• 13 Mar
    FCOJ – Enough juice for everyone to drink, but the prices will be a little higher. July update from Jack Scoville

    FCOJ – Enough juice for everyone to drink, but the prices will be a little higher. July update from Jack Scoville

    FCOJ held strong in the last few weeks as demand held strong despite the higher prices.  The domestic demand has really improved due to the Coronavirus and COVID-19.  People are remembering that orange juice in whatever form has important vitamins and minerals to support them if the effort to stay safe.  The demand from households has come while the food service demand has dropped but the household demand increase has been larger than the food service decrease.

    Domestic production is down a little bit this year at 67 million boxes.  The reduced production helps keep the supply manageable against the demand.  In fact, the FCOJ Movement and Pack report issued by the Florida Mutual Association notes that stocks levels are starting to become more stable against the previous year.  That implies that prices can at least hold at current levels.

    US imports of FCOJ remain relatively low this year.  US prices are low in the world market, so Brazil producers and even the Mexican producers would rather sell to Europe, where the prices are a lot higher.  The US can also export to Europe as long as the politics are good.  The Trump administration has made life more difficult for the exporters, though, as it has railed against all things European in an effort to promote the America First policies and in general animus to our friends.  The EU will primarily source its FCOJ from Brazil.

    The market has improved in the last half a year and should continue to gain a little bit.  Interest in FCOJ futures is returning to the marketplace, which is good for everyone.  The fundamentals of supply and demand favour somewhat higher prices as well.  There is still going to be juice for everyone to drink, but the prices will be a little higher.


    A little background

    FCOJ futures started in New York in the 1960’s but the contract terms were developed in the late 40’s by Florida academic and government officials.

    The contract calls for delivery in Delaware, New Jersey, Florida, and California.  Juicer from other origins can be delivered to the exchange as long as the juice is stored in the designated warehouses.  These origins include Brazil, Costa Rica, and Mexico as well as some other countries.

    FCOJ was the most important component of the industry when the contract started, but now the fresh juice market is bigger.   Even so, the price relationships work out well enough that the FCOJ contract is the benchmark price for all orange juice.  It has become a very important factor in the life of the Florida producer as about 90% of Florida oranges are juiced.

    By Caroline Calder Features News
  • 13 Mar
    Tough times for Aussie growers

    Tough times for Aussie growers

    Problems down under continue to put pressure on juice industry while leading businesses are urged to innovate to keep pace with changing consumer tastes.  One report says that poor prices could mean an end of fresh Australian orange juice in five years, writes FJF.

    It’s not just adverse weather that’s affecting Australia – frosts, bushfires, water, the citrus industry is suffering from an onslaught of issues that are making life tough.  The domestic citrus crop will be way down in volumes, farming is proving a tough livelihood for growers with rising costs, and to top it consumer demands are changing dramatically which makes juice staples less attractive to younger consumers as they look at alternatives.

    Weather issues

    Citrus Australia, the industry body representing the nation’s commercial citrus growers, says major retailers must lift prices to juice growers, who are facing a decline in production due to seasonal conditions. CEO Nathan Hancock says prices paid for fresh juice by supermarkets to juice companies does not reflect the seasonal environmental impacts of frost and drought on the 2019/20 Valencia crop.

    “This limits the amount of money that juice processors can pay growers, which will exacerbate the long-term decline in juice variety production,” Mr Hancock said.

    “The juice growing industry is under immense pressure and Australian consumers may not have access to fresh Australian orange juice in as little as five years.

    “The high cost of water and low returns for juicing oranges mean less incentive to irrigate and maintain the crop.” Mr Hancock said growing juice fruit is unprofitable based on current rates, which barely cover the cost to grow the fruit.

    Operating environment

    Operators in the Fruit Juice Drink Manufacturing industry have faced a difficult trading environment over the past five years, according to analysts IbisWorld.

    Strong competition, both internally from private labels and externally from other beverages, has negatively affected industry revenue. In addition, slow growth in household disposable income has caused consumer preferences to shift to cheaper alternatives over the period.

    As a result, industry revenue is expected to fall at an annualised 0.4% over the five years through 2018-19, to be worth AUD822.8 million. However, revenue is anticipated to increase by 0.8% in the current year, due to rising health consciousness.

    If the domestic market fails it is likely we will see more imported frozen products, or non-refrigerated juice products, rather than fresh imports it has been suggested.

    Look to innovation

    The Australian Beverages Council is positive about the industry and sees premium products as key to success going forward.  Since 2008, chilled juice has been increasing in market value at the expense of ambient juice, growing in value by more than AUD140 million. While the overall value of the juice market has been declining since 2011, forecasts indicate value losses will slow and value should peak this year due to consumers opting for more premium chilled products. Looking further ahead, the expectation is that growth will remain modest across the category with the greatest promise of better margins and sales in premium lines. Clearly this will be contingent upon the local supply of fruit regaining some certainty over the forward horizon, comments the Council.

    “It could be noted that Australians on average only consume about half recommended fruit in their diet, so perhaps innovation really is key”

    Some of the premium lines introduced by Members of Juice Australia include combinations of fruit and vegetable juices, greater density juices which have been pressed or crushed, and unique juice blends, many of which include coconut water. Some producers have also branched out into other categories, such as non-dairy yoghurt and sparkling juices or flavoured waters.

    Just recently, market research on Australian fruit juice suggested millennials and families with young children are key targets for premium juice products. The report found millennials perceive juice consumption as an indulgence, while families with young children generally value high quality ingredients as a key factor in the decision-making process.

    It could be noted that Australians on average only consume about half recommended fruit in their diet, so perhaps innovation really is key here as the country is far down the list when it comes to consumption of juice.  Their favourite fruit is apparently apple, followed by banana, favourite juice consumed orange, followed by juice blends such as tropical mixes.

    Positive vibes despite coronavirus concerns

    The Citrus Australia Market Outlook Forum wrapped up in Melbourne recently with the industry looking forward to the season ahead. Citrus Australia Chair Ben Cant says “There is a huge amount of opportunities in export, and there are a lot of trees that are going in,” he said. “There is a lot of confidence in the industry that our record trade figures are going to continue going forward. Another key message is getting to know your consumer/customer and understand the supply chain, through technology, blockchain and genetic testing. There is also a lot of technology and it’s amazing the profound impact technology is having on the industry.”

    Another issue on the radar was the Coronavirus, with China a key trading partner with Australia, but Mr Cant says it is a situation the industry will monitor as the season gets closer. “It can certainly go either way,” he said. “That may be due to the reduced economic activity, and consumer behaviour focusing on essential items, and purchasing items like citrus will be reduced. But, that said, the markets are empty of fruit and 1.3 billion Chinese people, a significant portion, who are going to be looking for a Vitamin C hit, to increase immune levels. So, we are confident that there might be a spike in sales this year. Anecdotally, we saw that with trade data, post-SARS in citrus sales. So, we are hoping the Chinese will be back on board and better than ever.”

    Australian Beverages Council, IbisWorld, Citrus Australia.

    By Caroline Calder Features
  • 13 Mar
    Finland – Health benefits from lingonberry juice

    Finland – Health benefits from lingonberry juice

    In a study conducted at the University of Helsinki, the juice was found to lower the blood pressure of hypertensive lab rats. It was already known that by consuming berries that are rich in micronutrients known as polyphenols, people can reduce their risk of cardiovascular disease – lingonberries, blackcurrants and cranberries.

    Researcher Anne Kivimäki recently set about feeding cold-pressed and diluted juice of all three of these berries – separately, not mixed together – to different groups of rats that had been genetically modified to have high blood pressure. After eight to 10 weeks of this diet (in which the juice replaced the animals’ water) it was noted that the higher the polyphenol levels of any of the juices, the better they were at improving the function of compromised blood vessels. The lingonberry juice alone, however, also excelled at preventing the expression of genes that are associated with low-grade inflammation of the aorta.

    This resulted in the rats that consumed the lingonberry juice experiencing more of a drop in their blood pressure than those that drank the other juices. It is believed that also contributing to this drop may have been the lingonberry juice’s effect on the animals’ renin-angiotensin system, which regulates blood pressure. NewAtlas

    By Caroline Calder News
  • 13 Mar
    UK – Juice consumption on the rise

    UK – Juice consumption on the rise

    The manufacture of fruit and vegetable juice was the fastest growing sub sector in the UK food industry, growing 17% from £654 million in 2017 to £768 million in 2018 – according to analysis of the latest ONS PRODCOM data by Santander.

    Research shows that more than half of people aged 16 to 24 consume juice drinks at least once a day. Consumption of smoothies has seen the biggest increase among all fruit juice drinks with Brits spending £112 million alone on these last year alone.

    Food and drink remained the largest UK manufacturing sector in 2018, reporting sales of £71.8 billion – a 3% increase on 2017. Overall UK manufacturing sales hit a record high of £390.1 billion in 2018 – an increase of £9.4 billion (2.5%) from the previous year.

    Andrew Williams, Head of Food & Drink Sector, Santander UK, said: “Food and drink manufacturing is vital to the health of the economy and the UK is widely seen as a global leader in product innovation. The last decade has seen the food and drink industry shaken up with huge shifts in consumer buying habits – from growing interest in veganism to juice and smoothie diets. Manufacturers are having to respond quicker than ever to develop new products to meet customer demand – a pattern which is likely to continue as Brits explore the latest food fads.”Santander

    By Caroline Calder News
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