Orange juice experience as warning
April 3, 2012
Whenever grain-based foods must contend with an issue threatening consumer demand, one senses a rumble of fear diminished by confidence that so much is on the industry’s side that any damage will be brief and also reversible. That optimism largely stems from experiences of recent years when onslaughts against foods made by processing grain have been severe enough to cause hiccoughs in consumption trends, both in total and per capita. Aggregate usage of wheat flour has suffered periodic setbacks due mainly to unscientific assaults on carbohydrates as a leading cause of obesity. Yet, the current usage total is right at the all-time record. Per capita consumption has slipped from its modern high at the turn of the new century. But in light of the preceding two decades of sizable increases, per capita consumption has registered relatively slight moves in the dynamic food market where changes are often large. Yet, there’s no question but that the industry must be alert to respond to attacks from any and all sources while investing to build consumption.
Of many reasons the entire grain-based foods industry should be alert to any and all attacks discouraging consumption, hardly any carries greater weight than looking at other foods and appreciating the multiplicity of forces accounting for consumption setbacks. A striking example is orange juice, a product that many in the food industry would consider the beneficiary of enviable convenience and health-related qualities safeguarding its market position.
How striking it is then to realize that consumption of orange juice is down 31 per cent from its peak recorded in the final years of the last century. The drop, from 1,585 million gallons in 1998-99 to 1,093 million currently, results from year-after-year losses. How different that is from wheat flour, where in the same period total disappearance increased 5 per cent. The latter is an outcome that has produced little or no satisfaction, except when compared to how something like orange juice performed.
In examining what might account for this dismal trend in orange juice, many of the issues that industry faces have parallels in grain-based foods. Hardly anything has hurt orange juice more than erratic swings in production, primarily in Florida, that have caused sharp fluctuations in prices and have limited supplies of the quality sought by U.S. manufacturers. The two leading American beverage companies, Coca-Cola Co. and PepsiCo, Inc., control more than 60 per cent of the orange juice market, and they have relied on imports to supply up to 20 per cent. The latter, coming from Brazil, face a cutback due to the presence of a fungicide used by South American growers, but which is not accepted by the U.S. Dramatic price moves have occurred this year following 2011 when poor growing conditions cut the Florida crop.
Supply problems unlike any experienced by American wheat millers are only a part of the orange juice problem. Yet, there’s no question but that fluctuations in production due to weather vagaries and acreage decreases have played a role. Efforts by fruit processors to be innovative have resulted in a proliferation of fruit-containing beverages, and their availability has cut into orange juice demand. Consumption has declined as consumers have turned to other fruits, not just for juice but for eating fresh and as the way to maintain health. The only recent spike in orange juice consumption came when concern about swine flu held sway.
Price increases dampened demand for juice, particularly at a time of high unemployment and economic setbacks. Except for the lack of direct alternatives, grain-based foods, especially bread, has had to deal with many of the same forces that weigh on orange juice. The superior path of grain-based foods may be due partly to good luck in avoiding serious negatives from identical forces. Realizing what may happen, as witness the orange juice experience, ought to encourage grain-based foods to move aggressively to keep these forces at bay.