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Florida growers see orange juice sales decline
Tampa Tribune – September 10, 2010
Orange juice sales are on pace to be the lowest since the late 1990s, squeezed by a stubbornly slow economy, rising prices and increasing drink options on store shelves.
Diminishing orange juice sales can have a major impact on Florida growers because about 90 percent of the state’s orange crop is for juice and the state accounts for about 70 percent of the orange juice sold in the country, said Andrew Meadows, spokesman for Florida Citrus Mutual, a trade organization.
“The consumption of our product, when it’s in decline, is a concern,” he said.
So far in the 2009-2010 citrus season, retail sales are just shy of 521 million gallons, well below where they were at the same time in the 2008-09 season.
At this point in the 2008-09 season, 533 million gallons of orange juice had been sold.
Sales each month since February have been below comparable months of the last two seasons. The final tally will come next month.
Other factors besides the poor economy are helping sap juice sales.
Shoppers are paying more for the juice. A gallon of orange juice costs 3.2 percent more than this time last year and prices have gone up 5 percent since February.
In August, the average price for a gallon of orange juice nationwide was $5.63. A year earlier, the price was $5.45 a gallon.
“Orange juice is an elastic commodity. Demand rises and falls with price,” Meadows said.
The price averaged $4.46 over the previous 10 seasons going back to 1997-98.
A small orange harvest in Florida has resulted in higher prices. At 133 million boxes, this season’s orange harvest is the smallest since the 2006-07 season, when hurricanes ripped through the heart of the Central Florida citrus belt.
A string of freezes in January along with a dry fall stunted this season’s crop. The result was fewer oranges per tree and smaller fruit.
Buyers also have more choices such as less costly juice blends or juice drinks, said Valerie Barnhardt, market research analyst for the Department of Citrus.
“Some people are shifting to juice blends that are a blend of juice and non-juice,” she said. “Maybe people are giving up 100 percent juice. It has something to do with the economy and how people spend their grocery dollars,” she said.
“It is a concern to the industry. We’re doing what we can here to keep orange juice on top of people’s minds,” Barnhardt said.
Orange juice isn’t alone in seeing lower sales.
“Almost all other juices are down. Blends seem to be doing okay,” she said.
Other factors could be affecting juice sales, according to Mark Brown, chief economist for the Florida Department of Citrus.
In past years, low carbohydrate diets were in vogue and orange juice with its sugar content was not.
“There’s probably a residual of that today. It’s a negative factor we’ve had to deal with,” Brown said.
Also, the state is spending less money to promote orange juice consumption. The Department of Citrus has switched some of the money once used for advertising into research on combating a disease that threatens the state’s entire citrus industry called greening.
Growers allocated $39 million over the last four years for research into citrus greening, Meadows said.
The disease, spread by an insect, can reduce a tree’s yield or kill it in a few years. It’s been found in 34 counties in Florida, including the Tampa Bay area.
Members of the state Citrus Commission allocate how to spend money raised by a levy of 24 cents growers imposed this season on each box of juice oranges harvested. The commission’s proposed budget calls for a levy of 25 cents for the coming season.
“The commission committed money for greening research and that impacted the amount of dollars spent on advertising,” said Karen Mathis, spokeswoman for the citrus department.
The commission’s proposed budget calls for spending about $1.6 million more on disease research than its current budget and reducing spending to promote orange juice consumption by about $1 million compared to this year.
The commission will set next year’s budget at its Oct. 20 meeting after the U.S. Department of Agriculture issues its first estimate of next season’s orange crop, she said.
A larger crop next season might ease some of the upward pressure on prices.
“When there were larger crops you had lower prices,” Brown said. “Right off the bat with the higher prices, you’re not going to sell as much orange juice.”
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