Florida Department of Citrus (FDOC) economist Marisa Zansler discussed orange juice (OJ) volume movement and the potential impacts inflation may have on the category at the May 18 Florida Citrus Commission meeting. She also addressed the importance of ongoing marketing activities to support sales even as supply constraints continue.
Inflation is persistently up across all goods, with shelter, food, airline fares and new vehicles as the largest contributors, while earnings have remained relatively unchanged, Zansler reported. According to the FDOC Consumer OJ Tracker, consumers are noticing the increase in prices at grocery stores and are shifting to cost-saving measures. Specific to OJ, consumers are increasingly citing price as a barrier to purchase.
Inflation in citrus categories is due to several factors. Demand-pull inflation occurs due to crop shortages, pandemic and supply-chain constraints. Cost-push inflation occurs due to HLB, freeze, increased cost of inputs and high labor costs. Also, reduced trade promotion means the additional costs are being passed along to the consumer. All of these factors have placed an inevitable upward pressure on OJ prices. Research indicates that consumers’ reference for price of OJ has increased over the last several years.
With these factors likely to be in play for some time, reinforcing the positive attributes of OJ remains vital to sustaining demand amidst rising prices, Zansler said. While taste and price are consistently ranked as leading reasons to purchase OJ, an increasing number of consumers have placed higher emphasis on the health and nutritional benefits OJ provides. On the other hand, when it comes to reasons for not purchasing OJ, more consumers cite that it is out of stock, or the price was too high, than did in 2020.
The higher price of OJ, declining retail sales promotions, and declining distribution in some markets have created uncertainty in the category, Zansler reported. These challenges would potentially block the path to purchase for some consumers, which is why robust marketing programs are crucial for the long-term sustainability of the market. Additionally, programs to resolve supply shortages are also crucial.
Zansler reported that sales of orange juice are at or near 2018–19 levels with volume movement consistent with processor volume movement. However, with supply a concern, Florida processors relied on existing inventories plus imports to sustain movement in the 2021–22 season.
Source: Florida Department of Citrus
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