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Florida seeks solutions to OJ sales squeeze

22-Jun-2005

The Florida Department of Citrus is concerned that declining orange juice sales across the northeastern United States could mark a deeper trend, writes Anthony Fletcher.

Bob Norberg, the department's director of market and economic research, told the Florida Citrus Commission last week that the industry's biggest markets were in decline, with sales in the Northeast falling 5.9 percent since October.

"That would tell me it's getting worse," he told The Ledger.

Orange juice (OJ) is averaging about $4.80 a gallon nationwide, and many in the industry believe that consumers are slow to adjust to price hikes. The department suspects that one major factor might be the rising price of not-from-concentrate (NFC) premium orange juice products.

While sales of NFC products have actually declined 3.3 percent since October, the average price has gone up 2.2 percent. In addition, the share of NFC orange juice sold at a discount price has declined from more than 50 percent in October 2003 to 45 percent in May 2005.

However, the Department of Citrus (FDOC) also believes that the issue is a little more complicated.

"We are concerned about the decline we have observed in orange juice sales in some of our key markets," Keith Lee Rupp,global marketing communications manager at the Florida Department of Citrus told FoodNavigator-USA.com.

"Our director of economic research noted that prices are up slightly in those markets, but as orange juice a great value due to its high nutritional content, we are skeptical that price alone explains this phenomenon."

Nonetheless, the sales decline in the top eight US markets for orange juice, which account for 77 percent of the national decline, is a cause for concern to the $9 billion Florida OJ industry, which employs over 90,000 Floridians. Six of these top markets are in the Northeast, which has witnessed the greatest decline in sales.

The FDOC now plans to conduct additional research to determine root causes. Some possibilities, according to Rupp, include markets not restocking shelves promptly; changes in display area allocated to juice; activities by competing beverages and changes in consumer behavior patterns, such as a sudden growth in non-retail segment.

"We will publicize our findings and use them to tailor our own efforts and/or find opportunities for other segments of the market to respond," said Rupp.

"We know our product has great value, so we are optimistic that we will swiftly regain any lost ground in these markets."

Florida is second only to Brazil in global orange juice production and the state remains the world's leading producer of grapefruit. Florida produces more than 80 percent of the United States' supply of citrus, with major oversees export markets including Canada, Japan, France and the UK.

The on-tree value of citrus - the money that goes to growers - is estimated at close to $1 billion.

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