Mission Produce Assay

MISSION PRODUCE

Final case

BUS501

• What is the company’s mission or purpose?

Mission produce is the company was founded in 1983 by Steve Barnard and Ed Williams. California avocado production was beginning to spread northward from its traditional southern base and Barnard saw an opportunity to develop relationships with the new northern growers, which would allow Mission to supply avocados to retailers later in the season. By 2013, with sales over $400 million and 1,000 employees, Mission was leading avocado distributor in the United States and had a small but fast growing international business. Avocado consumption in the U.S was booming which was straining global supply. In 2012, Mission had vertically integrated into production by acquiring 2,000 hectares in Peru and planting new avocado orchards to help bridge the supply gap.

The mission of the company was to build a business with avocado as the main product. They want to provide enough quantity and quality avocado to fulfill the U.S customers need and international customers with all year round supply. Also Mission Produce wanted to grow its business and expand market share and become a world lead in avocados industry.

• What are the major objectives set forth by the firm (either explicit or implicit)?

The majors objectives set forth by the firm were organic growth and to grow market share. Mission Produce set the market share target as 25% by 2015, larger than other competitors. As the case mentioned “Our revenues were growing with the market during the 2000s but our share had hovered at 15% and 17%.” In order to achieve these objectives, they focus on three strategies: creating an international business, developing a network of ripening centers and vertical integration.

First major strategy was to build the international business or international expansion. Because of California avocado were only available in large quantities from March through October which led Mission to start sourcing and packing fruit in Mexico to provide year around supply both for U.S customer and also for Japanese market. Due to some of the restrictions which were not allowed to bring avocado from Mexico into the U.S, Mission was the first company imported Chilean avocados into US in late 1980s. They became an international company in both directions which are selling and selling imported avocadoes in the US. In 2013, Mission sourced avocados from California, Mexico, Chile and Peru. Over 90% of Mission’s avocado sales were in the U.S. and Canada and 6% in Japan. Mission also marketed avocados in Europe, Singapore and China.  

Second strategy was to build ripening centers. As the way to differentiate themselves from their competitors, they realize they could deliver ripe avocado to their customer. In order to do that, they need to build a network of ripening centers. Avocado was not popular to the consumer outside of avocado areas because they ripen slowly and unripe avocados are hard, dry and tasteless. They are delicious when properly ripened. With someone who never had avocado, it would be confusing to know how to ripe them properly. That was a prime motivation for Mission to build ripening centers. Retailers and Mission believed that consumers wanted ripe fruit that they would use immediately. According to the case, “Mission did a trial in 2000-2001 using fruit that was ripen at its Oxnard, California, facility and packed in modified atmosphere boxes. The boxes can hold two weeks which mean California-ripened fruit could be shipped by truck anywhere in the country. There were some problem but the sales went up 300% during trail. Based on this jump, Mission decided to build dedicated facilities spread across the U.S where fruit could be ripened under proper condition in specially design rooms. In 2013, Mission operated seven ripping centers in the U.S. and one in Canada. Almost 40% of Mission’s U.S. avocado sales were ripened product. In addition to generating a 300% to 400% increase in sales for retail customers that took ripened fruit, Wileman explained that the ripening center network allowed retailers to receive just in time delivery of ready to eat avocadoes and also served as an insurance policy. It also allows the company to provide a consistent supply when they had fruit located around the country.” The ripening center was one of the competitive advantages of the company.

Third strategy was to build a vertically integrated supply chain, having control from production to customer. As U.S. avocado demand increased thought the 2000s, U.S. production moved in to other direction. The growing area in California, where 95% of U.S. avocados were produced, decreased due to rising lab values, water shortages, and the high cost and difficult of getting labor for harvesting. Avocado consumption increased not just in the US but also globally and the needs were also changing, with more interest in where and how products were grown.  Success in the future depended on whoever controlled the complete supply chain. Those factors led Mission to buy more vacant land in Peru. With all positive characters from Peru land and environment, average avocado yields in Peru were 11 tonnes per hectare and Barnard believed they could go higher to 20 or even 30 tonnes per hectare. Mission Produce became vertically oriented in it import as well as it domestic operations. According to the case, in 2013, Mission sourced avocados from California, Mexico, Chile and Peru. It owned packing facilities in Mexico and had partnership in packing houses in Chile and Peru. Over 90% of Mission’s avocado sales were in the U.S. and Canada and 6% in Japan. Mission also marketed avocados in Europe, Singapore and China.

• Do a brief SWOT analysis for Mission.  What are the SO opportunities?

SWOT analysis

S-Strengths

• First company opened ripening center.
• Having a reputation for great service and visibility with its retail customers.
• A strong financial condition, ample financial resources to grow the business.
• Good employee with full passion and energize.

W-Weaknesses

• Resources that are not well matched to industry key success factors. As the case mentioned “CFO Tim Albers recalled Mission’s expansion into ripening centers “Between 2000 and 2004, we moved quickly to build facilities before anyone else could. Sales grew quickly, but we were didn’t really have the right people to manage them and there were no IT system to support the locations.”
• While Mission wanted to move in different area in Peru, they had difficulty with labor. As the case mentioned, they need to know local culture and be able to relate to local people.
• No long relationship with Europe customer.
• Not success while trying to expand into other crops

O-Opportunities

• Buying more land and convert to avocado production. As in the case mentions that “avocado farming in low-cost countries was a significant opportunity to secure more value.”
• Have an opportunity to invest into other crop such as grape or berries. As the case mentioned “at the top of Barnard’s priority list was the acquisition of more land in Peru that could be used for avocados as well as possibly other high value crops such as grapes and/or berries”
• Invest in international market development
• Invest in processing
• Prepackage avocado products such as guacamole.

T-Threats-

• Capital cost of facility might be high upfront due to purchasing land in different countries.
• Threat of policies and economy risk with international business. as in the case mentioned “Albers noted that going  to new location carried a different set of risks….labor is a problem…..Political risk was also present”.
• Threat of substitutes is low because avocado is unique fruits, consumer can find different one but the taste might not be the same.
• Because Mission ripe avocado before delivering to customer, if the demand were too lower, there would be a waste. As in the case mentioned “Ripened fruit was usually shipped to the retailers at stage three (three days to ripe) or stage four 9one to two days to ripe). Retail “shrink” (i.e., waste)  for avocados typically ran 5%-8%, “ about the same as other fresh produce items”
• Competition
• Political conflicted in Peru or other countries where they grow avocado.

SO opportunities -         

Mission produce was the first company building ripening centers across the country which gave them the competitive advantage among their competitors. They maximize just in time delivery of ready to eat avocadoes and also served as an insurance policy. It also allows the company to provide a consistent supply when they had fruit located around the country and help to grow demand.

Mission was the first grower in Peru which gave them the opportunity of using local labor, cheap land and trees produce more fruit in a short time.