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OJ Sales Fall, but Less Than Prior Month

The Ledger – June 23, 2015

WINTER HAVEN | Orange juice sales in the U.S. improved slightly this month, but not nearly enough to reverse more than a decade of decline.

Perhaps it can learn a lesson from its cousin, grapefruit juice.

Sales of 100 percent OJ at major U.S. retail outlets fell 6 percent in the four-week period through June 6 at an average price of $6.63 per gallon, up 3.5 percent from a year earlier, according to the most recent sales report from the Florida Department of Citrus in Bartow. That was nearly 3 percentage points better than the previous month’s decline.

For the 2014-15 season that began on Oct. 1, OJ sales have declined 7.8 percent on an average 4.8 percent price increase. Sales have declined in 13 of the last 14 seasons.

Oranges represent Florida’s largest citrus crop, projected at 96.4 million boxes this season. About 95 percent of those oranges go to juice, and Florida provides more than 70 percent of the OJ consumed in the U.S.

Citrus Department spokeswoman Shelley Rossetter took heart that not-from-concentrate OJ continues to outperform the overall market, down just 5.3 percent in the recent period and 6.9 percent for 2014-15. It sold better despite an average price of $7.74 per gallon in the June 6 period, or $1.11 higher than the overall average.

A large percentage of not-from-concentrate products contain only Florida OJ compared to products involving frozen concentrated OJ, which are blended with imported juice.

“Not-from-concentrate OJ is the primary focus of the Florida citrus industry and continues to outperform the OJ category overall, despite continued increases in retail price driven by increases in production costs due to the state’s ongoing battle against greening,” said Rossetter, referring to the fatal bacterial disease citrus greening, which has reduced the state’s orange harvest by more than half over the decade.

OJ sales continue to fall at higher rates than price rise would seem to warrant, and that suggests OJ prices have reached a level where many consumers don’t see a unique value in the product compared with competing beverages, said Larry Ross, a professor of marketing at Florida Southern College in Lakeland.

Sales will continue to decline until marketers at the Citrus Department and OJ brands convince consumers the product has qualities different from other beverages, he said.

“It’s reached a point now where OJ has lost its differentiation,” he said. “Sales will improve when consumers see a unique quality in orange juice that justifies the price.”

Ross pointed to the performance of grapefruit juice, a smaller, niche market but one with loyal consumers. By definition, niche products offer consumers something they don’t find elsewhere, Ross said.

Grapefruit juice sales in the recent four-week period declined only 3.7 percent on an average price hike of 2.9 percent to $7.41 per gallon, the department reported. Seasonal sales are down just 4.1 percent, about half of OJ’s decline.

“A niche market tends to have stable demand; they tend to be rock-solid loyal,” Ross said.

On the downside, grapefruit juice consumers tend to come from Baby Boomers and older generations, he said.

“If the younger generation only knows grapefruit juice as a (cocktail) mixer, the market will not be sustainable,” Ross said.

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