Speaking to FoodNavigator-USA after announcing its acquisition by Sesajal, which started supplying Chosen Foods with key raw materials in 2012, chairman and CEO Gabriel Perez-Krieb said:
“At the core of our business is avocado oil, and value added products using avocado oil… but we’re also looking at plant-based proteins [Sesajal supplies chickpea flour, raw chickpeas, cooked chickpeas, and hummus mix]. We’re one of the biggest organic garbanzo beans companies out there, for example [chickpeas are a good source of plant-based protein and have been used in shelf-stable brands such as Neat Foods as egg and meat replacements and high-protein pasta brands such as Banza].
“We’ve already started exploring snack bites [Sesajal makes snack bites from chia, sesame seed, peanuts, nuts, and dehydrated fruits], so in the snack segment there is an opportunity [to develop new protein-fueled snack products under the Chosen Foods brand], but also in refrigerated finished products.”
The sky really is the limit
But he added: “We’re at a very early stage with this, as our resources are currently focused on healthy fats. Avocado is one of the best cooking oils out there because of its health and nutritional properties, and also because [the refined version] has a higher smoke point than coconut oil and olive oil.
“When it comes to avocado oil products, the sky really is the limit,” said Perez-Krieb, who joined Chosen Foods as chairman and CEO in August 2016 from Sesajal.
We haven't been able to keep up with demand
He added: “The response we’ve had in the market has been overwhelming, we haven’t been able to keep up with demand. I can’t disclose figures [the last figure the firm made public was in 2015, when revenues reached $34m] but we have grown exponentially since 2015, and we’re very excited because the company keeps doubling its size year over year.
“We see avocado as the base of our strategy going forward via the oil format and via the value-added products such as mayonnaise, dressings and infused avocado oils. But we also see big growth opportunities for other specialty oils such as sesame oils, organic peanut oil, chia, and flaxseed oil.”
Based in Guadalajara, Mexico, Sesajal now conducts business in over 25 countries and operates five manufacturing facilities in Mexico and Central America. Its core products are specialty oils (safflower, rice bran, chia, flax, avocado, sesame), seeds (chia, sesame), peanuts, and Mediterranean products (chickpeas, tahini, hummus, lemon juice powder).
It took a 50% stake in Chosen Foods in 2015 and acquired a controlling stake in January 2017, a move it announced this week.
Prices of avocados have more than doubled since January
While avocado prices have spiked this year owing to a lower than expected crop in Mexico, continued surging demand from the North American market, and the emergence of new buyers from Asia, Chosen Foods is far better placed than many other companies to handle the situation, he claimed.
“Prices of avocados have more than doubled since January, but we’re one of the few companies in the market that has the supply chain strategies to handle this because we have a sustainable program around avocado oil that can really supply you all year around, and we’re fully integrated from the field to the consumer.
"We do everything inhouse, from the manufacturing of the oils, the bottling, the distribution and the warehousing in the US and distribution to retailers and distributors.”
Chosen Foods’ refined expeller-pressed avocado oil has a smoke point of 500°F enabling consumers to sear, saute, stir-fry, barbecue and bake at high temps without the oil breaking down, says the company. By contrast, virgin avocado oil, “while beautiful in color and also very healthy,” does not have such a high smoke point, it explains.
“It is common to see all avocado oil listed with a 500°F + smoke point, with no differentiation between virgin and refined. We love virgin avocado oil and its many purposes, but want to set the record straight. Only a refined avocado oil can reach a 500°F smoke point. Virgin avocado oil comes in at 350-375 degrees, similar to olive oil.”
Avocado is one of the few oils that’s growing in the double digits in the retail space
Chosen Foods’ products are currently in close to 30,000 stores from conventional accounts such as Vons and Ralph’s and club stores such as Costco to natural chains such as Whole Foods and general retailers such as TJ Maxx, said Perez-Krieb.
“But we’re also working with the military commissaries and drugstores… our products are not just sold in the natural space.”
The focus now is on “working closely with distributors, brokers and retailers to show them the data [suggesting that avocado oil products warrants more shelf space given their meteoric growth], said Perez-Krieb.
“Avocado is one of the few oils that’s growing in the double digits in the retail space, but it still has limited facings in the oil category, so we’re working diligently to try to expand that and show the consumer the benefits.”
As for the competitive set, he said: “A rising tide raises all ships, so we hope that the segment grows and more serious players give validity to the marketplace.”
“In late 2016 the decision was made by Chosen Foods’ founding partners to divest most of their shares, while Carsten Hagen [the naturopathic doctor who started the company in 2011] wanted to transition out of the company, and it became very obvious that the best plan for Chosen Foods was for Sesajal [which had been supplying Chosen Foods with its key raw materials since 2012, and took a 50% stake in the company in 2015] to step in.
“It was a case of, we’re going out there trying to find a suitor, when the best suitor is actually in-house.”
Gabriel Perez-Krieb, chairman and CEO, Chosen Foods
According to the Hass Avocado Board, dollar sales of avocados rose +14.13% in the 13 weeks ending March 26, 2017, significantly outpacing the 2% growth in the total fruit category, while volumes grew 6.3% ahead of category growth of 3.6%.
In December 2016, the FDA issued an interim final rule that would permit raw fruits and vegetables (such as avocados) that don't meet its definition of 'low fat' to make health claims on the relationship between dietary saturated fat and cholesterol and risk of coronary heart disease.