By Marisa L. Zansler
Over the last 20 years, the Florida citrus industry has faced many challenges, from destructive diseases, hurricanes, production cost increases, and, now in 2022, the devastation of a winter freeze. As a result, Florida citrus production has declined considerably. During the 2021–22 season, there is a 26% decline in volume movement compared to the prior season.
This is particularly troubling when coupled with inflation at a 40-year high and demand for citrus products at 2019 levels. Florida processors will need to utilize existing inventories and imports to meet current market demand. As the season closes, industry stakeholders are left evaluating the next steps in protecting the industry for the long run by addressing both supply-side and demand-side issues.
World availability of orange juice (OJ) has been on the decline for several years as leading orange-producing regions, namely Florida and Brazil, struggle to contain HLB and mitigate its harmful impacts. Also of concern are weather-related events in the producing regions of each country.
Florida’s commercial tree inventory has been declining over the last 25 years. Surviving older trees experience degraded fruit-per-tree yields. Over time, deficient tree replacement rates and declining fruit yields have led to diminishing production trends for Florida’s orange crop.
As a result, the decline in production translates into loss of market share. In the United States, domestic consumption of OJ has declined by 47% over the last decade due in no small part to this decline in availability from production. At the onset of the season, Florida processor beginning inventories were already down by 15% with 115 million gallons of not-from-concentrate (NFC) OJ stocks and 220 million gallons of frozen concentrated orange juice (FCOJ).
By midseason, it was projected that Florida processors would produce around 150 million gallons of NFC OJ and 20 million gallons of FCOJ. This was based on the current U.S. Department of Agriculture forecast and reduced juice yields. To meet current market demand in 2022, Florida processors had to use a higher share of existing inventories this season. By the middle of the 2021–22 Florida citrus season, it was apparent that demand for OJ at retail would settle near 2019 pre-pandemic levels.
POSITIVE ATTRIBUTES DRIVE DEMAND
In addition to supply chain/logistical issues and high inflation, the shortage in OJ production and supply was yet another factor contributing to higher prices of OJ at retail. Most of Florida’s processed oranges reach consumers at retail. Price has historically been a major barrier to purchase for some buyers.
According to results from the Florida Department of Citrus Consumer OJ Tracker survey, managed by the University of Florida/Florida Agricultural Marketing and Research Center, an average of 10% of consumers who had indicated that they were still shopping with COVID-19 in mind and reported less purchases of orange juice were more likely to cite price as a leading factor. Thirty percent indicated that they felt OJ was too expensive. Another 22% indicated that OJ was not in their budget, and 10% indicated that they purchased less OJ because it was occasionally out of stock.
At the same time, a higher share of consumers who had indicated that they were still shopping with COVID-19 in mind by March 2022 had indicated there were either no changes to their OJ purchasing behaviors or that they were still purchasing more. The health and wellness attributes of 100% OJ were the leading reason provided. Over 70% of respondents indicated 100% OJ supports a healthy immune system and has vitamin C.
Recent consumer research (see doi.org/10.1002/agr.21596) has informed the industry that reinforcing the positive attributes of 100% OJ has been a viable option for negating the negative perceptions consumers may form about this traditional American beverage. At the onset of the pandemic, a clear path to purchase was a key factor in a resurgence of sales for the OJ category. At that time, consumers’ shopping behaviors rapidly shifted back to shopping at traditional grocery stores, either in person or through e-commerce grocery services, such as personal shoppers (Instacart) and click-and-collect services. While stocking up on essential items may have reopened a path to purchase for OJ and other citrus products, consumer awareness of the positive attributes of 100% OJ, including the taste and the health and wellness attributes, may have served to sustain demand at retail so far in 2022.
THE ROAD AHEAD
Moving forward, the demand for Florida citrus will depend on long-term changes in consumer behavior. Investing in consumer awareness today has a lag effect that strengthens and maintains consumer demand in the future. The economic research indicates a path to reaching consumers where they shop through innovative e-commerce channels while reinforcing the science-based messaging of the health and wellness benefits of Florida citrus.
Yet, it is equally important to note that long-term Florida production and infrastructure utilization is key to grower endurance. Commercial tree replanting, reduced costs of production and improved yields to meet market demand are going to be required to maintain Florida competitiveness in the market.
Marisa L. Zansler is the director of the Economic and Market Research Department at the FDOC in Bartow.