By Marisa L. Zansler and Lijun (Angelia) Chen
Throughout 2022, consumer demand for goods and services remained strong despite the highest rate of inflation in 40 years. Many Americans resumed leisure travel and purchased luxury items, such as new cars. Movement of Florida citrus products remained near 2019 levels. Consumers were spending vigorously at grocery stores even as prices increased.
However, as the year progressed, consumers began shifting shopping behaviors in response to higher grocery prices and an increasingly uncertain economic outlook. By late summer, signs were showing that consumers’ confidence may be waning and with good reason. Overall inflation in July indicated that prices for goods and services in the United States were up by 8.5%.
Despite some relief felt at the gas pump by late summer, food prices were still on the rise, up by 10.9% compared to the previous year. Moreover, prices for food purchased for home consumption were up by 13.1%, the highest since May 1979. Consumers were feeling pressure everywhere in their budgets and would soon need to make decisions on how to stretch their dollars to meet household obligations.
INFLATION IMPACTS OJ CATEGORY
The orange juice (OJ) category was not spared the impact of higher prices. The price of 100% OJ rose by 8.9% in July from a year ago with an average price nearing $8.15 per equivalent gallon. The average price for not-from-concentrate OJ exceeded $9.75 per gallon, while the average price for reconstituted OJ exceeded $5.45 per gallon, over 9% higher compared to the prior year. Although increases in OJ prices at retail are not a new concern for the category, consumer responses to increased prices by the end of summer suggested impending changes to how they shopped.
According to the Florida Department of Citrus (FDOC) Consumer OJ Tracker, managed by the Florida Agricultural Market Research Center at the University of Florida, the share of consumers who reported noticing higher food prices at grocery stores increased from 74% in January to 95% by July. While OJ sales were at or near 2019 levels for most of 2022, consumer shopping behaviors in response to increased food prices were starting to revert to pre-pandemic behaviors. Prior to the pandemic, consumers were very sensitive to price changes.
At the onset of the pandemic and during the subsequent year, consumers said they were more likely, compared to previous years, to report no changes in shopping behaviors in response to noticing a rise in food prices at grocery. By July, however, consumers were beginning to react to those price hikes by seeking ways to stretch their grocery dollars.
REACHING BUYERS VIA E-COMMERCE
In addition to reinforcing the positive attributes of 100% OJ through a variety of awareness-focused channels, reaching consumers where they shop is essential to guiding consumers along the path to purchase. Consumer awareness and trust in using internet grocery services, such as personal shoppers (Instacart), store pickup (Walmart), and, more recently, ghost/virtual grocery stores (100% online delivery services, such as Kroger delivery-only) has remained consistent. According to the OJ Tracker, on average, around 10% of consumers turned to e-commerce for their grocery needs prior to the pandemic. By late summer of 2022, when access to most grocery services had returned to normal operations, an average of 16% of consumers still utilized e-commerce for grocery purchases.
While usage of store pickup services is not as robust as 2020, ordering groceries online for delivery, either from brick-and-mortar stores or virtual (ghost) grocery stores, remains popular. Reaching consumers through these channels to create and sustain awareness of the health and wellness attributes of 100% OJ is crucial for the category.
Research shows that consumers who use internet grocery options were more likely to report noticing food price increases and shift shopping behaviors accordingly. Moreover, these consumers were more than twice as likely to report awareness of 100% OJ, in general or with Florida promotion, when compared to consumers who didn’t use these online channels. With price as a leading barrier to purchase, reinforcing the premium attributes of 100% OJ may be key to preserving the category through this inflationary period.
As we embark on the 2022–23 Florida citrus season, guiding consumers along the full path to purchase to sustain consumer willingness to pay for 100% orange juice, much like the current FDOC marketing campaign does, may well preserve the category for the long-run and maintain a market for the Florida grower in the years to come. The Florida citrus industry continues to provide significant economic contributions to the state of Florida and its local communities. Current efforts by the industry to shore up commercial inventory and improve yields will ensure the long-term viability of the industry.
Marisa L. Zansler is the director of the Economic and Market Research Department at the FDOC in Bartow. Lijun (Angelia) Chen is an assistant professor at the University of Florida Institute of Food and Agricultural Sciences Florida Agricultural Market Research Center in Gainesville.
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