By Marisa L. Zansler
It’s been nearly two years since the COVID-19 pandemic first swept across the country. American households are still adapting to a new way of life that includes a shifting of work-life balance and a return to familiar routines such as family gatherings, travel and venturing outside of the home.
INFLATION AND OJ AVAILABILITY
As this transition into a new normal continues, inflation has become an increasingly salient issue. At the end of 2021, there were signs that consumers’ confidence in spending dropped due to inflation concerns. By late November 2021, the cost of living rose at the fastest pace in nearly 40 years with inflation of 6.8% over a 12-month period. Overall, food prices were on the rise, increasing 6.1% over the course of the previous year with prices for food at home up by 6.4%. All of this meant sticker shock at grocery stores for many Americans.
An increase in the average orange juice (OJ) price at retail is not a new concern for the category. In fact, as members of the Florida citrus industry know all too well, the average price of 100% orange juice, particularly the price of not-from-concentrate (NFC) OJ at retail, has experienced sustained increases each year for more than a decade. The average price of NFC OJ has increased more than 2.5%, on average, each season. While price is often cited as a leading barrier to purchase, consumers’ intent to buy the American breakfast staple over the last two years remained stable despite both reduced in-store deals and current constraints on orange juice’s availability.
By late fall 2021, however, inflation woes renewed industry concerns that higher food prices, particularly at retail where most of Florida’s processed oranges reach consumers, could reignite consumers’ concerns about paying for 100% OJ. According to the Florida Department of Citrus (FDOC) Consumer OJ Tracker, managed by the Florida Agricultural and Marketing Research Center at the University of Florida, an increasing share of consumers reported that they noticed a spike in food prices at grocery stores throughout 2021. Eighty-eight percent reported that they noticed an increase in food prices in November of that year compared to 74% in January.
When it comes to higher food prices in general, more than one-third of those consumers indicated that they would search for in-store deals to offset price increases. Furthermore, an increasing share of consumers were reporting a lack of OJ availability on store shelves since the onset of the pandemic. This can be linked back to higher demand for OJ during that time amid an already constrained supply.
KEEEPING OJ TOP OF MIND
Maintaining the demand for 100% OJ requires continued insight into how to keep the beverage top of mind among consumers who are willing to pay more. Research has shown that reinforcing consumer willingness to pay for 100% OJ requires a robust marketing strategy to continue to keep orange juice relevant and guide consumers along the path to purchase.
Health and wellness benefits were among the top reasons consumers gave for purchasing OJ in 2021. Consumers who stated a positive perception of OJ, such as it having vitamin C and other nutrients that help support a healthy immune system, were more likely to express a willingness to pay for orange juice. Also, lapsed buyers who indicated that price was a contributing factor for not purchasing OJ were found to be more likely to return to the category on their next shopping trip, especially when marketing activity on the wellness attributes reengaged their awareness.
1 Consumer Price Index – November 2021, U.S. Bureau of Labor Statistics
2 House, L. and Y. Heng, The impact of “Florida” on Consumers’ Willingness-to-Pay for OJ, presentation to the Florida Citrus Commission, January 2021
Marisa L. Zansler is the director of the Economic and Market Research Department at the FDOC in Bartow.
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