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Calavo Growers, Inc. Announces Significant Addition to Diversified Fresh Products With New Agreement to Introduce Calavo-Brand Tomatoes to the Market

Posted on: Monday, 13 August 2007, 09:16 CDT

Calavo Growers, Inc. (Nasdaq:CVGW), the worldwide leader in the procurement and marketing of fresh and processed avocados and other perishable foods, today announced a significant initiative to further enhance its diversified fresh products business with the planned introduction of Calavo-brand tomatoes late this fall.

To that end, Calavo has entered into a marketing and distribution agreement with Agricola Belher of Mexico, a well-established quality producer of fresh vegetables, primarily tomatoes for export to the U.S. market. In conjunction with the agreement, the Mexican company will be making substantial investments in infrastructure to support the new program.

Agricola Belher is based in a prime growing region of Mexico's agricultural heartlands in the northwestern state of Sinaloa. Founded in 1989 by Rosario Beltran, the company exports 90% of its production to the United States and has since its formation become increasingly known as a high-quality grower.

Lee E. Cole, Calavo's chairman, president and chief executive officer, commented: "We are pleased to enter into this important agreement with a top quality producer, which will enable us to begin selling Calavo-branded tomatoes to retail and food service customers in the United States. We are confident that this expansion will make a meaningful incremental contribution to company revenues and expect tomato sales in the range of $20-25 million in fiscal 2008.

"Calavo has established a reputation for unparalleled and consistent quality as the leading avocado brand, and we believe this positive awareness will support our successful entry and sales growth in a second, major branded product category. In so doing, we are capitalizing on our core strengths in marketing and distribution as well as leveraging our substantial investments in infrastructure."

Beginning with Calavo's acquisition of Maui Fresh International in 2003, the company has focused on expanding its fresh product line and further developing Maui Fresh's extensive grower relationships in order to add diversification and sales growth to Calavo's core market leadership in the avocado category. Tomatoes produced by Agricola Belher will be marketed under the Calavo brand, utilizing Calavo's three value-added depots in Santa Paula, Calif., San Antonio, Tex. and Swedesboro, N.J., plus the company's two market locations in Los Angeles, Calif. and Nogales, Ariz.

Cole emphasized that the Calavo name has achieved "tremendous consumer awareness, both in its strong association with the growing popularity of avocados as well as a trusted brand synonymous with quality. Since tomatoes and avocados in retail locations are traditionally merchandised in close proximity to each other, we believe that consumers will feel confident in purchasing Calavo brand tomatoes," he said.

With rising consumption bolstered by growing awareness of its significant nutritional benefits, the tomato represents a "key growth opportunity," Cole emphasized. Americans consume more than 19 pounds per capita. Over 80% of U.S. households purchase tomatoes and 40% make weekly purchases. New varieties and year-round availability have spurred category growth, with retail sales up 55% since 1999.

Cole described the new agreement as "highly synergistic on many levels." Most notably, it leverages Calavo's core strengths in fresh produce marketing and processed product manufacturing. "We believe this program also provides us with another prospective platform to further broaden our processed product line," he said. In this arena, he noted that Calavo has achieved "exciting growth and broad market acceptance" with its ultra-high-pressure guacamole.

Moreover, Cole pointed out that fresh tomatoes represent a "strong, complementary" product to the company's core avocado business, both of which will continue to benefit from an expanding Hispanic population. "The two items go hand-in-hand, to the point of recent nutritional research that identifies further healthful benefits of avocados when consumed in tandem with tomatoes," the Calavo CEO said.

Cole concluded: "This exciting new program is directly in line with our key objective of building a larger, stronger and more diversified agribusiness company. Looking ahead, we remain committed to the exploration and pursuit of the many attractive avenues available to us for growth and further diversification. These efforts will continue to be guided by detailed planning, careful analysis and a philosophy that is fundamentally risk-aversive."

About Calavo

Calavo Growers, Inc. is the worldwide leader in the procurement and marketing of fresh avocados and other perishable foods, as well as the manufacturing and distribution of processed avocado products. Founded in 1924, Calavo's expertise in marketing and distributing avocados, processed avocados, and other perishable products enables it to serve food distributors, produce wholesalers, supermarkets and restaurants on a global basis.

Safe Harbor Statement

This news release contains statements relating to future events and results of Calavo (including certain projections and business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include but are not limited to: increased competition, conducting substantial amounts of business internationally, pricing pressures on agricultural products, adverse weather and growing conditions confronting avocado growers, new governmental regulations, as well as other risks and uncertainties detailed from time to time in the company's Securities and Exchange Commission filings, including, without limitation, the company's Report on Form 10-K for the year ended October 31, 2006. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Source: Business Wire

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