Strange Journey For Juice Brands: Disease Hurts Supply, But COVID Raises Demand

Amid the pandemic lockdowns and concerns for personal health, juice sales – which had plummeted due to widespread consumer rejection of sugar – have seen a significant rebound as demand for immunity and wellness drinks prompts a return to traditional fridge staples like orange juice led.

Now, a little over two years later, consumers are returning to pre-pandemic routines. While juice sales don’t compare to the 2020 boom, they remain high and health and wellness remain top consumer concerns.

Data company IRI reported that sales of refrigerated juices in MULO plus convenience increased 4.8% to $7.8 billion in the 52 weeks ended June 12. During that period, orange juice — which accounts for about $3.3 billion alone — grew 1.4%. Top brand Tropicana (sold last year to private equity firm PAI Partners) saw sales fall -8.2%. In comparison, shelf stable bottled juices were up 5% to $8.1 billion, aseptic juices were up 14.8% to $1.7 billion and canned juices were up -1.6% to $1.3 billion.

But the category has also been hit hard by supply shortages — not just from labor and shipping complications, but also from a citrus greens epidemic that began well before the pandemic and was exacerbated by worsening climate change. Even as functional trends from the pandemic era, such as immunity and focus, continue to linger, the question remains as to how much longer they will drive category expansion.

The Green Monster

While the pandemic has impacted supply chains across all consumer goods sectors, juice – particularly orange juice – has also seen citrus cultivation deteriorate. According to an April 2022 report by Rabobank, the global orange juice market is seeing inventory levels at their lowest in five years, with “declining production from Brazil and Florida impacting supply and demand in developed markets.” Citrus greens have plagued orange trees in both regions, while unexpected frosts have further devastated crops. The report noted that Florida was on track to produce a small bumper crop for the 2021-22 season, producing about 41.2 million cases — up from 52.8 million a year earlier. Currently, Mexico has served as a lone “bright spot” that provides a steady supply.

Brands and consumers are still feeling the impact of supply disruptions in different ways. Florida’s Natural, a co-op-owned brand that has for decades marketed its orange juice as locally sourced and “not from concentrate,” began sourcing concentrate from Mexico earlier this year and reformulated its flagship beverage into a blended product. An updated label explained the change, noting that the co-op’s harvests are now 70% lower than a decade ago and proclaiming the harsh truth that “there just isn’t enough juice in Florida.” Despite the shift, the brand is still thriving; Florida’s Natural’s chilled juice sales grew 8.2% year over year, and its long-life orange juices were up 82.8%, according to IRI.

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The Rabobank report indicates that there are some positive signs for the 2022-23 growing season, particularly in Brazil where more favorable weather patterns bode well for orange production. Still, a recovery for Florida “remains an uphill battle” due to rising costs.

Matt McLean, founder and CEO of Florida-based Uncle Matt’s Organic, said Florida’s supply issues are having a major impact on the industry. McLean, a fourth-generation citrus farmer, said he made the decision in 2015 to diversify Uncle Matt’s supply chain to source oranges from Texas, California and Mexico in addition to his own farm — which are already facing significant declines from greening citrus fruits were faced.

“We’re seeing the Florida citrus industry declining really rapidly right before our eyes,” McLean said.

Outside of citrus, Todd Putman, CMO of juice and smoothie maker Bolthouse Farms, noted that his company’s supply chain is vertically integrated, which was a key factor in weathering the slow shipping and labor shortages that have caused hurdles over the past year. While he said the freight problem has steadily improved over the past six months, the brand – which makes a wide range of juices including carrot, day green, berry and orange juices – has been quick to capitalize on empty shelf space posing as competitors would have opened are still struggling to meet compliance requirements.

“Without this vertical integration, we’ve seen that other competitors aren’t doing nearly as well in this space,” he said. “We’re aggressively consuming this space.”

juice on the table

Despite supply-side challenges, many brands continue to see strong consumer demand for multiserve juice beverages – particularly functional beverages, with immunity leading among category trends.

Uncle Matt’s is now one of the fastest growing brands in this category — up 43.1% year over year to $18.6 million, according to IRI. Following the 2020 rush for immunity-boosting products, McLean said the company’s vitamin-enriched Plus and Ultimate Immune lines continue to be top sellers.

“I don’t think anything is at COVID level anymore [in terms of sales], but it’s taken a good foothold in the market and I think the immunity is here to stay at a new level,” McLean said. “It’s fallen off since COVID, but it’s definitely still at the center of consumer awareness and I think it’s fundamentally linked to health and well-being. It’s just a functionality of health and wellness. So immunity is always in the mindset of the new customer.”

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However, with inflation remaining volatile, many retailers may not be planning to revamp or radically expand their juice sets right now. McLean said that in his conversations with buyers during recent hires, most retailers have made little or no adjustments to their juice sets, which he attributed to pricing uncertainty as well as a lack of manpower to actually restock shelves.

“For those willing to change something, it still has to be high quality, it has to be stuff that has a functional purpose,” he said.

Meanwhile, Putman offered a more optimistic outlook, hinting that retailers are still embracing new products. He said the brand is currently selling nine new SKUs of functional juices and smoothies for fall, including a new energy product aimed at offering consumers a balanced and nutritious high.

According to Putman, despite the impact of inflation on consumers, premium products are still selling well. The calculus: Refined taste and nutritional preference wins over savings—as long as consumers feel they are getting more bang for their buck in the form of clean label, function, or simply better taste. Bolthouse, which completed its acquisition of HPP’s Evolution Fresh brand this summer, saw strong sales growth across its product portfolio — including a 20.1% increase in its chilled core juices and smoothies and a 4.6% growth in its chilled vegetable juices, according to IRI.

“One really important thing about shelving space is that there’s often an intab of an aisle that has prime space and stuff [retailers] want to see a lot of velocity and a lot of profitability come out of this space, which is what they should,” Putman said. “And so what we’re seeing at this taste and nutrition pivot, if you will, is that consumers are always wanting more value, more and more functionality, and better taste with that functionality.”

Nick McCoy, co-founder and chief executive officer of Whipstitch Capital, also suggested that despite the atmosphere of an economic recession hanging over the industry, there are still clear signs that consumers are continuing to spend and adopt healthier habits. Unlike during the Great Recession of 2008, low-income workers are now outstripping middle- and upper-class consumers in terms of wage increases, helping them to maintain spending habits and keep more money flowing into the economy. He also noted that the continued strength of health trends like low sugar – and even the rise of alcohol alternatives – bode well for the categories
like juice, as long as consumers continue to prioritize well-being.

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“People like to manage their health through food and drink choices,” McCoy said. “There are these very real costs around healthcare, like deductibles, that are incurred across the population…. So if you can reduce sugar and not have to buy insulin, you’ve saved a lot of money. So I think wellness makes a lot of economic sense.”

In addition to warning of supply issues, the Rabobank report also threw some cold water on the prospects for continued sales growth, noting that the surge in immunity and vitamin C-rich beverages sustained after the 2020 blast , as temporary “rather than as a permanent reversal of the long-term trend of falling consumption in developed markets.”

“Aging populations, smaller households, less time spent at home during breakfast hours, and competition from other beverage categories such as coffee, tea-based beverages and other juices continue to be strong drivers holding back the growth in orange juice consumption,” states in the report.

The report found that U.S. 100% juice sales fell nine basis points from 2016 to 2019, before rebounding seven points in 2020. However, as many consumers returned to the world, volumes fell by three basis points in 2021.

From a brand perspective, however, juice makers are hoping that consumers who have returned to the category during the pandemic lockdowns have been reminded of all the things they loved about it in the first place.

“The whole demonization of orange juice and sugar has turned a lot of people away from fruit juices, especially orange juice,” McLean said. “And I think when COVID came it was, ‘Okay, wait a minute. Vitamin C, antioxidants, vitamin B – orange juice has all those things.” So it ticked a lot of boxes for people, and they were like, ‘Hey, we need to put that back in our diets.’ And now it’s just one of the things you really enjoy; Orange juice just tastes great. The products that I think will emerge from COVID that taste really great and have real health and wellness benefits have a better chance of sticking.”

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