriculture (87), Effect of fruit ripeness and method of fruit drying on the extractability of avocado oil with hexane and supercritical carbon dioxide. 38 Unlu, N. Z. 2005; Journal of Nutrition (135), Carotenoid absorption from salad and salsa by humans is enhanced by the addition of avocado or avocado oil. 39 Salazar, M. J. et al. 2005; Journal of Ethnopharmacology (98), Effect of an avocado oil-rich diet over an angiotensin II-induced blood pressure response.

• Oxidative stability and antioxidant activity of avocado oil41

• Further study on the characteristics and comparisons of oils produced from different avocado varieties42.

Knowledge of future research commitments is limited. The recent introduction of extra virgin avocado oil into the New Zealand market has spawned a number of projects at Massey University in Auckland43. Their projects include studies into the oxidative stability of the extra virgin oil and the kinetics of photo-oxidation, the effect of fruit quality on oil quality and yield, extraction process optimisation utilizing natural enzymes, and complex analyses of the oils being produced in New Zealand including season variability.

40 Audisio, S. N., Audisio, S. A. and Vaquero, P. 2005; Veterinaria Argentina (22), Treatment of arthritis of the dog with unsaponificable oils of palta and soya bean. 41 Oluyemi, E. A. et al. 2005; Journal of Food Technology (3), Oxidative stability and antioxidant activity of some non- conventional vegetable oils. 42 Requejo-Jackman, C. et al. 2005; Orchardist (78) The good oil on avocado cultivars - a preliminary evaluation. 43 Eyres, L., Sherpa, N. and Hendriks G. 2009; http://www.olivado.com/studies4.htm Avocado Oil: A New Edible Oil from Australasia.

3.2 Avocado oil market segment potential

3.2.1 Industrial

The manufacture of avocado oil for industrial purposes is of interest because the quality of the fruit, and the level of processing technology, is not as high as that desired for food grade oil production. It also appears to be the largest current market for avocado oil. Unfortunately the profitability of industrial oil can be seen to be somewhat questionable, with high levels of potential substitution and new entrants, and high buyer power. The product value is also low relative to the cost of production in developed countries.

Threat of substitution (HIGH) -

There are several substitute products for avocado oil in industrial applications. The highest industrial use of avocado oils is in cosmetic and pharmaceutical products. The purpose of the oil in these products are primarily its penetrating properties, which can be found, albeit at perhaps at less desirable levels for some applications, in several other common plant oils including olive, coconut, peanut, sunflower, and soybean oils.

Threat of new entry (HIGH) -

Both the lesser level of infrastructure investment required for the crude oil extraction techniques, and the lesser level of fruit quality required for industrial oil extraction, mean that new entrants can establish quite easily. This has been observed by the emergence of industrial oil suppliers from developing countries in Africa and Asia.

Supplier power (MODERATE)

It can be assumed that the power of the supplier in providing the raw avocados for industrial oil extraction is not high. The fruit can be of poor quality, and the supply base can be flexible in the majority of producing nations, which have a large number of growers. There are minimal costs involved in changing suppliers. It would only be due to a reliance on a small number of growers, particularly large suppliers or suppliers based close to the extraction facility, that supplier power would become significant. Perhaps in an effort to combat supply risks several manufacturers can be seen to process a number of plant oils instead of having a sole reliance on the avocado oil segment.

Buyer power (HIGH) -

There appears to be significant buyer power in industrial oil value chains. The basis of this power is the absence of quality and country of origin differentials, the ability to substitute other oils, the limited number of customers (relatively small number of large cosmetic and pharmaceutical entities) and the degree of price sensitivity to the oil product that is only one of the several ingredients in their manufactured goods.

Competitive rivalry

Insufficient information is available to ascertain the level of competitive rivalry between manufacturers of industrial avocado oil. Business networking sites such as Alibaba.com and Tradekey show numerous manufacturers and wholesalers/distributors from a wide range of countries, but information on pricing and customer loyalty is not publicly available.

Current segment performance

The market for industrial avocado oil appears stable in terms of the numbers of manufacturers and related wholesalers / distributors present in the segment, however data on their business size and their years in business is not publicly available.

Forecast segment growth

There are no clear indicators that the demand for crude avocado oil will become significantly more or less. The current trend for increasing numbers of topical products to be marketed with implied nutraceutical benefits could be responsible for increasing product uses and customer numbers; however no shortage of raw material fruit supply, or buyer ability to pay higher ingredient prices, could currently be forecast to result in greater product profitability. Future diversification in product use is unknown.

3.2.2 Culinary

The market for culinary avocado oil has expanded significantly since the emergence of cold pressing extraction technology. It is a more desirable product segment for developed countries because of the higher product value compared to industrial oil, and as such the greater probability that the returns to growers will cover the cost of supply, which involve significant harvest costs regardless of quality. The current size of the segment, and medium term outlook for the level of growth in demand is however a limitation on the potential performance of the segment.

Threat of substitution (HIGH) –

To date the threat of substitution is high due to the well-established cultural use and known health benefits of olive oil. Olive oil is also an attractive substitute product because it has a lesser product value compared to avocado oil. Currently avocado oil retails at approximately $5USD per bottle (250ml) on the New Zealand market and at a comparable price in Australia. Extra virgin olive oil sells anywhere between $2USD and $10USD for 250 ml depending on whether it is imported or New Zealand/Australian produced. The latter oil has only a two percent market share of the total bottled vegetable oil market. Bulk avocado oil sales are at around $10USD per litre44. Other plant oils with different relative health benefits and greater market share also provide attractive alternatives to consumers and food service providers.

44 Eyres, L., Sherpa, N. and Hendriks G. 2009; http://www.olivado.com/studies4.htm, Avocado Oil: A New Edible Oil from Australasia.

The market share of avocado oil is expected to expand slightly due to increasing research and public awareness of the unique health attributes of avocado oil. These unique benefits will reduce the threat of substitution to some degree, although customer price sensitivity would be expected to constrain demand somewhat.

Threat of new entry (MODERATE)

In developed countries the threat of new entrants is small due to the substantial investment and market risk involved, and the large supply base required for economies of scale. There are distinct cost of production advantages in developing countries however, particularly those close to large markets (i.e. Mexico/USA), in which case the likelihood for new entrants is high.

Supplier power (LOW) +

The power of the supplier can be determined as low. The main reason for this is as oil production is a market for low grade fruit, supplier loyalty is anticipated. As long as supplier returns, at a minimum, cover the cost of supply, supplier business relationships should be stable. Additionally, the numbers of alternative outlets (i.e. other processors) available to suppliers in most production districts is limited.

Factors that may increase the power of suppliers in some instances would however include the requirements for fruit of certain quality (i.e. most appropriate oil content), a supply base of fewer larger suppliers, and potential fluctuations/shortage in supply due to seasonal variations in harvest periods or excellent market conditions for fresh fruit.

Buyer power (MODERATE)

The power of buyers in culinary oil value chains appears moderate. Whilst there are potential limitations on the power of buyers due to country of origin branding advantages in some developed countries, there is still a small customer base for culinary avocado oil (i.e. it remains a boutique segment), and strong price competition from international manufacturers and distributors. Until market demand strengthens, buyer power will remain relatively high from an Australian production perspective.

Competitive rivalry (HIGH) –

Competitive rivalry is high in relation to existing international manufacturing (with lower costs of production), and the existence of well-established brands in both developed and developing countries. Another factor responsible for maintaining competition is the high cost of leaving the market due to the establishment costs.

One limitation on the level of competition to date however is the number of brands currently available. Whilst the number of culinary oil manufacturers remains low, there is limited competition within markets, particularly country of origin markets.

Current segment performance (MODERATE)

The performance of businesses in the small current market is mixed. The presence of strong product brands and evidence of promotional activities (e.g. Olivado) reinforce the apparent profitability of the segment, although this may in some instances be offset by other fresh and value added products also sold by other business units (e.g. Westfalia). It should also be noted that Olivado’s holding company has recently (July 2009) gone into receivership45 .

Factors obviously limiting the segment’s current performance include the small size of the category, and price sensitivity constraints relating to substitute culinary oils. As a high value fresh product, the pricing of the resultant fraction of avocado oil has limited flexibility. Extraction rates obviously vary during the season because of the change in absolute oil content, but typically vary from 10-18% of the whole fruit. In New Zealand in 2000-2001 approximately 1200 tonne of fruit yielded around 160 tonne of oil46. Australian fruit typically produces lower oil yields (10 -13%) and in early season fruit this can be lower47. Due to the associated processing costs, processors need to be selective about fruit they receive.

Forecast segment growth (MODERATE)

There are market factors forecast to both drive and constrain segment growth. Driving demand for culinary avocado oil is increasing knowledge of significant unique health benefits, which are tied to critical health concerns affecting populations across the world. Constraining demand are wholesale and retail price points relative to substitute oil products, and the cost of production in developed countries as compared to developing countries, or countries sourcing fruit from developing countries (i.e. Kenyan supply to South African and New Zealand companies).

45 Anon, 2009; Avocado oil company goes into receivership, www.foodweek.com.au (15 July 2009) 46 Eyres, L., Sherpa, N. and Hendriks G. 2009; http://www.olivado.com/studies4.htm, Avocado Oil: A New Edible Oil from Australasia. 47 Pers. Comm. Josh Gadiske, Proteco.

3.3 Processes avocado flesh products market segment

3.3.1 History

Initial investigations into the possibility of supplying processed avocado commenced in the 1950’s in the United States. Two studies in 1951 looked at manufacturing frozen avocado pulp; one involving mixing sieved or finely ground avocado flesh with sugar, and the other with lemon or lime juice, salt and dehydrated onion powder.48,49 Another product, Avocado Whip, was developed and reported in 1955 and combined avocado, onion, lime juice, salad dressing, and salt into a puree50. Further preliminary studies on puree additions and packaging followed as efforts were made to reduce enzymatic browning and reduce the watery separation of frozen and thawed products.

Commercial processing of avocado flesh was first started by Frigid Foods in California, which was purchased by Calavo Growers of California in 1964. Their processing involved freezing avocado by immersion into liquid nitrogen. They produced guacamole dip (avocado pulp) in steel cans. The company is also reported to have produced frozen avocado halves and slices packed in vacuum sealed (Mylar) bags. By 1975 Calavo was processing 12 million pound (5.5 million kg) of fresh avocados annually. Large plastic buckets and smaller cases were being supplied to the food service industry, while small 6-oz (170g) aluminium cans were being retailed to consumers.51

Subsequent research was focused on solving quality issues presented by initial processing methods. In 1970 United States researchers looked at reducing storage deterioration simply by identifying the avocado variety that showed the least breakdown.52 Researchers also stated at this time that “unfortunately, avocados are not well adapted to canning or most other means of preservation. Undesirable changes in flavour, texture, or colour occur.”53 By 1987 a Chilean study showed that both the choice of cultivar, and the maturity of fruit when picked, affected the quality of the frozen pulp product. A minimum oil content was established as criteria for selecting fruit for processing.54

It was the late 1980’s before Mexico began processing avocado pulp. Most Mexican plants were originally established by US companies seeking increased supply and cheaper production costs. By the mid 1990’s six plants are reported to have been established; in Zamora, Mexicali, Morelia and Uruapan. This included one opened by Calavo in 1995. At this time the primary use for processed avocados was the Mexican

48 Cruess, W. V., Gibson, A. and Brekke, J. 1951; The Canner (112), Avocado products experiments. 49 McColloch, A. J., Nielsen, B.W. and Beavens, E.A. 1951;. U. S. Bur. Agr. & Indus. Chem, A new frozen avocado product. 50 McColloch, A. J. 1955; Industrial South (7), New treat from Florida laboratory. 51 Barrett, D. M., Somogyi, L. P. and Ramaswamy H. S. (ed) 2004; Processing Fruits. CRC Press. 52 Gomez, R. F and Bates, R. P. 1970; Proceedings of the Association of Southern Agricultural Workers. Storage deterioration of freeze-dried avocado puree and guacamole. 53 Smith, L.M. and Winter, F. H. 1971; California Avocado Society 1970-71 Yearbook (54), Research on avocado processing at the University of California, Davis. 54 Olaeta, J. A. and Rojas, M. 1987; South African Avocado Growers’ Association Yearbook 1987 (10), Effect of cultivar and maturity on the quality of frozen avocado pulp.

food service industry in the United States. Major markets followed the Hispanic population in the western and southwestern states. The central and eastern areas of the United States were undeveloped, as were foreign markets55. The performance of the products in the United States did however, encourage the processed pulp industry in South Africa to commence in the late 1990’s. They initially produced 500 tons of pulp in 199856.

The research that continued throughout the 1990’s was focused on finding new treatments that would more effectively conserve processed avocado products in storage. Reducing enzymatic browning and microbial spoilage were the core objectives. Treatments researched included modified atmosphere using vacuum, CO2 and N2 in low density polyethylene bags57; and heat treatments on intact fruit to reduce enzymatic activity prior to processing58. Neither of these methodologies was adopted commercially.

By the late 1990’s the first ultra-high pressure treatment of fruit for preservation was being conducted. In 1997 Avomex (now known as Fresherized Foods) launched the first food product (guacamole) using this technology59. Two studies reported in 1998 showed the effectiveness of pressure treatments on reducing the enzyme activity responsible for the browning in avocado. The studies supported previous findings that high pressure could reduce microbial counts and inactivate enzymes while retaining flavour and colour quality. It was found that treated avocado pulp could maintain an acceptable colour for at least 60 days.60,61 The treatment was studied on fresh-cut pineapple as early as 1994, but it wasn’t reported on fresh-cut avocado until 2002 when United States company Fresher Under Pressure, promoted the availability of new stainless-steel processors which utilised ultra-high pressure for the treatment of a range of products62.

USDA scientists documented the first study on a possible preserver of fresh-cut avocado product in 1998. Their research applied a natural plant compound isolated from the genus Jasminum, which they had identified as having similar physiological responses to abscisic acid. Preliminary studies were completed on a range of fresh produce and showed that avocado slices could be kept from browning through the application of the compound, called methyl jasmonate63.

55 Vangelos, A. J. 1992; Proceedings of Second World Avocado Congress, Workshop 1. “Will processed products overtake the fresh market as the major profit maker?” 56 Vorster, L. 2005; New Zealand and Australia Avocado Grower’s Conference ’05 (20-22 September 2005, Tauranga, New Zealand), The Avocado Industry in South Africa -Competing in a global market. 57 Olaeta, J.A. and Undurraga, P. 1995; Proceedings of The World Avocado Congress III, Fresh avocado pulp (Persea Americana Mill.) stored under modified atmosphere using vacuum, CO2 and N2 in low density polyethylene bags. 58 Trejo-Gonzalez, A., Munguia-Mazariegos, R. and Cantwell, M. 1992; Proceedings of Second World Avocado Congress, Inactivation in situ of Polyphenol Oxidase in Ripe Avocado Fruit. 59 Mermelstein, N. H. 1997; Food Technology (51), High-pressure processing reaches the U.S. market. 60 Weemaes, C. et al. 1998; Journal of Food Science (63), High pressure inactivation of polyphenoloxidases. 61 Lopez-Malo, A. et al. 1998; Food Research International (31), Polyphenoloxidase activity and color changes during storage of high hydrostatic pressure treated avocado puree. 62 Anon. 2002; Foodnavigator.com www.foodnavigator.com/Science-Nutrition/High-pressure-to-kill-foodborne-germs High pressure to kill foodborne germs. 63 Stanley, D. 1998; Agricultural Research (February), Keeping Freshness in Fresh-Cut Produce.

Regardless of these new fresh-cut technologies, pulp products continued to be the primary product processed, mainly as a result of the lesser plant technology required, and the continued strong demand for the product. A paper by the Californian Avocado Commission in 2003 found that guacamole was the avocado product that United States consumers use most often (91 per cent of survey respondents)64. At that time Calavo was manufacturing up to 20 million pounds of processed avocado products annually, primarily guacamole65. Also in 2003, the total South African production of pulp was estimated to have increased to 2000 tons (4 million pounds)66.

3.3.2 Current profile

Since 2003, the processed avocado flesh industry has evolved differently in key regions. The only United States guacamole processing plant was closed in 2003 by Calavo, shifting the facility to Mexico to be closer to fruit supply, and to reduce transportation costs. By 2004 it had opened a new processing facility plant in Mexico, which incorporated ultra-high processing capability67. Ultra-high pressure processing plants have become more common in Mexico, predominantly supplying the American markets with refrigerated containers and packages of both pulp / guacamole and fresh-cut lines, as well as an extensive frozen product range. The ultra-high pressure process has enable companies like Calavo to market high quality retail lines, with no microbial concerns, and superior taste, texture, colour, and nutritional value68.

Elsewhere in the world, companies are still producing antioxidant-preserved and snap-frozen products, which ultimately still have the more inferior flavour and post-defrost shelf life attributes, but fulfil certain primary food service market requirements. Exporters in South Africa such as Westfalia continue to concentrate on frozen pulp / guacamole lines69. In 2003 the South African industry reported on their research into the production of fresh cut flesh, as half fruit, slices and chunks70. Unfortunately their methodology involving preservatives and vacuum packaging was not deemed successful. The deterioration of the product was very rapid, and could not be considered in respect of distribution requirements to key markets. Modified atmosphere packaging was again trialled by South Africa in 2004, but frozen products were found to still be the more superior product in terms of total shelf life and their ability to maintain sound condition during distribution71. No reports are available on why ultra-high pressure technology was not trialled in South Africa, although logistical issues related to European

64 DeLyser, D. 2003; Proceedings of Avocado Brainstorming. Session III. Quality Management. (October 31 – November 1 2003, Ventura, California). The US Avocado Consumer. 65 Alvarez, F. 2003; Los Angeles Times (1 March), An Era Ends as Avocado Facility Closes. 66 Vorster, L. 2005; New Zealand and Australia Avocado Grower’s Conference ’05 (20-22 September 2005, Tauranga, New Zealand), The Avocado Industry in South Africa -Competing in a global market. 67 Anon. 2009; www.calavo.com/frozen.php, Calavo Growers – The First Name in Avocados. 68 Anon, 2009; www.calavo.com/frozen.php, Calavo Growers – The First Name in Avocados. 69 Anon. 2009; www.virtualmarket.fruitlogistica.de/index.php5?id=45115&Action=showCompany, Fruit Logistica (Exibitor profile), Westfalia Marketing UK Ltd. 70 Bower, J. P. and Dennison, M. T. 2003; South African Growers’ Association Yearbook (26), Progress in the development of avocado products. 71 Bower, J.P. and Dennison, M. T. 2004; South African Growers’ Association Yearbook (27), Alternative avocado products.

markets may be a consideration. In 2005, South African researchers turned their focus to how they could improve their frozen product, by reducing product browning after defrosting, and maintaining a more acceptable taste. They were successful in developing a heat treatment for fresh-cut product prior to freezing, which delayed fruit browning on defrosting for several hours72.

Other notable research conducted in the last five years has similarly explored different processing methodology for varied benefit. Studies reported included research into extending microbial shelf life of avocado pulp73, dehydrating and reconstituting avocado to a puree74, further packaging trials75, the use of microwave technology and the addition of avocado leaves as an ingredient to maintain flavour in pulp76.

The avocado pulp / guacamole industry is now reasonably mature. Calavo have been manufacturing guacamole and pulp for over four decades. Techniques for the provision of frozen and refrigerated pulp are established. Growth is still expected due to increased use of avocado products in international markets, and expanding production in all avocado-producing countries. Increasing volumes of fruit not satisfactory for traditional fresh market sales are forecast. Frozen avocado products are expected to constitute the majority of the market because of their desirable shelf life of up to two years.77 Market leaders in the supply of frozen avocado products include United States-based companies Calavo, Simplot and Sysco Corporation, and Westfalia in South Africa.

Frozen avocado products are available worldwide through a wide range of food service wholesalers; however insufficient information is available on the country of origin of products sold. Manufacturers of frozen processed products present in New Zealand have not been identified. In Australia, Simpson Farms and FoodPac Pty Ltd78 produce a range of frozen avocado products. The wholesale trade is also supplied by companies including Heinz Food Service, Watties, Chefs Pride and Pazari.

The emergence of fresh-cut lines has been slow. Companies reported to be wholesaling ultra-high pressure processed fresh-cut lines include Fresherized Foods (previously AvoMex) and Sysco Corporation. Fresherized Foods avocado chunks and halves have a shelf life of 30 days79. At this stage Calavo is maintaining only a refrigerated guacamole product as part of its expansion in to ultra-high pressure processing. The primary restraint on the production and sales of fresh-cut lines is the shorter shelf life. To date the retail of fresh-cut lines has been limited to the United States. Although it is noted that

72 Bower, J. P. and Dennison, M. T. 2005; South African Growers’ Association Yearbook (28), A process to prevent browning of frozen avocado halves and chunks. 73 Soliva-Fortuny, R.C. et al. 2004; Food Control (15), Effect of combined methods of preservation on the naturally occurring microflora of avocado purée. 74 Nindo, C. I. and Tang, J. 2007; Drying Technology (25), Refractance Window Dehydration Technology: A Novel Contact Drying Method. 75 Undurraga, P., Olaeta, J.A. and Olivares, C. 2007; Proceedings of the VI World Avocado Congress, Evaluation of three kinds of packaging material in Edranol avocados (Persea Americana Mill.) as fresh-cut products. 76 Guzmán-Gerónimo, R. I., López, M. G. and Dorantes-Alvarez, L. 2008; Innovative Food Science and Emerging Technologies (9), Microwave processing of avocado: Volatile flavor profiling and olfactometry. 77 Anon (2009); www.verfruco.com/english.html, Verfruco. 78 Food Pac Pty Ltd website www.foodpac.com.au 79 Anon (2009); www.fresherizedfoods.com, Fresherized 101.

Simpson Farms are making a ultra-high processed product available to the trade in Australia in October 200980.

Another processing technology released in 2007 by Mantrose-Haeuser is NatureSeal®, which was originally developed for fresh-cut apples. A product coating, NatureSeal® allows avocados to be cut and prepared up to two weeks in advance of serving and still look and taste as fresh as the day they were cut81. No companies utilising this new technology have been identified to date.

80 Fine Food Australia website – 2009 new products section www.finefood.com.au 81 Murphy, K. 2007; www.natureseal.com/news.asp, Pass the football and the Guacamole (Press Release).

3.4 Processes avocado flesh products market segment potential

3.4.1 Pulp and guacamole

The demand for avocado pulp and guacamole products has been most notable in the United States, but has not shown obvious growth opportunities in other developed countries, including Australia. Whilst this type of product has both retail and foodservice sector opportunities, these are generally constrained by the usage limitations relative to the cultural characteristics of the market. Outside of the United States the product usage is limited to dips, and as a foodservice accompaniment in Mexican food outlets and a small number of hospitality offerings such as nachos. For production in developed countries the risk of investment in this segment remains high due to strong cost competition from international suppliers and high buyer power in most markets.

Threat of substitution (LOW) +

There is a low substitution level for avocado pulp and guacamole products. This is due to the unique flavour and texture attributes of the avocado product, and the existence of a strong usage identity with avocado pulp/guacamole, which in some markets can be considered a staple purchase. Uses of avocado pulp/guacamole that can be substituted include its use as a breakfast or sandwich spread.

Threat of new entry (MODERATE)

The risk of new entrants in this product category is dependent on the country and markets in which it plans to operate. Plant establishment generally involves substantial investment, but market risk pertaining to developing supply networks and buyer commitment are highly variable depending on the cost of production (i.e. less in developing countries) and the consumer profile and existing demand in the destination market.

Supplier power (MODERATE)

The power of the supplier is higher relative to oil, extract and waste processing. This is due to slightly higher quality requirements of fruit, and therefore the greater return expectations of suppliers, and the potential for shortage of supply in good fresh market conditions. There is also some logistical limitation on how far away from the processing plant fruit can be sourced. The extended storage life of frozen products does however allow some flexibility to the manufacturer on when fruit is sourced.

Buyer power (MODERATE)

Depending upon the country of production, and the markets in which it plans to operate, buyer power can be markedly different. The key factors affecting the power of buyers is the size of the customer base in the destination market (existing buyer numbers and order capacity), the price competition from other manufacturers (level of competition currently different in each destination market), and the level of country

of origin advantage available to domestic manufacturers. There appears to be little opportunity for country of origin leverage however, with the vast majority of pulp products sold worldwide as frozen lines direct to foodservice. Dip product lines currently constitute the only opportunity for fruit to carry country of origin information in the Australian domestic market.

Competitive rivalry (MODERATE)

The level of competition in the pulp and guacamole segment is significant. There are several large manufacturers in South America (predominantly Mexico) and South Africa servicing the North American and European markets respectively. These manufacturers have cost advantages in both fruit supply and logistics compared to other producing countries (ie. higher costs of production, more expensive shipping lines), and have well-established international sales networks built on long periods of export marketing. The 2 year shelf life of frozen pulp and guacamole lines also encourages stiff business competition with large windows of opportunity for revising orders (greater volumes to existing customers or negotiation of orders with new customers) as market demand fluctuates.

The one constraint to the level of competition is that there continues to be a limited number of brands or wholesalers / distributors available in some markets. This occurs primarily in smaller markets, or markets with comparatively low usage of avocado products (i.e. Australia, Asia).

Current segment performance (MODERATE)

The products available in existing markets appear profitable with large brand lines established in North America and Europe. The product category size in these markets (particularly North America) is reported to be substantial and carries significant consumer product usage and awareness. Purchase of avocado products in the United States is strongly correlated to the Hispanic population with strong cultural behaviour in the consumption of avocado products. A study by the Hass Avocado Board in 2007 showed that six in ten (60%) Hispanics purchase avocados on a weekly basis. By comparison, only half (49%) of the general US market purchased avocados in the entire year preceding the study82.

Forecast segment growth (MODERATE)

The outlook for growth in existing markets is favourable. Demand in North America is predicted to increase substantially as the Hispanic community grows to comprise one quarter of the US population by 205083. The use of processed avocado by foodservice in European markets is also expected to grow; in dips, accompaniments and as a spread84, although no coordinated marketing initiatives are apparent in this market. In other markets, both domestic and export, there are no current indicators that significant growth in the wholesale or retail of pulp and guacamole products will take place, although general trends

82 J.L Obregon. 2007; www.avocadosource.com/W-AC6/en/Presentacion/5b-214.pdf, U.S. Hispanics and their Purchase, Consumption and Brand Preferences with regard to Avocados. 83 G. Block et al. 2006; Preventing Chronic Disease 3(3), Validation of a Food Frequency Questionnaire for Hispanics 84 Anon. 2003; Quick Frozen Foods International, Simplot sees frozen guacamole use in EU spreading beyond Mexican cuisine scene.

in the growth of convenience and foodservice product segments continues in developed countries, such as Australia.

3.4.2 Flesh halves, slices and chunks

Similarly to avocado pulp and guacamole, the current and expanding market for avocado halves, slices and chunks is North America, and to some degree the European market, primarily the UK. Also primarily sold frozen (as opposed to fresh cut), these products are almost exclusively directed towards the foodservice sector. The product is desirable as a higher value line that offers customers zero waste and an extended shelf life, but supplier fruit quality requirements are distinctly higher (processing involves peeling and cutting only) and supply to the foodservice sector is currently indifferent to country of origin, which continues to allow significant cost of production advantages to South America and Africa.

Threat of substitution (MODERATE)

There is a moderate threat of substitution with semi-processed avocado products. Whilst the unique flavour and texture attributes of the avocado cannot be replicated by another product, there are several usages of avocado slice and chunks that can be easily substituted. These most frequently include their use in salads, sandwiches, and sushi. Supplied frozen to the foodservice sector, the threat of substitution could be higher (defrost period) or lower (convenience) dependent on the nature of the foodservice business. Substitution with fresh avocados is likely under periods of oversupply in the fresh market, however the zero waste of frozen lines appears to be a clear advantage to fresh supply (internal quality defects often unapparent until preparation).

Threat of new entry (MODERATE)

The risk of new entrants in this product category is similar to that for pulp/guacamole. It is dependent on the country and markets in which it plans to operate, due to significant differences in the costs of production (fruit supply, processing labour), and presence of existing market demand (including established buyer networks). The risk of new entrants based in South America would be low compared the risk of new entrants in Australia or New Zealand.

Supplier power (HIGH) -

The power of the supplier is high due to the higher quality requirements of fruit (ie. internal quality consistent with first grade fresh market lines). Suppliers expect higher returns relative to fruit supplied for more heavily processed products, and there is potential for supply shortages when seasonal conditions result in high prices for fresh produce. There is also some logistical limitation on how far away from the processing plant fruit can be sourced. The extended storage life of frozen products does however allow some flexibility to the manufacturer on when fruit is sourced.

Buyer power (MODERATE)

Again dependent upon the country of production, and the markets in which it plans to operate, buyer power can be markedly different. The key factors affecting the power of buyers are the size of the customer base in the destination market, and the existing number of manufacturers/distributors present. There is minimal country of origin advantage available to domestic manufacturers due to the product being sold primarily to foodservice. The absence of significant differences between competitor offerings (product form, quality, shelf life) would contribute to heightened competition between distributors and favour buyers in most instances.

Competitive rivalry (MODERATE)

The level of competition in the semi-processed segment would be moderate. Whilst the absence of differences in product offerings between manufacturers/distributors could result in significant price competition in some markets, the small number of competitors that exist in some markets would negate this competition to a degree. There are noticeably less suppliers of semi-processed avocado as compared to pulp/guacamole products. The most significant competition would exist between manufacturers from different producing countries with the same target market, due to variations in the cost of production and logistics. The frozen form of the product would also allow opportunities for competition in orders as described for frozen pulp/guacamole lines.

Current segment performance (MODERATE)

There is limited public information on the size and penetration of semi-processed avocado products in any market. Large manufacturing/distributor businesses such as Simplot Foods (US)85, Calavo (Mexico), Verfruco (Mexico)86, Casa Solana (Mexico), Florigin (UK)87 and Camposol (Peru) are prominent and have product lines noted as being established from around 2003. It can be assumed that these lines are profitable due to this market history, as well as their requirement for higher value fresh fruit (no internal defects) in the manufacturing process. Similarly to pulp/guacamole products, the primary market appears to be the United States, followed by the UK. Distributors in other markets include SeaGood (Finland), Pazari (Australia), Avomix (Spain), Descours (France), and Netra-Agro (The Netherlands).

Forecast segment growth

Insufficient information is available to forecast the growth in the market for semi-processed flesh products. General existing drivers for product category growth (i.e. health and convenience) are strong, but the only market known to currently have a high purchase size and frequency of avocado foodservice products is the United States which hosts a number of Hispanic fast food outlets and a relatively higher number of avocado based items in general foodservice offerings as compared to other countries.

85 Anon. 2009; http://www.simplotfoods.com/index.cfm?content=products&class_id=153, Avocados. 86 Anon. 2009; http://www.verfruco.com/english.html, Products. 87 Anon. 2009; http://www.florigin.com/products.htm. Florigin Avocado Products.

3.4.3 Fresh cut

The fresh cut segment, using ultra-high pressure processing, is currently an emerging and unsure market for avocados, but has distinct advantages in its ability to allow lines to be retailed directly to consumers as high value convenience products with no additives. The major constraint of the product, although in some instances a strength, is the limited shelf life afforded by current fresh cut technology. This shelf life period may constrain export opportunities for many southern hemisphere producers, but similarly could afford certain market exclusivity for domestic product lines.

Threat of substitution (MODERATE)

There is a moderate threat of substitution with fresh cut avocado products. Whilst the unique flavour and texture attributes of the avocado cannot be replicated by another product, there are several usages of fresh cut avocado that can be easily substituted as described with frozen flesh options. These most frequently include their use in salads, sandwiches, and sushi. As a retail product also available directly to consumers, substitution with fresh avocados may occur when quality is more consistent, or seasonal conditions allow discount prices on fresh lines.

Threat of new entry (LOW) +

The risk of new entrants in this product category is low. With technology and its application still under development, the cost of processing infrastructure is high and the pace of processing and treatment systems is reported to be slow. As such the cost of business establishment and operation is assumed to be high. The shorter shelf life (relative to frozen lines) and related market logistical constraints would also be deterring new entrants due to concern over limitations in market growth. The high product value (high quality fruit supply plus costly processing operations) also currently limits the potential customer market to a niche segment of higher income grocery buyers, and the restaurant segment of the foodservice sector.

Supplier power (HIGH) -

Supplier power in a fresh cut value chain would be relatively high. This is due to the high quality requirements of fruit (ie. internal quality consistent with first grade fresh market lines) and the potential for supply shortages when seasonal conditions result in high prices for fresh whole avocado. Similarly to semi-processed frozen lines, there may also be some logistical limitations on how far away from the processing plant fruit could be sourced. The manufacturer would require strong commitments from suppliers to ensure processing plans and forward orders could be fulfilled on short timelines considering the shelf life of the product.

Buyer power (MODERATE)

The power of the buyer in a fresh cut value chain would be moderate. The primary factor that would contribute to the power of the buyer is the small current market size for the product. If supplying the retail sector, manufacturers may need to negotiate shelf space and promotional opportunities (perhaps

exclusivity) with retailers to build a base of initial orders. This would be offset to some degree however by the boutique/niche supply of the product, and the absence of alternative suppliers (ie. Fresherized Foods and Sysco are the only companies currently reported to be selling fresh cut avocado in the US). Quality (wastage) issues relating to shelf life limitations may be another factor favouring the power of the buyer in price negotiations.

Competitive rivalry (LOW) +

At this point in time there appears to be minimal competition. There are only two companies currently reported to be manufacturing fresh cut avocado, which are both based in the United States. If market demand grew, and fresh cut technology was established in a greater number of producing countries, competition may increase, but would be constrained relative to the size of the market within a 2 week transport timeline from manufacture (i.e. estimated transportation limit based on a total shelf life of 30 days).

Current segment performance

Insufficient information is available on the performance of the two businesses currently selling refrigerated fresh cut avocado in the United States. Fresherized Foods has five processing plants (in the US, Mexico, and Peru), but manufactures a number of avocado products, predominantly guacamole lines. Similarly there is little information on the business unit of Sysco Corporation that specifically wholesales Casa Solana brand fresh cut avocado. Whilst the products appear profitable, there is no clear history of their time on the market, and no data on the current size of the market they are supplying.

Forecast segment growth

Potential growth in the demand for fresh cut avocado is unknown. Limitations in shelf life currently restrict potential markets to producing countries (i.e. domestic supply), with the exception of Mexican / South American supply into the United States. Closely aligned production and marketing regions in Europe (e.g. Spain, Israel) may contribute to future growth of the segment in that region. Product demand will also be restricted by purchase price, which may limit target markets to higher socio-economic groups and service providers. As such the additional domestic-focused markets in which fresh cut avocado may emerge would perhaps include only developed countries such as Australia, New Zealand, and South Africa. The size of these markets would however be constrained by population limitations.

Research and innovation in fresh cut technology may dramatically alter the outlook for this segment, if shelf life could be extended further. Avure Technologies are reported to be one of the leaders in high pressure processing equipment currently available, and appear to have been responsible for extending the shelf life of fresh cut avocado products from two weeks (shelf life of Fresherized Foods products cited in 2008) to four weeks.

Use of food coatings has not been explored as an option in this sector. Although technology providers claim successful application of the product in avocados, the product is currently not registered for use in Australia.

3.5 Plant extracts market segment

3.5.1 History

Extracts can be defined as concentrated preparations of plants, usually obtained by removing active constituents with a suitable solvent, which is evaporated away, and adjusting the residue to a prescribed standard. The main categories of plant extracts are phytochemicals (pharmacological, including functional foods), industrial (insecticides, agri-chemicals) and medicinal herbs (herbal medicines).

Phytochemicals are plant derived extracted compounds, technically termed non-nutritive bioactive plant substances. They include antioxidants, phyto-oestrogens, and compounds that modify potential toxins and carcinogens. They are present in fresh harvested plants, and in recent years have been artificially added to supplements and processed foods to add perceived health benefits.

Industrial extracts involve plant-derived compounds being utilised as pest and disease control agents and in cosmetics etc.

Medicinal herbs usually involve a dried plant, or a specific part of it (root, leaves, fruit, flowers, and seeds), formulated into suitable preparations such as compressed tablets, infusions (teas), tinctures and ointments.

Plant extracts have been used widely throughout history, and have included garlic used by the ancient Egyptians, ginseng in traditional Chinese medicine and Echinacea in Native American medicine. The research and application of plant extracts has been reported as long as scientific literature has been printed. Different parts of the avocado plant have been used for varying purposes since the time of the Aztecs, and continue to be reviewed for their observed or potential medicinal and industrial applications88.

88 DerMarderosian A. and Beutler J.A. 2002; The review of natural products: the most complete source of natural product information. (2nd ed) Avocado. Lippincott Co.

Plant extracts sourced from the avocado plant can be separated into all three categories outlined above. References in these areas include:

• Leaf extracts

Phytochemicals Preservation of DNA89 Antihypertensive agent90 Inhibition of cholesterol91 Regeneration of connective tissue92 Anticonvulsive agent93 Hypoglycaemic agent94 Antimicrobial agent95, Antibacterial agent96 Antiinflammatory agent97 Virucidal and virustatic anti HIV-1 agent98

Industrial Flavour and fragrance compound99 Insecticidal properties100

Medicinal herb Treatment of menstrual cramps, haemorrhage, cough, gum disease

89 Giao, M.S. et al. 2008; Journal of the Science of Food and Agriculture (88), Protection of deoxyribose and DNA from degradation by using aqueous extracts of several wild plants. 90 Ojewole, J. A. O. et al. 2007; Cardiovascular Journal of South Africa (18), Cardiovascular effects of Persea americana Mill (Lauraceae) (avocado) aqueous leaf extract in experimental animals: cardiovascular topic. 91 Brai B.I., Odetola A. A. and Agomo P. U. 2007; Journal of Medicinal Food (10), Hypoglycemic and hypocholesterolemic potential of Persea americana leaf extracts. 92 Gaby, A. R. 2006; Alternative Medicine Review (11), Natural remedies for scleroderma. 93 Ojewole, J. A. and Amabeoku, G. J. 2006; Phytotherapy Research (20), Anticonvulsant effect of Persea americana Mill (Lauraceae) (avocado) leaf aqueous extract in mice. 94 Gallagher, A. M. et al. 2003; Nutrition Research (23), The effects of traditional antidiabetic plants on in vitro glucose diffusion. 95 Ogundipe, O. T. and Oladipo, B. O. 2001; Hamdard Medicus (44), The phytochemical and antimicrobial studies of Persea americana Mill. (Lauraceae). 96 Olaleye, M. T. 2005; Global Journal of Pure and Applied Sciences (11), Antibacterial and cytotoxicity properties of leaf extract of Persea americana. 97 Guevarra, A. P. et al. 1998; Philippine Journal of Science (127), Anti-inflammatory principles of the leaves of Persea americana Mill. 98 Wigg, M. D. et al. 1996; Antiviral Chemistry & Chemotherapy (7), In-vitro virucidal and virustatic anti HIV-1 effects of extracts from Persea americana Mill. (avocado) leaves. 99 Chialva, F. et al. 1992; Journal of Essential Oil Research (4), Volatile constituents of the leaves of Persea gratissima Gaertner. A source of methyl chavicol. 100 Koua, H. K., Han, S. H. and d'Almeida, M. A. 1998; Bulletin de la Societe de Pathologie Exotique (91), Histopathology of Anopheles gambiae s.l. Giles, 1902 (Diptera, Culicidae) treated with an aqueous extract of Persea americana Miller, 1768 (Lauraceae).

• Flesh extracts

Phytochemicals Treatment of osteoarthritis101,102,103 Treatment of hypoglycemia104,105 Inhibition of prostate cancer106 Inhibition of breast cancer107 Inhibition of colon and gastric cancer108 Increased effectiveness of breast cancer treatment109 Increased accessibility of iron in cereal foods110 Increased absorption of carotenoids111 Cholesterol metabolism112 Anti-aging (inhibition of skin degeneration) agent113

Industrial Antibacterial, antifungal, antidandruff and moisturising enhancement of cosmetic products114 Insecticidal and fungicidal agent115,116

Medicinal herb Treatment of suppurating wounds (poultice)

101 Wall, E. L. and Walker-Bone, K. 2008; Botanical medicine in clinical practice, Herbal remedies in the treatment of osteoarthritis. 102 Chrubasik, J. E., Roufogalis, B. D. and Chrubasik, S. 2007; Phytotherapy Research (21), Evidence of effectiveness of herbal antiinflammatory drugs in the treatment of painful osteoarthritis and chronic low back pain. 103 Lippiello, L. 2008; eCAM, Metabolic Effects of Avocado/Soy Unsaponifiables on Articular Chondrocytes. 104 Antia, B. S., Okokon, J. E. and Okon, P. A. 2005; Indian Journal of Pharmacology (37), Hypoglycemic activity of aqueous leaf extract of Persea americana Mill. 105 Kappler-Tanudyaya, N. et al. 2007; Biotechnology Journal (2), Combination of biotransformation and chromatography for the isolation and purification of mannoheptulose. 106 Lu, Q. Y. et al. 2005; Journal of Nutritional Biochemistry (16), Inhibition of prostate cancer cell growth by an avocado extract: role of lipid-soluble bioactive substances. 107 Young, R. O. 2009; Articles of Health (Blog), articlesofhealth.blogspot.com/2009/01/olive-and-avocado-oil- prevents-breast.html, Olive and Avocado Oil Help Prevent and Reverse Breast Cancer. 108 Zabaras,D. 2009; Determination of health-promoting bioactives in Australian avocados, HAL project AVO7003. 109 Stephen, P. 2007; About.com, breastcancer.about.com/b/2007/06/11/avocado-extract-plus-tamoxifen-more- effective.htm. Avocado Extract plus Tamoxifen More Effective. 110 Matuschek, E. and Svanberg, U. 2005; Food Chemistry (90), The effect of fruit extracts with polyphenol oxidase (PPO) activity on the in vitro accessibility of iron in high-tannin sorghum. 111 Unlu, N. Z. et al. 2005; Journal of Nutrition (135), Carotenoid Absorption from Salad and Salsa by Humans Is Enhanced by the Addition of Avocado or Avocado Oil. 112 Carranza-Madrigal J. et al. 1997; Archives of Medical Research (28), Effects of a vegetarian diet vs. a vegetarian diet enriched with avocado in hypercholesterolemic patients. 113 Danhof, I. E. 1993; Phytotherapy Research (7), Potential reversal of chronological and photo-aging of the skin by topical application of natural substances. 114 Huang C., Huang A. and Chen M. 2004; Chemistry and Industry of Forest Products (24), Preliminary study on the application of extract from baccae of Persea americana L. in cosmetic industry. 115 Rodriguez-Saona, C. R., Millar, J. G. and Trumble, J. T. 2005; Biopesticides of plant origin. Idioblast oil cells as a source of new botanical products with biological activity. 116 Domergue F. et al. 2000; Phytochemistry (54), Antifungal compounds from idioblast cells isolated from avocado fruits.

• Skin extracts

Medicinal herb Treatment of intestinal worms and parasites (infusion)

• Seed extracts

Phytochemicals Control agent for protozoan disease in Latin America117

Medicinal herb Relief of rheumatic pains and gout (topical application), diarrhoea remedy

On the whole, the areas of research conducted on avocado extracts that have seen repeated investigation or commercial application include:

• Preventative health – primarily in relation to cardiovascular health.

• Medicinal treatment – primarily in relation to cancer, inflammatory disease, hypoglycemia, and cholesterol management.

• Cosmetic additives – the inclusion of moisturising and medicinal benefits into topical hair and skin products.

3.5.2 Current profile

Commercial products involving avocado extracts that are currently available include a range of cosmetic products, avocado oil and powder capsules / supplements, and avocado soybean unsaponifiable supplements. Cosmetic products include makeup, skin care and hair care products from a multitude of brands (eg. Garnier, Gillette, Alchemy, Avon, Kit Cosmetics, Burt’s Bees, Lush, The Body Shop, Crabtree & Evelyn, and Antipodes). There are three key suppliers of avocado oil capsules; Linoflax and Avocare in the United States, and Olivado in New Zealand. Powder capsules appear to be less widely distributed and are supplied by Universal Naturals and Kaylx, both in the United States. After cosmetic applications, the most widespread use of avocado extracts appears to be as an ingredient in a supplement for osteoarthritis and joint health called ASU (an acronym for avocado soy unsaponifiables). This product is manufactured and marketed by a handful of international brands. Nutramax is the primary supplier of ASU products for both human and veterinary health (Cosamin ASU, Avoca, Dasuquin, and Cosequin brands). Other popular brands include Dr Theo’s “Avosoy” and Maximum International’s “Maximise ASU”. An example of a bulk supplier of avocado unsaponifiables in the United States is Cyvex; a supplier of a range of ingredients to nutritional supplement brands.

117 Abe, F. et al. 2005; Biological & Pharmaceutical Bulletin (28), Trypanocidal constituents in plants 5. Evaluation of some Mexican plants for their trypanocidal activity and active constituents in the seeds of Persea americana.

Recent research in the areas of cancer prevention and treatment, and cardiovascular health has not yet resulted in tailored supplements being developed and marketed for retail. With initial research in these fields only undertaken in recent years, it is anticipated that further clinical trials and research findings would be required before further extract product development for pharmaceutical purposes is initiated. At this stage the beneficiary of media on emerging health research on avocado compounds is the fresh avocado and avocado oil industry sectors.

3.6 Plant extracts market segment potential

3.6.1 Phytochemicals

The current use of avocado phytochemicals is relatively small. A few brands of avocado oil and powder capsules are available, but do not strongly communicate their phytochemical content to consumers. One supplement combining avocado and soybean extracts is marketed more widely as a result of reported benefits in arthritis treatment, but has limited brands and suppliers. The use of avocado extracts in cosmetic products is more significant, but the specific phytochemicals responsible for cosmetic benefits are not widely communicated in this industry. Whilst the researched health benefits of avocado phytochemicals are substantial, the industry is yet to determine if and how these phytochemicals could be profitably packaged and utilised by consumers.

Threat of substitution (MODERATE)

The threat of substitution of avocado phytochemicals is highly dependent upon the form in which they are made available. In theory there should be limited risk of substitution where benefits are uniquely attributable to the avocado. An example of such a unique benefit is in the application of phytochemicals for medicinal treatment, such as the finding that the furanic lipids in avocado can assist in the repair of damaged connective tissue. There may be the option of substituting other compounds however, in areas such as the prevention of heart disease, whereby other plants (ie. grape compounds) are also showing benefits in continuing research. Ongoing clinical trials will continue to slowly provide information on what avocado phytochemicals may not be substitutable.

Where potential substitution may be more prevalent is in the use of phytochemicals in cosmetic products. This is due to the lesser medicinal requirement, and more flexible marketing environment of the cosmetic product market.

Threat of new entry (MODERATE)

The threat of new entry is moderate. At present avocado phytochemicals are provided in oil or powder extracts which can be supplied as a side product of avocado processing plants predominantly concerned with industrial or culinary oils (e.g. Olivado), or by specialist plant extract manufacturers which supply multiple plant extract products for health and cosmetic product development. There are a reasonable number of such processors across avocado producing countries. Cost advantages subsequently exist for some producing countries with lower fruit supply and processing costs.

If the demand for avocado extracts for specific phytochemicals of medicinal interest was established, then specialist manufacturing may be required, involving significant innovation and intellectual property protection. In this scenario, the threat of new entrants would become significantly lower.

Supplier power (LOW) +

There would be minimal supplier power in current plant extract value chains. Avocado oils and powders can be derived from lower grade product, which means that the requirements for supplier returns are lower, and minimal supply difficulties would be experienced. Product materials could also be sourced secondarily from multiple avocado processing plants in an opportunistic manner.

Buyer power (HIGH) -

The power of the buyer in avocado extract value chains would be significant. There would currently be only a limited number of customers, and price competition from opportunistic international competitors could be strong. Additionally there would be minimal country of origin or product quality advantages.

Competitive rivalry (HIGH) –

Competition within the market to wholesale and distribute plant extracts is strong. This is based on the presence of existing specialists in extract wholesale/distribution which service the large and well established health and cosmetic sectors. There are a large number of plant oils and powders currently wholesaled to supplement manufacturers and cosmetic labels. Additionally there would be limited brand value, as the extracts are generally ingredients in diverse product formulations.

Current segment performance

No current data is available on the profitability of sales of avocado extracts to the health and cosmetics sectors. Whilst the product category size is potentially large (phytochemicals increasingly cited in skin care and hair care marketing), there is no structured information available on the total list of products, product sales data, and respective extract content of products, to evaluate the demand for avocado extracts for phytochemical purposes. At this stage one major constraint to an expansion in extract use is the limited consumer awareness of avocado phytochemical benefits. Most likely due to limitations in the current value of extracts, industry does not appear at this stage to be progressing any phytochemical research relating to non-fresh products.

Forecast segment growth (MODERATE)

Whilst no specific data on the size of the plant extract industry is available, there are significant drivers for the health industry specifically, that continue to see large growth in the development and sales of supplements and topical treatments in line with aging and more health-conscious populations. With government support for health research and development increasing internationally, future plant product (including extract) benefits and communications campaigns are forecast. Although growth in demand for plant extracts is likely, the future value placed on plant extract ingredients is difficult to hypothesise. Specialised extraction of key phytochemicals is anticipated to be of the most interest, however fresh fruit consumption may provide the most economic source of the benefits sought.

3.6.2 Industrial

The industrial use of avocado plant extracts primarily involves further applications in the cosmetic sector. In the cosmetic industry, avocado plant extracts have been shown to contribute antibacterial, antifungal and moisturising benefits to products. They appear to be extensively utilised in skin care and hair care products in multinational product lines (eg. Garnier) and emerging nature-based cosmetic companies (eg. Burt’s Bees). Increasing information on the cosmetic benefits of avocado extracts in products is likely to expand their use in this sector, however the market to supply avocado extracts will continue to be generic and strongly contested. The development of organic or free trade extracts would be valued by the cosmetic sector and could constitute a more viable market segment.

Additional applications have been researched but not commercially applied in the agrochemical sector where avocado extracts have been trialled as insecticidal and fungicidal agents. There does not appear to be any strong case for the commercialisation of such an agrochemical product. It primarily offers organic growers and growers in developing countries, a soft and cost effective option for pest and disease control that they can develop themselves.

Threat of substitution (HIGH) -

As opposed to extracts sourced for specific phytochemical benefits, extracts sourced for more generic cosmetic needs can be substituted in many instances (eg. aloe vera, papaya extract etc.) Antibacterial, antifungal and moisturising qualities are not unique to avocado plant extracts.

Threat of new entry (HIGH) -

The threat of new entry is high. The plant extracts provided to the cosmetic industry appear to be in oil, butter and powder forms, which can be sourced widely through avocado processing plants or specialist plant extract manufacturers/distributors. Opportunistic sales from some producing countries with lower fruit supply and processing costs could be anticipated.

Market segmentation to supply product from organic or fair trade production systems could limit new entrants in to some cosmetic value chains.

Supplier power (LOW) +

Similarly to supply for phytochemical extracts, there would be minimal supplier power in industrial plant extract value chains. Avocado oils and powders can be derived from lower grade product, which means that the requirements for supplier returns are lower, and minimal supply difficulties would be experienced. Product materials could also be sourced secondarily from multiple avocado processing plants in an opportunistic manner.

Buyer power (HIGH) -

For undifferentiated extracts the power of the buyer would be increased due to the number of suppliers of avocado oils, butters and powders, and the level of supplier competition in this segment globally.

Development of organic and fair trade extract products may however reduce the buyer power significantly by providing a clear product quality value difference, and restricting segment competition markedly.

Competitive rivalry (HIGH) –

As with the supply for phytochemical extracts, it can be assumed that the competition within the wholesale plant extracts market would be strong. This is based on the large wholesale/distribution network for provision of extracts to the cosmetic sectors, and the large number of plant oils and powders currently wholesaled to cosmetic labels. In most cases there would also be limited brand value, as the extracts are generally ingredients in diverse product formulations.

Development of organic and fair trade extract products could reduce competition significantly, although many producing countries have developed these production systems already and may take the first mover advantage for such a market segment.

Current segment performance

No current data is available on the profitability of sales of avocado extracts to cosmetics sectors for industrial purposes. As with the use of extracts for phytochemical benefits, sales to the cosmetics industry for industrial benefits are potentially large but unquantified. One particular market feature which would be of interest relates to the high level of substitution that may occur with avocado extracts, which can be replaced by other ingredients for moisturising and antimicrobial properties. The market size may fluctuate considerably based on supplies of other substitute ingredients.

Forecast segment growth

There is no current data or trend information by which a forecast on the growth in the use of avocado extracts for industrial uses can be estimated. The only generalised trend currently identifiable is the emergence of an increasing number of more natural cosmetic brands and formulations which are targeted at expanding sections of the market desiring less artificial/synthetic-based chemical ingredients in beauty products. The number of brands specifically providing more nature-based cosmetic solutions has increased substantially in the last ten years; and includes brands such as Burt’s Bees (United States), Natural Instinct (Australia) and Trilogy (New Zealand). Some existing mainstream brands have even repositioned themselves into this segment (e.g. L’Occitane). Even with increased demand for plant extract ingredients as a result of this trend, any perceived change in the value of the ingredients to these manufacturers is difficult to estimate.

3.7 Avocado waste products market segment

3.7.1 History

The avocado industry has been interested in finding markets for avocado waste since 1934118. At this time, the United States industry, with plans forecast for processing avocado pulp, were seeking a possible market for avocado seeds. Preliminary markets identified in the 1934 study were the explosives industry (potential use of perseit constituent) and the supply of seed pulp for stock feed. Their findings stated that “animals will live on a diet of three-fourths seed if that is supplemented with other proper supplemental food. It is not poisonous… animals will live and grow quite normally on a diet up to as high as one-fourth of their food being avocado seeds.”

Despite this early interest, no subsequent published research has recommended the use of avocado waste as a livestock supplement. Research in Nigeria in 1998 reported that drying, soaking, leaching and fermentation could be simple means of detoxifying antiquality and toxic components within avocado seed meal before it was given to animals119. In Australia, despite no public record of use of avocado waste as stockfeed, SAFEMEAT issued a warning on the residue risks associated with using avocado processing waste as stockfeed. The assessment indicated that the potential for unacceptable residues in export meat and offal could arise from the use of endosulfan and prochloraz in the avocado industry120.

Other isolated reports of the application of avocado waste products have included plans for avocado peel to be used in Kenya to produce a biological pesticide121, and the use of organic on-farm waste in South Africa to be recycled into an orchard mulch122.

3.7.2 Current profile

The only current commercial outlet for avocado waste is the limited processing of oils and powders from avocado seed that remains from avocado processing.

There does however, appear to be some new applications on the horizon. The most recent and repeated research on the use of avocado waste is in relation to its adsorption properties. Natural, activated and carbonised forms of avocado seed were studied for adsorption properties in 2007. Washed, dried, cut (1- 2mm) and sieved kernels were used in the assessment. In that study it was highlighted as having an application as a dye adsorbent for use in textile wastewater treatment.123. Another study on the application

118 Weatherby, L. S. 1934; California Avocado Association Yearbook (19), Composition of Avocado Seed. 119 Aregheore, E. M. 1998; Veterinary and Human Toxicology (40) A review of implications of antiquality and toxic components in unconventional feedstuffs advocated for use in intensive animal production in Nigeria. 120 Anon. 2007; www.mla.com.au, SAFEMEAT Information Sheet. Warning on Chemical Residue Risks from use of Avocado and Mango Processing Waste as Stock Feed. 121 Stabel, L. 2007; files.foundation-imagine.org/documents/avocado/interviewKariukiEngels.pdf, The Avocado-project in Kenya: ‘The chance to fulfill my dream’. 122 Kohne, S. 2004; II Seminario Internacional De Paltos (Presentation). http://www.avocadosource.com/Journals/2_Seminario/2_Seminario_Talks_Kohne_Organic_Production.pdf, Organic Avocado Production. 123 Elizalde-Gonzalez, M. P. et al. 2007; Journal of Analytical and Applied Pyrolysis (78), Characterization of adsorbent materials prepared from avocado kernel seeds: Natural, activated and carbonized forms.

of avocado seed products for adsorption purposes has included research into its use as an ecological technique for reducing pesticide ground water contamination124. Further research has assessed a reduction of chemical oxygen demand (COD) and biological oxygen demand (BOD) of wastewater from a coffee processing plant using activated carbon made up of avocado peels125. This recent set of adsorption research has given positive results and point to the possible application of avocado waste in remediation projects in the future.

Chilean research has been investigating the use of powder from the avocado seed as an additive in snack product126.

124 El Bakouri, H. et al. 2008; Journal of Hydrology (353), Potential use of organic waste substances as an ecological technique to reduce pesticide ground water contamination. 125 Devi, R., Singh, V. and Kumar, A. 2008; Bioresource Technology (99), COD and BOD reduction from coffee processing wastewater using Avocado peel carbon. 126 Olaeta, A. et al, 2007; Use of Hass avocado (Persea Americana Mill.) Seed as a processed product, Proceedings of the VI World Avocado Congress, November, 2007.

3.8 Avocado waste products market segment potential

3.8.1 Seed oil and powder

The avocado waste product market overlaps with the plant extract market due to seed oil and powder being able to be used similarly to oil and powder derived from avocado flesh. Specific phytochemical or industrial benefits of seed extracts as compared to avocado flesh extracts are not known and hence an analysis of this product segment is not possible.

3.8.2 Adsorption material

The use of avocado waste products (processed seed) for contaminant recovery in ground water and wastewater has been researched in three different studies since 2007. The product was successfully trialled in these studies for the remediation of water in textile and coffee processing wastewaters, and for the general reduction in pesticides in ground water in agricultural ecosystems. Whilst this product is in the first stages of development, it shows commercial viability in terms of its overall cost benefit. The forecast constraints on the future profitability of the product however relate to the presence of future substitute products and any intellectual property protection on the process pertaining to the processing and application of the avocado seed material.

Threat of substitution

The research material related to this new product application provides insufficient information on what other potential adsorption materials may be comparable to avocado seed material. Research on what other materials is under trial is required, however the existing scientific literature reviewed does report on the exception attributes of the avocado material independently.

Threat of new entry (MODERATE)

The threat of new entrants into this segment is difficult to forecast given that the product is not yet commercially developed. It can be assumed that specialised manufacturing facilities (ie. not a standard output of existing avocado processing facilities) would make the probability of several suppliers establishing in the first instance quite low. The product (seed) value is quite low and the product processing would be completely mechanised so cost advantages in some producing countries would be minimal compared to other products reviewed. Intellectual property protection for the seed material preparation could be foreseeable and offer additional protection against new competitors arising.

Supplier power (LOW) +

There is minimal power of suppliers in this waste product market. There is minimal return anticipated and no requirements for fruit quality. The development of this product would in fact provide a service to avocado processing plants by providing a outlet for waste seed kernels otherwise needing to be dumped.

Factors which may increase the supplier power in this product value chain would be a reliance on one or a few avocado processors located nearby the plant required to process the waste seeds, and the potential absence of a substitute if for some reason avocado seeds became sought after for any other commercial venture (eg. seed oil production in light of new health research).

Buyer power (MODERATE)

Buyer power in this product value chain would be anticipated to be moderate. Whilst the initial market demand may be small, if the product is successfully adopted, the use of such a material in government and commercial environmental management could be widespread. The level of competition, governed by the extent to which the material is commercially protected, and the future development of potential substitute products, would determine whether this buyer power increased or decreased relative to demand.

Competitive rivalry

Competitive rivalry in this segment could be low or high depending upon the commercial intellectual property related to the product development, and presence of substitute adsorption products for similar applications.

Current segment performance

There is no current commercial application of avocado seed waste being used as a remediation agent.

Forecast segment growth

There is insufficient information at this stage to forecast the market potential of this product segment.

4.0 Case Studies

The following case studies have been developed to provide an insight into other industry market segments that have been successfully developed or in the case of the functional foods market a market category in which avocado products could play a greater role. The three case studies chosen are:

• The Australian olive oil market.

This market segment has been chosen as over recent years it has seen significant growth and the industry has been proactive in implementing strategies to strengthen its competitive advantages in the market. Lessons can be learnt from the approach the Australian Olive Industry has adopted and the benefits that have manifested as a result of industry unity, vision and planning.

• The functional foods market

This case study has been chosen to highlight a market segment in which avocado products, including processed products, could play a greater role. The natural health attributes of avocados, although not fully understood or researched at this time, `potentially provide significant market advantages in this market category. This case study explains the key attributes of brands which have been successful in the sector. It also looks at the cholesterol-lowering margarines sector as the benefits these products offer equate to some of the benefits that avocado products also offer.

• Processed avocado products in the US market

The size and sophistication of U.S. retail and food service market for processed avocado products dictates that the development and placement of product offerings; supporting services; and the related flow of product and supply information is more developed than the fledgling Australian industry. This provides the opportunity for the Australian industry to learn from others and gain an insight into future trends in the industry.

4.1 The Australian olive oil market segment

Profile of industry

The Australian olive oil industry has a history dating back 150 years; however it is only in the last 20 years that the industry has seen significant growth in production, enabling it to move beyond the status of a cottage industry.

A breakdown of 2007 figures shows that the majority of production (50%) occurs in Victoria, whilst other producing States are Western Australia (24%); South Australia (14%) and New South Wales (8%)127.

In 2008 there were approximately 10 million trees (30,000 hectares) planted in Australia and projections indicate significant growth over the period to 2014, possibly reaching 25,000 tonnes as these trees come into maturity128.

Australia’s climate, infrastructure, resources and position in the southern hemisphere is advantageous enabling the industry to produce a high quality fresh olive oil and as a result the industry is now a successful competitor in international markets.

Approximately 95% of olive oil produced in Australia is extra virgin oil. In 2006 Australian had 0.3% of the world’s extra virgin olive oil market. In 2009, it is closer to 3% of the world market. The world market for extra virgin olive oil is only 40% of the total olive oil market.

In 2001 the Australian market consumed nearly 28,000 tonnes of olives oil of which more than 99% was imported. At that time the Australian industry produced approximately 500 tonnes of olive oil of which 385 tonnes was exported.

By 2007, the market for olive oil in Australia had nearly doubled to 50,150 tonnes and Australian production had a 13.5% market share (6,750 tonnes) of the domestic market. Imports in 2007 totalled 43,400 tonnes valued at A$220 million. During this time Australia’s production had grown to eighteen fold to 9,250 tonnes.

Exports have also grown more than ten fold from 2001 to 2008 and in 2008 totaled 4,170 tonnes valued at A$23.25 million. The key export markets are USA, Italy, China and New Zealand.

One of the challenges for industry has been to overcome fragmentation. It is noted in the “Taking Stock and Setting Directions for the Australian Olive Industry” eport (p.9) that “The division between ‘commercial’, ‘cottage’ and ‘anaged investment schemes’, whether real or simply perceived, appears to be limiting the ability of the industry to unite in moving forward.”

127 ABS statistic / Australian Olive Industry Association website www.australianolives.com.au. 128 Anon. (Courage Partners) “Industry Partnerships Programme: Taking stock and setting directions for the Australian olive industry” Department of Agriculture, Fisheries and Forestry, June 2005.

Table 1: Australian Olive Oil Exports 2007 (source: ABS statistic / Australian Olive Industry Association website www.australianolives.com.au)

Identifying the strategic advantages of the industry

The freshness and quality of olive oil produced in Australia are the attributes that set it apart from other traditional producing countries. These attributes facilitate quality Australian product achieving higher prices (reported at A$22-$65 per litre in 2004129) than the lower quality imported oils retailing on supermarket shelves at A$8-$12 per litre, which implies an import price of around $4 per litre or less. Hence it is important that the Australian extra virgin oil continues to maintain its differentiation, if consumers are to pay higher prices.

The Australian olive industry introduced a Code of Practice in late 2008 to guarantee the authenticity and quality of certified products and distinguish them from imported products (see Appendix 1). Its aim is to provide security and confidence to both consumers and investors in Australia and overseas that certified Australian olive products meet high industry standards. To be certified, products must be Australian and have undergone organoleptic (taste) and chemical testings130. The Code is a world first and helps differentiate the Australian industry and its products.

The Code of Practice was highlighted in the ‘Taking Stock and Setting Directions’ planning process undertaken in 2005 by industry with the support of Department of Agriculture Fisheries and Forestry Program. The resulting report recommended that the industry establish an industry wide quality assurance and label integrity regime. Under the Code there is:

• an independent Code of Practice committee

• policies for the use of the Code of Practice in conjunction with industry promotional material

129 Sweeney,S. and Davies,G., Olive Oil, The New Crop Industries Handbook, Rural Industries Handbook, 2004. 130 Australian Extra Virgin website www.australianextravirgin.com.au.

• provision for product testing

• a financing system to support the Code.

The Australian Extra Virgin website (www.australianextravirgin.com.au) list 48 current signatories to the Code of Practice include ALDI Australia, as the first grocery retailer to sign up. ALDI is now using the Code as its own internal standard for all of its extra virgin olive oils. This means all extra virgin olive oil for sale by ALDI supermarkets in Australia – Australian or imported – must meet the criteria set out in the Code of Practice.

Leveraging the strategic advantage

In conjunction with the Code of Practice the Australian Olive Industry Association also launched a new brand ‘Australian Extra Virgin’ olive oil, to raise awareness and educate consumers about the health benefits, freshness and quality of Australian extra virgin olive oil131.

The Taking Stock and Setting Direction report (2005) also noted that, there is considerable scope to improve consumer awareness and education in relation to olive oils, and in particular in regard to health benefits, taste, quality and related classifications, and how to use olive oil. The report also highlighted the need for a national consumer awareness campaign as a significant finding and a priority consideration for the Australian Olive Industry Association. It was noted however that the very nature of education and awareness raising is long term activity that takes time to have impact. Even more importantly, it was likely to take even more time to actually translate into increased demand and sales132.

Australian extra virgin olive oils are renowned for their very low level of saturated palmitic acid and high level of mono-unsaturated oleic acid renowned for its health benefits.

Promotion of Australian Extra Virgin includes promotion of the health benefits of extra virgin olive oil which are listed as:

• Rich source of monounsaturated fats, which may reduce risks of heart and cardiovascular disease

• Olive oil contains a wide variety of valuable antioxidants that are not found in other oils. They may help lower bad cholesterol and maintain the beneficial HDL cholesterol

• Lowering effect on blood pressure

• Beneficial during pregnancy and whilst breast feeding

• Helps to prevent or delay the onset of diabetes

• Olive oil-rich diets may lead to greater and long lasting weight loss than a low-fat diet

131 Australian Extra Virgin website www.australianextravirgin.com.au 132 Anon. (Courage Partners) “Industry Partnerships Programme: Taking stock and setting directions for the Australian olive industry” Department of Agriculture, Fisheries and Forestry, June 2005.

• Beneficial for the stomach, pancreas and intestines

• Helps with anti-ageing, osteoporosis and skin damage

• May help bolster the immune system

• Contains a protective element which may assist against certain malignant tumours in the breast, prostate, endometrium and digestive tract.

Figure 1: Promotional material used by the Australian Olive Industry to promote Australian Extra Virgin Olive Oil (source: Australian Extra Virgin website www.australianextravirgin.com.au)

The industry’s promotion also highlights efficiency of the modern Australian industry over traditional European supply chains and the ability of the industry to harvest olives on time, process them quickly and distribute finished product to retailers so that the consumers experience a fresh flavourful product133.

In 2009, Matt Moran, head chef and co-owner of ARIA Sydney and Brisbane is heading an Australian Olive Association (AOA) campaign to raise awareness that ‘fresher tastes better’ when it comes to extra virgin olive oil134.

133 Australian Extra Virgin website www.australianextravirgin.com.au. 134 Australian Olive Industry Association website www.australianolives.com.au.

Lessons from the Australian olive oil industry

• By working together the Australian olive oil industry has created a stronger position for the Australian industry and its products

• The industry has been able to identify clear and positive points of differentiation from

competitor production countries

• The industry has adopted a Code of Practice to ensure that practices in the Australian industry do not dilute these points of differentiation. This Code of Practice embodies minimum quality standards that must be met

• The industry has developed a generic Australian brand ‘Australian Extra Virgin’ for

certified product

• In conjunction with this brand the industry has developed a consumer awareness and education programme to inform the consumer about the benefits of olive oil and the assurances that come with purchasing ‘Australian Extra Virgin’. This is part of a long

term strategy to build demand for certified Australian olive oil.

4.2The functional food market

The functional food market is characterised by foods ‘with a health benefit beyond basic nutrition’ – be it from an added ingredients or an intrinsic property of the food135. Added ingredients may include: probiotics; plant sterols and stanols; omega-3; fibre, protein, calcium; vitamins; antioxidants, beta- carotene and beta-glutans. This list is not exhaustive, but rather an indication of the type of additives that companies are using to find a points of differentiation and encourage consumers to purchase their product.

A number of these ingredients, such as plant sterols, beta-carotenes and antioxidants, are naturally present in avocados and derived products and it is for this reason that this market is being examined.

Profile of industry

The functional food market is one of the fastest-growing sector within the global food industry, By 2013, it is estimated that the global functional food market will reach a value of at least US$90.5bn136.

Growing consumer interest in the role of nutrition for health and well-being is a primary driver behind the success of the functional food market. As consumer awareness of health issues and the role of nutrition increases, the opportunities for new product development and marketing also grows. Into the future it is expected that the industry will focus on more specific and scientifically-supported health claims.

Major food manufacturers involved in the market for functional foods include: Kellogg and Nestlé in the functional breakfast cereals and cereal bars sectors; Danone and Yakult in the probiotic yoghurts and yoghurt drinks sectors; Unilever in the cholesterol-lowering margarines sector (and now also in the yoghurts and yoghurt drinks sectors); and So Good in the soya milk sector.

Attributes of a successful product

There are a number of common attributes related to the failure of products in the functional and health– enhancing food market. According to Mellentin (2009)137 success lies in differentiating the brand as strongly as possible, beyond the basics of good taste and convenience.

135 Melletin,J. Failures in Functional Foods and Beverages and What they Reveal About Success, 2nd edition, p.8, New Nutrition Business, UK, 2009. 136 Global market review of functional foods – forecasts to 2013, www.just-foods.com. 137 Mellentin,J. Failures in Functional Foods and Beverages and What they Reveal About Success, 2nd edition, p.13- 39, New Nutrition Business, UK, 2009

‘Good taste’ as defined by the target market is essential if a product is to succeed. Obviously ‘good taste’ is very subjective and is strongly influenced by culture and exposure to different foods and tastes.

‘Convenience’ is another essential element of the success matrix. Increasingly consumers are looking for products that are easy to prepare and / or consume. It is likely that no matter how wonderful the health attributes of a product are and the desire for consumers to achieve the related benefits, if the product is not convenient then consumers will find another way to achieve the benefit.

Beverages offer some major advantages over foods in regard to convenience, packaging innovation and consumer acceptance.

Mellentin (2009) also outlines the other steps involved. These are:

• Be a brand expert: To instil customer loyalty and generate repeat business it is important that brand is the most credible source of the health benefit the consumer is seeking. This is demonstrated by Yakult, the probiotic daily dose digestive health drink, with is clear focus on digestive health. In the competitive UK market, this product has been able to hold market share and the ‘high value’ niche in a declining market with a 70% price premium over the leading brand (by volume) in the category.

• Be a relevant benefit, a credible brand: To convince consumers to purchase a product the benefit needs to be easy to understand and experience, tangible and clearly communicated. The brand must also be a credible carrier for the benefit that is being promised. In a time deprived world, the consumer utilises known credible brands to assist in their purchasing decisions.

• Offer the power of a benefit the consumer can see or feel: This characteristic offers value to the consumer. Products such as energy drinks give consumers instant gratification. Satiety is another emerging benefit in the weight management category that consumers can immediately experience. Benefits from cholesterol-lowering products and products fortified with Omega-3 are not as tangible and easy-to-experience and this limits the sales potential of the product. In economically difficult times sales may actually decline.

• Note that an ingredient is not a point of differentiation: Consumers do not buy products because of their ingredients but rather for the benefits those products can deliver and which are relevant to their needs.

• Focus on niches of loyal consumers – and command a premium price: Health-enhancing products are usually low volume – high value products and very few achieve mass market status. This trend is driven by ‘health message overload’ and ‘individualisation’ of the consumer’s needs. As a result many functional foods are designed for individual consumption.

• Differentiate through packaging design: Packaging can be used to command and conceal high price premiums. Packaging also facilitates convenience, allows the product to assert its differences and enables the creation of new price points resulting in increased premiums.

• Open new categories and segments – don’t be a ‘me-too’: Creating a new category based around an innovative product is high risk but it is one of the most successful and proven strategies in the functional foods market. This involves offering a new proposition to the consumer and educating them about the benefits – as a result this often allows the brand to establish itself as the market leader and innovator. An example of this is Yakult and probiotic fermented milk drinks for digestive health. Case studies of ‘me-too’ failures in the market often demonstrate that the brands brought nothing new to the category except the brand’s health benefit, which could often be obtained more conveniently or cheaply from other sources.

Cholesterol–lowering margarine sector

With 6 million adult Australians believed to have high cholesterol levels (total cholesterol more than 5.5 mmol/L), the potential market for cholesterol-lowering functional foods is extensive.

Margarines containing plant sterols that manufacturers claim help reduce cholesterol have been on Australian supermarket shelves since the council advising the Australia New Zealand Food Authority (ANZFA) first approved the use of plant sterols derived from vegetable oils in margarines in 2001.

Clinical trials into sterol-enriched foods have demonstrated that a daily intake of 2 g of plant sterols and stanols can reduce LDL cholesterol (low-density lipoprotein cholesterol, the so-called 'bad' cholesterol) by 10 to 15 per cent over a three week period, and that this effect is in addition to reductions caused by a modified diet or medication such as statin tablets. This reduction translates conservatively to a 20% reduction in the risk of heart disease at a whole population level138.

Plant sterols work by reducing the absorption of cholesterol from the intestine, whether it be dietary cholesterol (cholesterol that is eaten in the diet) or biliary cholesterol (cholesterol that is produced by the liver and secreted as a component of bile into the intestine).

To achieve these results evidence shows that a daily intake of 20 to 30 g (about one-and-a-half tablespoons) of sterol-enriched margarine spread is required.

There are no reported adverse effects with these products however it known that plant sterols can be absorbed in the blood stream and can also can also reduce gut absorption of carotenoids, such as beta- carotene. Beta-carotene is an antioxidant which is believed to protect cells against damage that can lead to cancer. ANZFA requires that these foods are labeled as ‘not recommended for infants, children and pregnant or lactating women’ because they reduce the uptake of beta-carotene. People using these

138 Green,A. and Salisbury,P. Novel Products from Gene Technology, 2001. (http://www.regional.org.au/au/asa/2001/plenary/6/green.htm).

spreads should be encouraged to eat more yellow and orange fruit and vegetables, which are good sources of beta-carotene139.

The two brands of cholesterol-lowering margarine on the market are Flora Pro-activ®140 and Logicol®141. Sales of these products have not reached expected potential, however Australia has the world’s highest per capita sales of cholesterol-lowering spreads, although they represent only 3% of the Australian spreads market by volume. The Australian market for cholesterol-lowering spreads is valued at $60 million (2006)142.

There are a number of reasons that the potential of these products may not have been realised:

• people do not realise they need the benefit. One of the companies offered free cholesterol testing as part of their promotional campaign, so people could be aware of their need

• the product is not a credible carrier of the benefit, as people have been educated to restrict their use of margarines and as a result usage patterns have been modified to a point where consumers do not want to change irrespective of the benefit

• the benefit cannot be ‘felt or seen’ by the consumer.

Vegetable and Fruit Category

In regard to horticultural products, the Australian and New Zealand vegetable industries recently launched Booster Broccoli™143. This is the first release from the Vital Vegetables program, which will research and grow a whole range of antioxidant-rich vegetables including tomatoes, corn, capsicum, cauliflower and lettuce.

According to the promotional material, Booster Broccoli™ taste and looks the same as regular broccoli varieties the only difference is that it contains over 40% more sulforaphane (SF) than regular varieties. SF is a powerful and long-lasting antioxidant that has been proven to protect humans from serious disease if consumed several times a week according to studies and clinical trials144.

Other commercial seed companies are also breeding for health-enhancing properties such as high lycopene level in tomatoes. Lycopene is known to reduce the incidence of certain cancers, in particular prostrate cancer.

139 Pemble, L., Cholesterol Lowering Margarines, CMPMedica Australia, 2002, www.mydr.com.au. 140 Registered trademark of Unilever; www. floraloveyourheart.com.au. 141 Registered trademark of Goodman Fielder; www.logicol.com.au. 142 Mellentin,J. Innovation: reducing the risks and increasing the chances of success - a very short guide, power point presentation, 2006. 143 Trade Mark of the Department of Primary Industry Victoria and the New Zealand Institute for Plant & Food Research Limited. 144 www.vitalvegetables.com.au, August 2009.

It is still early days with these ‘novel and natural’ products, so it is yet to be determined if consumers will accept the product and pay a premium for the benefits they offer.

It is however noted in the research that the combination of ‘natural healthy’ and ‘convenience’ that occurs in the fruit category (e.g. blueberries) is one which the consumer is prepared to a significant premium145.

145 Mellentin,J. Failures in Functional Foods and Beverages and What they Reveal About Success, 2nd edition, p.33, New Nutrition Business, UK, 2009.

4.3 Processed avocado products in the US market

Profile of industry

Source of product

Processed avocado products sold in the US market are predominantly sourced from Mexico grown and processed avocados, although other supply sources are developing.

U.S. businesses, such as Calavo, which had historically processed fruit in California, have over the last decade moved their operation to Mexico in order to gain economic benefits and access to a more consistent fruit supply. In 2004, Calavo opened a state-of-the art processing facility in Uruapan, Mexico. This facility replaced an existing facility in Santa Paula California which had been operational since 1974. The new facility manufactures fresh, ultra-high pressure guacamoles, frozen guacamoles, pulp, and IQF avocado halves. Finished product is shipped to distribution centres in the United States and exported to Canada, Europe, Asia, New Zealand, and Australia.

Range of products Processed avocado products sold into the food service and retail sectors include frozen pulp and guacamole (various flavours and textures in a range of pack sizes and packaging offering portion control); frozen halves (peeled and seeded), avocado sauce, fresh cut avocados treated using ultra-high pressure processing technologies. For more details on these see ‘Products’ section below.

Categories

• Avocado dip category

The avocado dip category in the US is valued at US $60 million and continues to grow by 10% per year (based on 2002/03 AC Nielsen data). The growth is contributed in part to the convenience of the product and the perceptions by consumers that sour cream based products are unhealthy.

Diversification in this sector is significant with a range of flavour offerings to meet consumer demand. These include authentic, spicy, pico, salsa style and organic.

• Fresh Cut

New technologies such as ultra-high pressure processing (UHPP) and coatings technologies are driving growth in this sector, as is consumer demand for convenience and taste.

Fresherized Foods, under the Wholly Guacamole brand (originally Avo-Classic) provide UHPP into the market place as fresh halves. More information on this product is provided below.

Trends in the market

Meeting customer expectations: value

Consumers in the US are increasingly looking for products that offer value, particularly in relation to

• Increased flavour life

• Extended shelf life

• Increased health benefits

• Increased convenience (such as fresh cuts)

This is being achieved through improvements in processing technology, flavour enhancement and packaging innovations.

Meeting customer expectations: packaging and convenience

The prevalence of consumer ready packs of fruit and vegetable and the demand for semi-processed product, such as fresh cut product, is significant in the U.S. Prepackaged product promotes supply chain efficiency, assists in meeting consumer’s demand for convenience and perception that prepackaged foods are safer. Indications are that this trend will continue.

Meeting customer expectations: new and differentiated product

Consumers are also constantly looking for new and different products. Although commercial scale is critical to remain competitive, PMA research indicates that the ability to provide a differentiated product is one of the key indicators in regard to business success in the industry.

Industry promotions

The US, Mexican and Chilean avocado industries all continue to promote consumption of avocados around major sporting (Super Bowl) or family events such as holidays (4th July, New Year’s celebrations). In 2006, more than US $32 million was spent on promotion of the Hass avocado in the U.S. and although the campaigns focus on fresh product there is a significant benefit for the processed avocado sector.

Products

Suppliers

Processed products are available from a range of suppliers including:

Calavo Growers, Inc. – California (www.calavo.com)

• U.S. company processing in Uruapan, Mexico

• derives economies of scale from being largest marketer of avocados in the world

Product range includes:

• UHPP fresh refrigerated guacamole (authentic / pico / caliente) (pouches/boxed)

• Frozen pulp and guacamole (tubs /pouches and cartridges)

• Frozen avocado halves (deskinned and deseeded) (pouches)

• Avocado sauce (bottled)

• private labelling146.

See Appendix 2 for profile of products.

Diversified Avocado Products Corporation – California (www.dapguacamole.com)

• U.S. company processing in Uruapan, Mexico

Product range includes:

• Frozen pulp and guacamole (pouches)

Mission Produce – California (www.missionpro.com)

Product range includes:

• UHPP fresh refrigerated guacamole (authentic / pico / caliente) (pouches/trays)

Yacatan Foods. – California (www.yacatanfoods.com)

• Servicing the retail and food service sectors

Product range includes:

• Guacamole (authentic, mild and organic) (tubs / bags)

146 Calavo website (www.calavo.com) and printed material

• Avocado pulp (bags)

• Avocado halves (deskinned and deseeded) (bags)

Fresherized Foods – Texas (www.fresherizedfoods.com and www.whollyguac.com)

• U.S. company specialising in UHPP

• Markets under Wholly Guacamole, Dancing Iguana brands

• Markets to food service and retail. Market split is 50/50

• Also produce a range of UHPP salsas

• Producing more than 1 million pounds (454 tonnes) of guacamole and avocados each week in 300 pound (136 kg) batches147.

Product range includes:

• UHPP fresh refrigerated guacamole boxed (classic / spicy / pico / organic / guacasalsa / avocado puilp) (pouches/boxed)

• UHPP fresh refrigerated avocado halves (deskinned and deseeded) (pouches/boxed)

Figure 2: Wholly Guacamole Avocado halves information (source: www.whollyguac.com)

147 Christie, S., Wholly Guacamole, Fresh Cut Magazine Greater American Publishing, 2008 (www.freshcut.com)

Fresherized Foods have introduced innovation by:

• Reducing pack sizes (from 14-16 oz to 7 oz) to introduce customers to the product at lower price points

• Introducing a 100-calorie snack pack to reach dieting customers. The product retails for US$4 for a pack of 6 x 100 calorie portions. The product won the Shape Magazine Best Snack Award in 2008 and Men’s Health 2008 Nutrition Award148 (see below)

• Undertaking cross promotion with other fresh-cut vegetables such as carrots.

Figure 3: Wholly Guacamole 100-calorie snack pack information (source: www.whollyguac.com)

148 Wholly Guacamole website www.whollyguac.com.

5.0 Discussion

The research provided in this report outlines a number of market areas which may potentially be developed for commercial benefit and where inferior quality avocado fruit may be utilised, These market areas include: the avocado oil market, the processed avocado flesh market, the plant extracts market and avocado waste products market.

Unfortunately all markets identified have significant limitations and in some cases these may not be able to be suitably addressed to facilitate market development and profitable investment.

Although avocado oil possesses significant health-enhancing properties, it is unlikely there will be significant increases in the demand for Australian avocado oil under the Australian industry’s cost structures and based on current consumption trends. There may however be niches, such as organic oil production, within the market where more profitable activity can occur, but it is likely this is an adjunct to an existing production or processing business.

Of most potential is value adding of fruit for the pulp / guacamole and fresh-cuts sectors. Trends in the Australian food service and retail market reflect those of the U.S., in that food service operators and consumers are looking for tasty, convenient food solutions (at defined and consistent price points). New technologies have the ability to deliver products with these attributes for the Australian consumer and drive demand. However, the capital investment required; securing supply; and developing and positioning appropriate products within a competitive and value-based cost structure will be a challenge for any investor pursuing these opportunities.

The plant extracts market and waste products markets require further and significant investment in research and development if opportunities are to be realised in these sectors. In the case of plant extracts, research being undertaken by the industry in the health benefits of fresh avocados, may provide further direction in this regard.

The case studies provided in this report have been developed so that potential investors might be able to learn from the experiences and capabilities of other industries that have some elements in common with the Australian avocado industry and its products. It is hoped that they provide a new way of thinking about opportunities, what can be achieved and what processes might facilitate market development in the value- added avocado sector.

This project provides an outline of potential investment areas in regard to the development of the value added markets. It does not provide detailed market analysis, business plans or financial modeling. Industry members or investors that looking to develop markets and / or products would need to undertake these next steps to gain confidence in any investment.

6.0 Industry recommendations

It is not recommended that Avocados Australia make further investment at this stage.

It is expected that individual industry members and investors will utilise information in this report to independently undertake more detailed investigation of potential markets and prior to any commercial investment in product or market development activities.

Further industry funded R&D or promotional activities may be considered, if sound market assessment and business plans present a business case to justify such an investment by industry.

7.0 Technology transfer

The following activities will be undertaken to transfer information contained in this report to industry members and potential investors.

• A summary article will be provided to Avocados Australia for publication in ‘Talking Avocados”

• Avocados Australia can make a full copy of the report available to interested parties.

Appendix 1: Code of Practice (Australian olive oil)

Below is a copy of the Australian Olive Industry Code of Practice for olive oil. This has been sourced from the industry website (www.australianolives.com.au) August 2009.

Australian Olive Association Ltd A.B.N. 57 072 977 489-A.C.N. 072 977 489 P O Box 309 Pendle Hill NSW 2145

Tel: 61 2 9863 8735 Fax: 61 2 9636 4971 [email protected] 1

Australian Olive Association Ltd Australian Olive Industry Code of Practice for Olive Oil Including AOA Determinations

Introduction

The Australian Olive Industry Code of Practice is being developed to underpin and enhance the high quality of all Australian olive products and associated production processes.

This document includes the Code and also Determinations and Annexes relating to olive oil. Other products will be covered in the future as work currently underway delivers Determinations and Annexes specific to products such as the wide range of table olives that are an increasing part of the production of the olive industry of Australia. The Code stands behind industry efforts to educate consumers and to promote the quality of Australian olive products such as the Australian Extra Virgin campaign for Australian extra virgin olive oil.

This is a voluntary Code, designed to support quality, authenticity and confidence in the Australian olive industry and its products. It supplements the provisions of the Food Standards Australia New Zealand Code and related legislation, the Trade Practices Act, State and Territory fair trading food safety and health legislation, and international rules and codes with similar aims, such as those of the International Olive Council, American Oil Chemists Society, International Standards Organisation and the Codex Alimentarius Commission.

Success with the Code will provide assurance to consumers and provide certification and monitoring processes for producers of olive oil and in the future for producers of table olives, other food products marketed as olive products and other products where an olive product is the characterising or predominant ingredient.

The Code establishes the means for continuing consumer sensitive management, certification and monitoring processes. It also commits the industry to ecologically sustainable production methods.

We thank the numerous industry members across Australia and the many other stakeholders that have been involved since 2005 in the development of the Code. We believe that this is a major achievement for the Australia olive industry that will set it apart from other producers in a consumer-oriented and very positive way.

Paul Miller Nelson Quinn President Vice President

Index June 2009 Page(s) 1) Code of Practice 4 to 19

2) AOA Determinations a. Clause 2, Interpretation Permitted additives 21 b. Clause 4, Responsibilities of Signatories Environmental management 22 c. Clause 6, Certification Terms & conditions of use of Code of Practice certification symbol 23 to 30 Terms & conditions of use of Australian Extra Virgin logo 31 to 39 Certificate for bulk oil sales 40 d. Clause 13, Monitoring of Products Criteria for product selection & monitoring processes 41 Approved testing bodies 45 e. Annex 2, Quality & Labelling Guidelines Organoleptic testing 46 Approved testing bodies 47

3) Code of Practice Application forms 48

4) Code of Practice Checklist 50

5) Code of Practice fees 51

Code of Practice

For the Olive Industry

Table of Contents: PAGE PART I 1. Background 6 2. Interpretation 6

PART II 3. Application 8 4. Responsibilities of Signatories 9 5. Records 10 6. Certification 10 7. Coming into Force 10

PART III 8. Administration 11 9. Industry Compliance Committee 11 10. Committee Operations 12 11. Review of Committee Decisions 13 12. Committee Reports 13 13. Monitoring of Products 13 14. First Breach of the Code 14 15. Second Breach or Failure to Comply 15 16. Third and Subsequent Breaches 16 17. Publicity Procedures 16 18. Staff Instructions 16 19. Reporting Procedures 16 20. Review and Evaluation of the Code 17 21. Notices 17 22. Complaints 17

Annexure 1: Guidelines on Product Traceability 18 Annexure 2: Quality and Labelling Guidelines 19

PART I

1. BACKGROUND

This voluntary Code supports quality, authenticity and confidence in the Australian olive industry. It supplements the provisions of the Food Standards Australia New Zealand Code and related legislation, the Trade Practices Act, State and Territory fair trading food safety and health legislation, and international rules and codes with similar aims, such as those of the International Olive Council and the Codex Alimentarius Commission.

Success with the Code will provide assurance to consumers and provide certification and monitoring processes for producers of olive oil, table olives, other food products marketed as olive products and other products where an olive product is the characterising or predominant ingredient.

The Code establishes the means for continuing, well managed, consumer sensitive management, certification and monitoring processes. It commits the industry to ecologically sustainable production methods.

The Code will be reviewed in conjunction with interested parties, including Commonwealth, State and Territory government agencies, on a regular basis.

Objectives

The objectives of the Code are to provide processes to: • establish authenticity and quality of Australian olive products, • establish ecologically sustainable production processes, • provide security and confidence for consumers and investors in Australia and overseas in relation to Australian olive products, • deal effectively with complaints; and • establish a compliance culture within the industry in relation to the Trade Practices Act and relevant fair trading and food safety legislation.

2. INTERPRETATION

”Adulteration‘ of an olive product occurs: (a) when it is labelled or otherwise represented as being a particular type of olive product, and (i) it contains any substance other than permitted additives, (ii) has had any constituent wholly or partly extracted or removed so that its properties are diminished compared with such olive product in a pure state; (b) when it contains any substance prohibited for use in that class of product by State or Territory food laws or the Food Standards Australia New Zealand Code;

(c) when the olive product contains more or less than the quantity or proportions that may be specified in Food Standards Australia New Zealand Code or that any State or Territory law specifies that class of product may contain; (d) when it is prepared in any manner whereby damage, deterioration or inferiority is, or may be, concealed; (e) when it is potentially dangerous, offensive or injurious to health; or (f) when the packaging or anything included in it contains any substance that may render the olive product dangerous, offensive or injurious to health.

”HACCP principles‘ are the principles used to establish processes to identify hazards for food safety (by identifying any biological, chemical or physical property that may cause a food to be unsafe for human consumption) and to prevent, eliminate or reduce the hazards to acceptable levels (by appropriate action at a point, step or procedure in a food process at which control can be applied).

‘Labelling Breach’ includes any labelling, packaging, logos or promotional material that involves statements or representations, or gives rise to implications, in breach of:

(a) the Australia New Zealand Food Standards Code and the Code of Practice on Nutrient Claims in food labels and in advertisements, (b) the Trade Practices Act and State and Territory fair trading, food and weights and measures laws, and (c) Code of Practice Quality and Labelling Guidelines at Annex 2.

”Code‘ means this Code of Practice and Administration Rules for the olive industry as amended from time to time.

”Committee‘ means the Industry Compliance Committee.

”Olive oil‘ is the lipid part of the liquid extracted from olive fruit by mechanical processing.

”Olive product‘ includes olive oil, table olives, any food products derived predominantly from olive oil or fruit, any products based on olive leaf extract, any other products where an olive product is the characterising or predominant ingredient, or any product marketed as an olive product.

”Producer‘ means any person who grows olives, processes olives or any other part of the olive plant, or produces or trades in olive products.

”Person‘ means a person, corporation, partnership, association or any other body.

”Testing‘ means analysis of olive products to ascertain whether the product conforms to requirements of this Code, of the Food Standards Australia New

Zealand Code, or other relevant legislation and guidelines associated with the Code, or any other legislation applying to the product.

”Same product‘ means a product or products represented to be of the same or substantially similar composition whether or not packaged in different shapes or quantities to the product under comparison.

”Signatory‘ means a person who has signed an agreement binding the person to the terms, conditions and obligations of the Code.

PART II

3. APPLICATION

(1) Application

This Code applies to the Australian Olive Association Ltd and to each signatory to the Code.

(2) Eligibility to be signatory

Any person who is a member, other than an associate member, of the Australian Olive Association Ltd or other industry organisation approved by it may become a signatory to this Code, subject only to the payment of such fees as may be determined from time to time by the Australian Olive Association Ltd .

(3) Binding agreement

All parties to the Code shall sign an agreement that they agree to be bound by its terms, conditions and obligations.

(4) Amendments to the Code

(a) The terms, conditions and obligations of the Code may be amended by a majority vote of a General Meeting of the Australian Olive Association Ltd held following notice of the proposed amendments having been given to all members and signatories of the Code in accordance with the Australian Olive Association Ltd Constitution.

(b) Amendments approved by the Australian Olive Association Ltd shall be notified in writing to all members and signatories.

(5) Voluntary termination

(a) A person may cease to be a signatory to the Code by serving written notice to that effect on the Australian Olive Association Ltd and such cessation shall take effect from the date of receipt by the Australian Olive Association Ltd .

(b) The signatory shall continue to be liable in respect of its obligations and conduct to the date of cessation and the Code may be enforced by the Australian Olive Association Ltd in respect of such prior obligations and conduct notwithstanding such cessation.

(6) Suspension from Code When a signatory to the Code is suspended pursuant to the provisions of the Code and notified by the Australian Olive Association Ltd accordingly, the following restrictions shall apply during the period of suspension:

(a) the signatory shall not hold out to any person that it is a signatory to the Code without also advising that it is under suspension; (b) no product or advertising of the signatory prepared after fourteen working days from the date of the notification shall be entitled to bear any certification, or logo or symbol indicating that the person is a signatory to the Code or otherwise complies with the Code; (c) the signatory shall continue to be bound by the obligations of the Code.

4. RESPONSIBILITIES OF SIGNATORIES (a) Each signatory shall take all reasonable steps to ensure that the olive products it produces, purchases or trades comply with this Code and with State and Territory food, fair trading and health laws.

(b) Signatories shall observe good production and marketing practices for olive products and not engage in any conduct in breach of any relevant fair trading and food laws. Such conduct would include, but is not limited to: • adulteration, • misrepresentation about source of products, composition, grade, contents or the like, • misleading or deceptive labelling, • meaningless descriptions or labelling, • misleading or deceptive packaging, • misleading or deceptive promotion or advertising, • any other labelling breaches.

(c) Signatories shall: (i) develop and maintain a compliance program in relation to all aspects of this Code consistent with Australian Standard AS 3806-2006, as amended from time to time (ii) adopt complaints handling programs consistent with Australian Standard AS ISO 10002-2006, as amended from time to time (iii) in the case of food products, adopt a food safety program consistent with HACCP principles

(iv) adopt a product traceability system consistent with the Guidelines at Annex 1 (v) abide by any applicable Quality and Labelling Guidelines including those in Annex 2 in respect of extra virgin olive oil (vi) undertake to carry out their production and marketing processes so as to avoid or minimise adverse impacts on the environment, in accordance with any processes endorsed by the Australian Olive Association Ltd for this purpose (vii) provide information, as requested from time to time by the Australian Olive Association Ltd relevant to its systems for compliance with the Code, or to any matter relating to Code administration.

(d) The Committee shall take no action in respect of a first breach of the Code arising as a direct result from non-compliance of olive products provided the signatory had obtained a certificate of compliance from the supplier in respect of the offending supplies.

5. RECORDS Signatories shall keep purchasing, production and quality assurance records that might be relevant to dealing with a matter under this Code for a minimum of seven years.

6. CERTIFICATION (a) The Australian Olive Association Ltd may, from time to time, develop, own and license to signatories, logos, certification symbols or other insignia and devices that proclaim or certify a person to be a signatory to the Code, or that products have been produced and marketed in accordance with the Code.

(b) The logos, certification symbols or other insignia and devices that the Australian Olive Association Ltd may license to signatories may include any where the Australian Olive Association Ltd has entered into an agreement with another person to use its logos, certification symbols or other insignia and devices.

(c) Signatories shall not employ logos, certification symbols or other insignia and devices proclaiming or certifying a person to be a signatory to the Code inconsistent with the Australian Olive Association Ltd licence system.

7. COMING INTO FORCE The responsibilities and obligations in this Code are not binding on signatories until the Committee provided for in Part III has been appointed.

PART III ADMINISTRATION RULES 8. ADMINISTRATION (a) The Australian Olive Association Ltd shall: • manage the operation of the Code, • oversee the establishment and operation of the Committee, • arrange adequate financing for the administration of the scheme, • take action on recommendations made by the Committee or a reviewer and in its own name enforce the provisions of the Code, • monitor Code operations and propose amendments to the Code after consultation with relevant interested parties, • promote the Code and its benefits, • co-operate with, or enter into, an agreement with any other person in Australia or overseas in furtherance of the principles, objectives and effective operation of the Code.

(b) The Australian Olive Association Ltd may determine fees to be paid by signatories to contribute to financing the administration of the Code.

9. INDUSTRY COMPLIANCE COMMITTEE (a) The Australian Olive Association Ltd shall appoint not more than ten members of the Committee consisting of a Chairperson who must be independent of industry interests and, unless impracticable: • a nominee from a government food safety agency, • a non-industry nominee representing consumer and community interests, • a nominee from the retailing industry, and • three nominees from the Australian Olive Association Ltd .

(b) The Australian Olive Association Ltd shall call for nominations for members of the Committee from its members and from any relevant organisations it wishes, and may appoint a nominee who has accepted nomination in writing. (c) Nominations shall be sought prior to the obligations in the Code coming into force, and subsequently in sufficient time to enable new appointments to be made prior to the expiry of a Committee term. (d) Notwithstanding these provisions, the Australian Olive Association Ltd may appoint any person it considers appropriate as a Committee member. (e) The members shall disclose to the Australian Olive Association Ltd all interests in, or connections with, the olive industry prior to appointment and also any acquisition of such interests or connections while a member.

(f) Committee members shall hold office for two years and be eligible for renomination. (g) Members may be paid a fee and expenses agreed between the Australian Olive Association Ltd and each of them. (h) Industry nominees shall be ineligible to sit on any matter that involves a conflict of interest, including, but not limited to, deliberations on matters involving their employer, employee, partner, investor, debtor, a trading partner, or a related person. (i) Four members shall comprise a quorum, provided that two are non-industry representatives. Meetings may be convened through video, telephone conferencing or by electronic means. (j) If the Chairperson is not present, the members present shall elect one of them to chair the meeting.

10. COMMITTEE OPERATIONS (a) The Committee shall receive, assess and make recommendations for appropriate action in relation to: • complaints referred to the Committee by the Australian Competition and Consumer Commission, other Commonwealth agencies, or a State or Territory agency, • results of national monitoring programs, • alleged breaches of the Code, however brought to notice, • complaints or relevant information from signatories, • public complaints and allegations, and • any other matter referred by the Australian Olive Association Ltd.

(b) The Committee may refer a complaint against a signatory to the signatory before taking any further action where it believes that it has not been considered by that signatory under its complaint handling procedure. (c) The Committee shall: • act fairly, in good faith and without bias • ensure that documents it takes into account in reaching a decision are made available to the organisation the subject of the complaint • give the organisation the subject of the complaint the opportunity, subject to any time frames specified in the Code, to state its case adequately, and to respond to any relevant statement prejudicial to its case • deal with the complaint expeditiously.

(d) In arriving at any decision or exercising any discretion the Committee may take into account any previous conduct of the person subject of the complaint and any other matter or fact the Committee considers relevant.

(e) Subject to the funds available to it, the Committee may make arrangements with any persons on any conditions it determines to carry out its functions adequately. (f) The Committee shall provide a written acknowledgement for each written complaint by signatories to the Code. (g) Committee officers shall maintain a register of all complaints made by signatories that will be available for inspection by signatories to the Code.

11. REVIEW OF COMMITTEE DECISIONS (a) When a complainant or signatory is dissatisfied with a first decision by the Committee the Australian Olive Association Ltd shall appoint an independent reviewer to review it. This independent reviewer shall: • be recruited from outside the industry; • hold no known preconceived ideas about the industry of the complainant, and • be suitably qualified to hear and resolve complaints. (b) The reviewer may: (i) uphold the Committee‘s decision, or (ii) recommend an alternative course of action. (c) The Australian Olive Association Ltd shall, after consideration of the reviewer‘s report, determine a course of action for dealing with the complaint. (d) A reviewer may be paid a fee and expenses agreed between the Australian Olive Association Ltd and the reviewer.

12. COMMITTEE REPORTS (a) The Committee shall submit an annual report and an audited financial report to the Australian Olive Association Ltd prior to 30 September each year and at any other time it wishes. (b) The Committee‘s report shall include statistics and evaluation in relation to each of its functions.

13. MONITORING OF PRODUCTS (a) The Australian Olive Association Ltd shall conduct a continuing olive product monitoring program in respect of the products of both signatories and non- signatories. (b) The monitoring processes and criteria for selection of product to be monitored shall be as determined from time to time by the Australian Olive Association Ltd in consultation with the Committee. (c) Any signatory may initiate testing of an olive product. The Committee shall consider these results only if: • the requirements of sub-clause 13(b) have been followed

• the initiator pays for all product sample collection and testing • all results are forwarded by the testing agency to the Committee for consideration. (d) Signatories who make an individual complaint may be asked to pay all or part of the costs involved in examining the claim. (e) The results of independent finished product sample testing submitted by, and paid for by, persons may be limited to the Committee and the paying person where considered appropriate by the Committee. (f) Any results indicating breaches of the Code shall be retained by the Committee for further action, and the Committee shall advise the initiator accordingly. (g) The results of any testing under this Code carried out in accordance with the requirements of sub-clause 13(b) shall be deemed conclusive of the accuracy of the results in the absence of evidence of error that could materially affect the outcome of any action under this Code. (h) After obtaining test results that establish a breach of the Code has occurred, the Committee shall notify the producer advising that a sample is available for testing at the producer‘s expense. (i) Where the Committee concludes that a breach of the Code has occurred, it may authorise the reimbursement of some or all of the costs incurred by a signatory under sub-clause 13(c) or 13(d). (j) The Australian Olive Association Ltd may determine the testing bodies for this Code, and may include bodies endorsed by the National Authority for Testing Agencies, the International Olive Council, the Codex Alimentarius Commission, or any other relevant organisation. 14. FIRST BREACH OF THE CODE (a) If the information available to the Committee, including results from testing, in the opinion of the Committee involves a breach of the Code, a First Letter of Non- compliance shall be issued by the Australian Olive Association to the producer responsible for the product requesting, amongst other things, a letter of explanation. (b) The Australian Olive Association Ltd shall arrange further testing of the offending product. Where the producer has provided sufficient identification detail in its letter of explanation, the sample is to have been produced no earlier than two weeks after the date of receipt of the First Letter of Non-compliance. Where the producer has failed to supply such detail, the sample is to be the relevant product bearing the longest ”use by‘ date to expiry then available in the selected retail outlet, where the product is one requiring ”use by‘ information. (c) In the event that the explanation of the producer fails to satisfy the Committee that a further or continuing breach of the Code by the producer is unlikely to occur, the Australian Olive Association Ltd, upon recommendation of the Committee, can request the producer to duly execute and return to the Australian Olive Association Ltd an undertaking to

implement an effective compliance program. The producer shall return such undertaking within seven days of such request and shall comply in all respects with the undertaking.

15. SECOND BREACH OR FAILURE TO COMPLY WITH UNDERTAKING

(a) In the event that within twelve months of a breach of the Code: • evidence, including testing where relevant, disclosed the same or a related breach of the Code by the producer in respect of the same or similar product • the evidence suggests, in the opinion of the Committee, a serious breach of the Code in respect of a different product or matter, or • the producer fails to return the undertaking or provide upon request evidence of full compliance with the undertaking required under sub-clause 14(c). • then a letter seeking reasons why further action should not be taken shall be sent to the producer by the Australian Olive Association Ltd.

(b) If in response to the letter seeking reasons, the producer fails to satisfy the Committee that a further or continuing breach of the Code by the producer is unlikely to occur the Australian Olive Association Ltd upon recommendation of the Committee may initiate any or all of the following actions:

(i) The Committee may arrange continuing testing of such of the producer‘s product at such frequency and for such duration, to a maximum of twelve months, as the Australian Olive Association Ltd, upon recommendation of the Committee, may determine. Such testing shall be at the producer‘s expense to a maximum of $5,000. (ii) The Australian Olive Association Ltd may notify and provide full details of the breach of the Code to the Australian Competition and Consumer Commission if in the opinion of the Committee a prima facie breach of the Trade Practices Act may have occurred and request that the Commission consider taking action in relation to the conduct in question. (iii) The Australian Olive Association Ltd may notify and provide full details of the breach to any other relevant Commonwealth, State or Territory agency and request that any breaches of the relevant legislation be pursued. (iv) Wholesale, retail, trading associations and any other relevant organisations may be advised of action in respect of the first and subsequent breaches and requested to inform their members of such results. (v) The Australian Olive Association Ltd may seek an undertaking from the producer that henceforth it will comply with the Code.

16. THIRD AND SUBSEQUENT BREACHES Where, within twelve months of a second breach, the Committee becomes aware of another breach of the Code in respect of any of the producer’s products or activities, the Australian Olive Association Ltd, upon recommendation of the Committee, shall notify the producer and request an explanation. In the event that no explanation is received within seven days of the date of request or if the explanation fails to satisfy the Committee that a further or continuing breach of the Code is unlikely to occur, then the Australian Olive Association Ltd, upon recommendation of the Committee, may initiate any or all of the following actions: (i) The Australian Olive Association Ltd may publish information relating to the breach, including any test results and expert scientific interpretation of the results in any form of publication the Committee wishes. (ii) The Australian Olive Association Ltd shall notify and provide details of the breaches of the Code, and how it may breach relevant legislation, to the Australian Competition and Consumer Commission and all other relevant Commonwealth, State and Territory agencies, requesting that the strongest possible action be taken under the relevant legislation, or otherwise. (iii) Where the matter involves an alleged breach of a Commonwealth, State or Territory law, the Australian Olive Association Ltd may institute in its name legal proceedings for damages, injunctive or other remedy aimed at preventing further breaches by the producer. (iv) The Australian Olive Association Ltd may suspend the producer from the enjoyment of the rights and benefits of the Code for a period of up to six months and publicise the suspension in any form it wishes. The producer shall be advised forthwith of suspension. 17. PUBLICITY PROCEDURES The Australian Olive Association Ltd shall initiate and maintain processes to develop awareness and understanding of the Code and the administration rules, and any amendments to signatories, its members and other interested parties through relevant industry associations or other appropriate means. 18. STAFF INSTRUCTIONS All signatories shall undertake to give adequate instructions to employees, agents and related persons about its existence and the administration rules, and any amendments when they are made. 19. REPORTING PROCEDURES (a) The Australian Olive Association Ltd shall produce an annual report on the Code and its administration and make it available to interested parties. (b) The report shall include information on action taken under the Code, on assessed levels of awareness of the Code by consumers and industry parties, and on any other matter the Australian Olive Association Ltd thinks fit.

20. REVIEW AND EVALUATION OF THE CODE AND ADMINISTRATION RULES (a) The Code and its administration shall be reviewed and evaluated by the Australian Olive Association Ltd, assisted by the Committee, at least every two years.

(b) The Australian Olive Association Ltd shall seek comments from interested parties on the review and evaluation of the Code, and on proposed amendments, whether arising from the review and evaluation process or otherwise.

21. NOTICES

Any notice, request or notifications to be given under the Code may be sent by facsimile, mail, email or other electronic means, or personal delivery. Such communication shall be deemed to have been received:

• in the case of email, facsimile or other electronic transmission, upon receipt by the sender of the evidence of full transmission

• in the case of mail, after two days from certified posting, and

• in the case of personal delivery, when delivered.

22. COMPLAINTS

The Australian Olive Association Ltd shall advise any person who makes a complaint of action taken to deal with it, including any decision not to take action.

Annex 1 Guidelines on Product Traceability

A system of product traceability is the cornerstone upon which recall and complaints procedures are based in the event of an anomaly being identified that involves a food safety, health, food quality or other Code issue. In the event that a traceability system is not in place and an anomaly in a product is identified then the producer may be required to recall all of that product and any other product with one or more common ingredients. Such a broad based recall will prove extremely expensive to any producer. A good traceability system will also enable identification of the point in the process or the activity that led to the anomaly. The information generated by a traceability system can be used to trace back to find the source and cause of a problem, to stop the problem or prevent its recurrence.

Traceability is defined as the ability to trace the history, application or location of an entity by means of recorded identifications. Normally this requires the recording of all suppliers and delivery destinations at least one up and one down in the supply chain, and to record related activities within the business. The latter is particularly important within the olive industry as the vertical integration common in it means that an individual business may control or carry out several activities in a typical product supply chain.

Such a system will include: • unique identification of products or batches and of inputs from outside the business, and • supporting data capture and record keeping systems.

For example, the supplier would need to develop and maintain appropriate procedures and systems to ensure: • identification through a code marking on the product that can be linked to the source of any out-sourced ingredient or service, and • record of purchaser or recipient and delivery destinations of all products supplied.

It is necessary to determine exact product specifications and, where relevant, batch or lot sizes.

Batch sizes can be based on any relevant factor, eg, production run time, volume, product best by or expiry dates. Individual businesses need to consider the best approach for them, taking into account risk and cost factors. Usually the cost will be less with large batch sizes, but the risk is greater as a recall will involve a larger loss. One advantage of smaller batch sizes is the greater control it can give of processes, and of identifying and linking steps in the processes that contribute to higher or lower quality, eg, any differences in olive oils produced from different fruit batches.

Annex 2 Quality and Labelling Guidelines

Australian Extra Virgin Olive Oil

Australian extra virgin olive oil must have the following characteristics:

• be produced only from olives grown in Australia • free fatty acid contents, expressed as oleic acid, of not more than 0.8 grams per 100 grams • a peroxide value less than 20 (mEq. peroxide oxygen per kg of oil) • not exceed the following extinction coefficients for ultra-violet absorbency tests:

270 nm no greater than 0.22 GK no greater than 0.01 232 nm no greater than 2.5 • have been assessed organoleptically by a person or persons accredited by the Australian Olive Association Ltd or in accordance with processes determined by the Australian Olive Association Ltd as having fruitiness characteristics, and not having any fusty, muddy, musty, rancid or winey characteristics.

The chemical analyses for these purposes shall be undertaken by a person or organisation accredited by the Australian Olive Association Ltd for this purpose.

A sample from each batch identified on labels needs to meet the above tests before the claim that an oil is Australian extra virgin olive oil can legitimately be made. A batch that is a blend of oils may be described as Australian extra virgin if either a sample of the blend or samples of the constituent oils have met the above tests.

The labelling requirements are as follows, subject to confirmation by the signatory by investigation, research and expert advice. Inclusion of a ”Best before‘ date on a label shall not be more than the equivalent of 30 days for every hour of the oil in Rancimat® at 110oC. Where the oil is a blend and the constituent oils have been tested separately the ”Best before‘ date shall be that for the lowest scoring constituent.

AOA DETERMINATION

August 2008

Clause 2, Interpretation

(i) Permitted additives:

Enzymes (pectinases and cellulases) talcum powder (hydrated magnesium silicate) or water may be added in the olive oil extraction process. These should not be detectable in the final product.

AOA DETERMINATION

June 2009

Clause 4, Responsibilities of Signatories

(i) Environmental management:

Signatories shall: 1. ensure compliance with all laws and regulatory requirements affecting or relating to environmental outcomes that are relevant to the production of products for which the Code of Practice has quality and related requirements

2. demonstrate a commitment to implement and maintain an environmental management system based on continuous improvement principles within two years of becoming a signatory, and

3. include conscious attention to biodiversity issues in that system.

AOA DETERMINATION August 2008 Clause 6, Certification (i)

CODE OF PRACTICE CERTIFICATION SYMBOL

TERMS AND CONDITIONS OF USE

The Code of Practice Certification Symbol may be used only by signatories to the Code of Practice who have met all their obligations under the code.

The Code of Practice Certification Symbol is the industry‘s method of guaranteeing the authenticity and quality of its products. It distinguishes quality certified Australian products from all other products in local and international marketplaces.

In addition to the olives being grown in Australia, certification includes organoleptic testing and chemical compound testing.

It is imperative that it be used consistently and only in accordance with these terms and conditions. ARE YOU GOOD ENOUGH? The Australian Olive Oil Industry Code of Practice will underpin all marketing activities.

These will include the promotion of the certification symbol as a new benchmark of industry standards.

And when compliance is met, your producer‘s brand will be awarded a new symbol; The Code of Practice Certification Symbol.

This is our —seal of approval“.

It is our promise to consumers that your standards meet high industry standards and have won the right to carry the industry‘s certification.

It is our commitment to consumers that Australian Certified Extra Virgin is certified to be high quality and produced here in Australia. The role of the Code of Practice Certification Symbol is to promote and demonstrate the quality of Australian made extra virgin olive oil products as a point of difference firstly to imported and secondarily to other olive oils.

Use of the logo will signify to all those who see it on your product‘s packaging that your product is good enough to bear the Australian Certified Extra Virgin Code of Practice Certification Symbol.

1. The Code of Practice Certification Symbol may be used only on or in association with a product that has been certified as meeting the requirements of the Code of Practice. It may not be used on or in association with any other product of the signatory.

2. The Code of Practice Certification Symbol shall be used only in the form provided by the Australian Olive Association Ltd. The CMYK colour breakdown or PMS colour swatch depicted below shall be used for all printing and display purposes, unless otherwise approved by the Australian Olive Association Ltd.

3. The Code of Practice Certification Symbol may be used in a two tone mono or black and white form, as shown below, only where use of the specified colours is not practicable and where the reputation of the signatory and the Australian Olive Association Ltd is enhanced.

3a. The Code of Practice Certification Symbol may be used in a solid colour or reversed form, as shown below, only where use of the specified colours is not practicable and where the reputation of the signatory and the Australian Olive Association Ltd is enhanced.

4. Modification of the Code of Practice Certification Symbol is not allowed. This includes: animation, colour changes, morphing, blurring, pixelation, font changes, elongation or any other form of distortion.

5. The Code of Practice Certification Symbol may be used only in advertising and marketing material or product identification dealing specifically and only with certified product.

6. When used in advertising and marketing material or on a large label, the Code of Practice Certification Symbol size should be increased to be prominent and easily seen, with a minimum of size 7% of a page unless otherwise approved by the Australian Olive Association Ltd.

7. The symbol shall not be used smaller than displayed below.

8. The Code of Practice Certification Symbol may not be used in any manner that might imply association with any product other than one certified under the Code of Practice or with any organisation other than the Australian Olive Association Ltd.

9. The Code of Practice Certification Symbol may not be used as a basis for any design that appears to mimic it or rely on it for impact or effect.

10. The Code of Practice Certification Symbol shall stand alone and not be combined with any other object, including other designs, images or graphics of any kind unless approved by the Australian Olive Association Ltd.

11. The Code of Practice Certification Symbol shall always be accompanied by the registered trademark symbol ®.

12. A minimum clearance space as indicated by the box surrounding the Code of Practice Certification Symbol below shall be maintained.

13. If the Code of Practice Certification Symbol is used on a label or any other advertising or marketing material similar in colour to the Code of Practice Certification Symbol background or border, the second or third option displayed below shall be used to ensure that the symbol is prominent.

14. The Code of Practice Certification Symbol shall be included only on the right hand top or bottom corner of a bottle label artwork and advertising or marketing materials unless the Australian Olive Association Ltd has approved otherwise.

15. If a sticker with the Code of Practice Certification Symbol is used it shall be affixed at or near the right hand top or bottom corner of a front label, or on the neck of an olive oil bottle.

16. A signatory may use a certificate or label provided by the Australian Olive Association Ltd with product qualifying for use of the Code of Practice Certification Symbol.

For any other questions or concerns regarding the application of these terms and conditions, please contact:

Chuck L’Heureux Secretariat Australian Olive Association Ltd (ABN: 57 072 977 489) PO Box 309 Pendle Hill NSW 2145 Tel: 02 9863 8735 Fax: 02 9636 4971 Email: [email protected] Web: www.australianolives.com.au

To purchase stickers for containers, including bottles, tins and casks or download artwork files, please visit the Australian Olive Association Ltd website: www.australianolives.com.au

AOA DETERMINATION August 2008 Clause 6, Certification (ii)

Australian Extra Virgin Logo

TERMS AND CONDITIONS OF USE

This Australian Extra Virgin Logo may be used by signatories to the Code of Practice who have met all their obligations under the Code. As intended with most logos, this Australian Extra Virgin Logo is a consumer brand identity for the Australian Olive Association Ltd. The Australian Extra Virgin Logo is very important for signifying commitment by its members to producing authentic and quality olive products. It is designed to distinguish Australian Extra Virgin products from all other olive products in local and international marketplaces. It is imperative that it be used consistently and only in accordance with these terms and conditions.

WELCOME TO A NEW BRAND; YOUR BRAND.

Australian Extra Virgin olive oil is a new name and a proud name. In order to protect it from misuse, we have written these conditions to help you use the name, the logo, and the registered trademark symbol in such a way as to both protect and promote the potential of the industry’s highest standards. Think of it as a seal of approval for your own brand name. We have designed the name, logo and trademark to be a stand-alone brand asset. The font and colour, size and shapes of these elements are as important as the new brand name itself. They must always be used according to the following guidelines. As the new name and logo become more recognised as the symbol of Australia’s best both here and overseas, we are confident you will see the benefits of being a partner in making a new name a Brand name.

1. The Australian Extra Virgin Logo may be used only in association with the signatory’s olive industry business. It may not be used in association with any other business of the signatory.

2. The Australian Extra Virgin Logo may be used only in the form provided by the Australian Olive Association Ltd. The CMYK colour breakdown or PMS colour swatch depicted below shall be used for all printing and display purposes except as otherwise provided in these terms and conditions.

3. The Australian Extra Virgin Logo may be used in a two tone mono or black and white form, as shown below, only where use of the specified colours is not practicable and where the reputation of the signatory and the Australian Olive Association Ltd is enhanced.

3a. The Australian Extra Virgin Logo may be used in a solid colour or reversed form, as shown below, only where use of the specified colours is not practicable and where the reputation of the signatory and the Australian Olive Association is enhanced.

The logo may not be used on a photographic background without the approval of the Australian Olive Association Ltd.

4. Modification of the Australian Extra Virgin Logo is not allowed. This includes: animation, morphing, blurring, pixelation, colour changes, font changes, elongation or any other form of distortion.

5. The Australian Extra Virgin Logo may be used in documentation, advertising or marketing material dealing specifically with the signatory’s olive industry business.

6. The Australian Extra Virgin Logo size may be increased or decreased so that it is a prominent and easily seen part of the advertising or marketing material. It shall not be smaller than depicted below.

7. The Australian Extra Virgin Logo may not be used in any manner that might imply association with any industry other than the olive industry or with any organisation other than the Australian Olive Association Ltd.

8. The Australian Extra Virgin Logo may not be used as a basis for any design that appears to mimic it or rely on it for impact or effect.

9. The Australian Extra Virgin Logo shall stand alone and not be combined with any other object, including other designs, images or graphics of any kind unless approved by the Australian Olive Association Ltd.

10. As shown below, the Australian Extra Virgin Logo shall always be accompanied by the registered trademark symbol ® and in the position shown.

11. A minimum clearance as indicated by the box surrounding the Australian Extra Virgin Logo below must be maintained, and remain proportional to its size when increased or decreased.

12. If the Australian Extra Virgin Logo is used on any material or document similar in colour to the Australian Extra Virgin Logo, a box should be placed around the Australian Extra Virgin Logo to ensure that it has prominence and the background colour remains the same. See point 11. for the size and spacing relationship of the box to the logo.

13. The Australian Extra Virgin Logo shall be included in the right hand top or bottom corner of all documents and advertising or marketing material unless otherwise approved by the Australian Olive Association Ltd.

14. The Australian Extra Virgin Logo may not be used in any manner that might imply that a specific product has been certified as meeting the requirements of the Code of Practice.

15. The Australian Extra Virgin Logo may be used in conjunction with the Code of Practice Certification Symbol on documents or advertising and marketing materials, provided that the proportions and placement of the logos are represented as displayed below.

16. Wherever the Australian Extra Virgin Logo is printed, the font Futura Light must be used for all copy and headlines. If this is not possible, typeface Helvetica Neue Light may be used. Where these fonts are not available Arial may be used. These 3 fonts are depicted below.

Other font weights (e.g. Bold, Medium, Regular etc.) may be used where necessary.

For any other questions or concerns regarding these terms and conditions, please contact: Chuck L’Heureux Secretariat Australian Olive Association Ltd (ABN: 57 072 977 489) PO Box 309 Pendle Hill NSW 2145 Tel: 02 9863 8735 Fax: 02 9636 4971 Email: [email protected] Web: www.australianolives.com.au

AOA DETERMINATION May 2009 Clause 13, Monitoring of Products

(i) Criteria for Product Selection

Program limits – The scale of testing from year to year will vary with the funds available for collection, transport, testing and storage of products. Within those overall limits, the range and quantity of product will be selected on the basis of the following criteria. Signatory products:

1. Once a year each signatory shall be asked to provide a list of products available for sale.

2. Subject to practicalities, such as availability, accessibility and cost, at least one product line from each signatory shall be tested each year.

3. Decisions under 2 shall have regard to assessment of risk of potential problems with products.

4. The products to be tested shall be selected randomly, that is, without a preconceived pattern of selection.

Non-signatory Australian products

1. At least four oils from each producing mainland State shall be tested each year, noting that in Tasmania most producers are, or are becoming, Code signatories.

2. Decisions under 1 shall have regard to assessment of risk of potential problems with products.

3. The products to be tested shall be selected randomly, that is, without a preconceived pattern of selection.

Other cases Notwithstanding the criteria set out above, the Australian Olive Association Ltd reserves the right to arrange the testing of any oil drawn to its attention, where it considers that it would be in its interests, or the interests of the industry, to do so. Collection of samples

1. Samples of oils shall be collected by persons endorsed by the Association as collectors.

2. Collection and management of samples shall be in accordance with procedures determined by the Australian Olive Association Ltd.

41 Australian Olive Association Ltd A.B.N. 57 072 977 489-A.C.N. 072 977 489

AOA DETERMINATION May 2009 Clause 13, Monitoring of Products

(i) Monitoring Processes

Procedure for Sample Collection Below is the procedure to be taken when collecting samples for testing of olive oil under the Australian Olive Association Ltd’s Code of Practice.

The procedure is designed to safeguard the grower/brand owner and also provides information needed by the Industry Compliance Committee and the Association in administration of the Code.

The integrity of this system relies upon your honesty and diligence.

Collector information: Given Name: Surname:

Address: Post Code: . Phone: ( ) Mobile: Email:

Product & Place of Purchase information: You will need to purchase three (3) samples that are the same size, have the same “best before” or “harvest” date and any other identifying features. Please complete the following table. Brand Name

Contact details on container (if any)

Type of container

Volume of each sample (eg. 500ml) Batch number or code

Best Before Date (if no date, write NO DATE ON CONTAINER) Harvest Date

Oil purchased from: Name of Store:

Address of Store:

Other source:

Method of purchase Eg, cash, credit card, over internet, or other (please specify)

Receipts must be attached for YES I have attached my receipt verification.

Conditions of storage prior to purchase: How was the oil stored before you purchased it (if known)? Eg, hot room, cold room, full sun, on shelf, dark area of shop, etc

Was the packaging in good condition? If No, please explain

Conditions of storage after to purchase prior to sending: Where did you store the oil once you got it home and prior to sending it for testing? Eg, cool room; fridge, pantry, cupboard

What were the temperature conditions of this storage prior to sending the oil for testing?

Method of transport to testing laboratory: Was the oil labelled and sealed to ensure identification and non-interference: YES or NO. If YES, please provide more details of the measures you took to ensure the integrity of the sample.

What date did you send the sample? ...... /...... /...... How much did it cost you to send the samples for testing? $...... Please attach proof of postage.

Laboratory Procedures for the Testing & Storage of Samples

Below is are procedures that you, as an approved testing laboratory, must comply with in order to safeguard the integrity of the Australian Olive Association Ltd’s Code of Practice.

Procedure

Samples have been labelled A, B and C, with each sample being allocated a unique identifier. The place, method and circumstances of storage have been recorded Each sample has been visually inspected for possible settling residues Sample A has been tested for the parameters specified in Annex A of the Code of Practice, and for adulteration. Sample B has been stored in cool, dark, consistent conditions to be made available to the producer if requested Sample C has been stored in cool, dark, consistent conditions for future reference Method of receipt and any unusual conditions on receipt of samples has been recorded The place of storage, if known, prior to transport to this lab, has been recorded Method of transport to this lab, if known, has been recorded The test results have been recorded and forwarded to the Code of Practice Secretariat with all relevant information from the processes

AOA DETERMINATION May 2009

Clause 13, Monitoring of Products

(ii) Approved testing bodies.

The following laboratories are the testing bodies for the monitoring program under the Code: • Australian Oils Research Laboratory New South Wales Department of Primary Industries Pine Gully Road Wagga Wagga NSW

• Modern Olives Laboratory Lara Victoria

AOA DETERMINATION May 2009 Annex 2, Quality and Labelling Guidelines

(i) Organoleptic Assessment

The organoleptic requirements of the Code are a minimum of three (3) people tasting the oil, of whom one must have a minimum of AOA’s Level II Olive Oil Assessment Course (or equivalent), and the others to have a minimum of Level 1 (or equivalent).

All persons with these qualifications are accredited for the purposes of organoleptic assessment.

AOA DETERMINATION May 2009 Annex 2, Quality and Labelling Guidelines

(ii) Approved testing bodies:

The organisations accredited for undertaking chemical analyses are: • Australian Oils Research Laboratory New South Wales Department of Primary Industries Pine Gully Road Wagga Wagga NSW

• Modern Olives Laboratory 151 Broderick Road Corio Victoria 3214 PO Box 92 Lara Victoria 3212

APPLICATION FORM (Business entity other than a Sole Trader)

…………………………………… (the Applicant) hereby applies to become a signatory to the Code of Practice for the Olive Industry, and is a member of the Australian Olive Association Ltd., membership ID#______.

The Applicant agrees: • to be bound by all the terms and conditions and obligations of the Code, covering compliance with applicable legislation, good production and marketing processes, compliance and complaints handling programs, food safety plans, product traceability, any applicable quality and labelling guidelines, environmental management record keeping, staff training, and any other matter determined from time to time by the Australian Olive Association Ltd under the Code • to abide by any applicable rules and processes in relation to logos, certification symbols or other insignia and devices used for Code purposes, and to act in accordance with the requirements of the Industry Compliance Committee • acknowledges that any act inconsistent with the requirements of the Code of Practice may lead to action under the Code for breaches of its terms, or to disciplinary action under the constitution of the Australian Olive Association Ltd • acknowledges that rights under the Code of Practice apply only to the Applicant and not to any associated legal entity or business • agrees that it shall cease using Code logos, certification symbols or other insignia and devices immediately that it ceases to be eligible to do so because it has ceased to be a member of the Australian Olive Association Ltd or a signatory of the Code, because it has not paid fees as requested or because of any relevant action taken against it under the Code or the Constitution of the Australian Olive Association Ltd.

APPLICANT DETAILS Name Name of company or other commercial enterprise Description of enterprise (including brand names and any trading names other than the name above) Postal address Telephone Mobile Fax Email Signed for and on behalf of ……………………………...... …………………………………………………………… Date ……………………………… Accepted ……………………………………………… Date ……………………………… for an on behalf of the Australian Olive Association Ltd APPLICATION FORM (Sole Trader)

I, ……………………………….., hereby apply to become a signatory to the Code of Practice for the Olive Industry. I am a member of the Australian Olive Association Ltd., membership ID#_____. I agree to be bound by all the terms and conditions and obligations of the Code, covering compliance with applicable legislation, good production and marketing processes, compliance and complaints handling programs, food safety plans, product traceability, any applicable quality and labelling guidelines, environmental management, record keeping, staff training, and any other matter determined from time to time by the Australian Olive Association Ltd under the Code. I agree to abide by any applicable rules and processes in relation to logos, certification symbols or other insignia and devices used for Code purposes, and to act in accordance with the requirements of the Industry Compliance Committee. I acknowledge that any act inconsistent with the requirements of the Code of Practice may lead to action under the Code for breaches of its terms, or to disciplinary action under the constitution of the Australian Olive Association Ltd. I acknowledge that rights under the Code of Practice apply only to my olive products business and not to any associated legal entity or business. I agree that I shall cease using Code logos, certification symbols or other insignia and devices immediately that I cease to be eligible to do so because I have ceased to be a member of the Australian Olive Association Ltd or a signatory of the Code, because I have not paid fees as requested or because of any relevant action taken against me under the Code or the Constitution of the Australian Olive Association Ltd.

CONTACT DETAILS Name Description of enterprise (including brand names and any trading names other than the name above) Postal address Telephone Mobile Fax Email Signed for and on behalf of ……………………………...... …………………………………………………………… Date ……………………………… Accepted ……………………………………………… Date ……………………………… for an on behalf of the Australian Olive Association Ltd Code of Practice Checklist

Thank you for submitting your code of practice application form. Under the code you have agreed to the following obligations. Please complete this checklist and retain a copy for your records and return a completed copy to the Australian Olive Association.

Code of Practice Fees

August 2008

Appendix 2: Calavo promotional material