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.

Jack Scoville March update 2020

FCOJ prices yo-yo as coronavirus adds to woes

FCOJ futures have had a relatively wild ride in the last few weeks.  Prices went above 102.00 May for the first time since the beginning of the year in February and acted ready to move higher and perhaps significantly higher.  Then, prices stalled and futures moved back down into the trading range between 98.00 and 102.00 for a few weeks before dropping below support and testing down to 92.15 May.  Then the Coronavirus hit and futures went back up to the range.  Now prices are fading lower again.

It has been quite a ride and it is somewhat disappointing that the onslaught of the Coronavirus has not really produced more demand for FCOJ in the American market.  After all, Americans should want to try to prevent getting the virus and one way to do that is by drinking a glass of Orange Juice each morning.  But the demand bump has been minimal and this highlights the problems with the market right now.

There are plenty of Oranges in Florida right now for making FCOJ.  The crop is still being harvested but all reports indicate that a bumper crop has arrived.  There are reports of some production problems this year in Mexico from earlier dryness, but Brazil’s crops are looking good and will offer plenty of competition for sales abroad and here at home.

On the demand side, the Coronavirus makes transportation that much more difficult.  The workers on the ships could carry the disease and people with the disease or even virus free are not going out too much.  So, the demand might crop due to the virus instead of increase.

FCJ futures can hold in the 90’s for the foreseeable future either way.  Prices might be cheap enough although historically prices have been even lower that the current levels.  But there is no real reason for any kind of a major up move in futures to develop anytime soon.  The best the market can hope for is a choppy and sideways trade rather than a V bottom and a big move from here.  We will need to absorb the harvest before any kind of a major rally can even be contemplated.  The amount of FCOJ made from the current crop plus imports will go a long way to deciding the longer term upside price potential.  For now one would think that the price rally potential is rather slim.

Josep Lay, Managing Director of PT Great Giant Pineapple provides some insight for fruitjuicefocus.com

Principal producers

The big four pineapple producers in the world are Thailand, Philippines, Indonesia, and Costa Rica (85-90%).  Thailand’s production in 2019 is expected to drop to 1.1 million tonnes.  The Philippines production remains stable over recent years, while Costa Rica is now producing more in NFC.  Indonesia’s production keeps growing steadily but will not be able to substitute the shortfall of other countries.

A passion for pineapple – PT Great Giant Pineapple

PT Great Giant Pineapple (GGP) operate on a 34,000 ha plantation area in Lampung, Indonesia, with some 25,000 employees.  This is the world’s single largest integrated green production facility producing more than 700,000 tonnes of pineapple annually. Rainforest Alliance Certified – GGP commits to control every step of the process from plantation to processing and shipping.

Fully traceable

Their system and process allows the company to trace from finished product to a specific planting area. Since our establishment in 1979, PT Great Giant Pineapple’s (GGP) has become the largest private label manufacturer of canned pineapples in the world and a prominent source of premium pineapples. Being farmers at heart we pride ourselves on implementing sustainable agricultural practices, at the core of our business operations. With one in every 4 pineapple originating from GGP, our plantation covers 90,000 acres, and our unrivalled expertise in fruit cultivation is supported by a seamless supply chain alongside our fully integrated facilities.

Sustainable

We began implementing our sustainability initiatives form 1980 by actively maintaining our natural lagoons to harvest rainwater thereby reducing our consumption of ground water.  Since then we have invested in various initiatives relating to the environment as well as the social and economic welfare of local communities.

Premium products

GGP are the largest private label manufacturer of canned pineapples in the

world serving leading retailers and brands from over 60 countries with a market share of 25%. Premium products include pineapple in pouches, fillings and spreads, canned pineapples and tropical fruit salad, pineapple juice concentrate (PJC), clarified pineapple concentrate (CPC), deionised clarified pineapple concentrate (DCPC), not from concentrate (NFC).

PRODUCTION OVERVIEW

Costa Rica pineapple landscape. After reaching a USD200 million record in exports in 2016, in 2018 the value of pineapple juice sold by Costa Rican companies abroad fell to USD104 million. The 2016 advantages such as climate and production problems in South East Asian countries such as Indonesia and the Philippines contributed to the spike in trade.

At the beginning of 2019 there were 44,500 hectares dedicated to fruit cultivation in Costa Rica, however because of high production costs and a drop in International prices predicted by 2021, the cultivated area could fall to 38,000 ha. Growing competition from Colombia, Panama and Ecuador producers who have managed to gain market share in the US and Europe is noted as the reason.

Thailand pineapple harvest. Experiencing the lowest tonnage in the last 20 years Thailand has significant production hurdles to overcome.  Due to the very low price of fresh pineapple in previous seasons, farmers did not take care of plantations and this has affected total production volumes, size of fruit and quality. Low yields are predicted to continue in the short term, and also noted is that pineapple production is seen as more labour intensive than other crops such as mango, jackfruit, or rubber. There has been a significant consolidation of canaries in the region from 2011-2019.

Philippines and Indonesia. Philippines has been facing dry spells although predictions are for this to normalise, production is slightly less compared to 2018. The dry season in Indonesia has turned into the ‘long drought’ from May-Nov 2019, not enough rainfalls during those period. Production of Indonesia in 2019 is expected to be higher than 2018. Due to long drought in 2019, Indonesia is expecting a lower production volume in Q1/2020 around by 20%.

Production opportunities for GGP.  Thailand is facing a crisis in pineapple industry, not enough workers and no interest for Thailand’s young generation to be a farmer. Declining trends in Thailand’s pineapple tonnage provides opportunities for growth of production volume at GGP. GGP is preparing to minimize the impact of El Nino or drought by investing more water reservoirs. GGP’s water reservoir enable to sustain for 90 days without rain. GGP is a company concerned with ‘Going Green and Sustainability’, creating a food estate that has no waste, every single item is utilized, from the pineapple skin, manure from the cattle operation as well as other solid waste.

Data from CBI – Market and quality 

The European Union is the largest market of pineapple juice with more over 50% share of the total world imports according to the CBI. The Netherlands is the largest European importer of pineapple juice, followed by France and Germany. The major developing country suppliers are Thailand and Costa Rica.

Pineapple juice may contain finely divided insoluble solids, but it does not contain pieces of shell, seeds, or other coarse or hard substances or excess pulp. The juice intended for export is usually concentrated and later reconstituted with water due to practical reasons of lowering transportation costs which would otherwise include transport cost for water and packaging.

Quality

The basic quality requirements for pineapple juice are defined by the following parameters:

• Colour: characteristic of the variety, most commonly golden yellow to amber.
• Flavour and odour: distinct pineapple flavour and odour, free from foreign flavours and odours.
• Brix level: quality of concentrated pineapple juices is mainly defined by the Brix level (sugar content of an aqueous solution) and Brix level directly influences the price of the product. According to trade classification the highest category for pineapple juices is defined with Brix level exceeding 67. However, in European industry practice the most common concentrated pineapple juices used by bottlers are around 60-61 Brix and 65 Brix. According to the European Union directive minimum Brix level for reconstituted pineapple juice is 12.8.

Additional quality requirements

• Pulp content: pulp content may vary and commonly it is between 6 and 18% in the concentrated pineapple juice. Importers may require more pulp content as visible pulp in juices is becoming more popular among European consumers.
• Acid level: citric acid level is beside Brix the most common parameter that influence the quality and price of the product. Usually acid level for concentrated pineapple juice is 2-4% of citric acid.

Which European markets offer opportunities for exporters of pineapple juice

Imports

Over the last five years, imports of pineapple juice in the European Union have increased annually by an average 9% in value, but decreased by 1% in quantity, reaching EUR521 million and 376,000 tonnes in 2016.

Decreasing import quantity compared to value indicates an increase in import prices in 2016. The average import price for concentrated pineapple juice in Europe increased from EUR1.7/kg (CIF) to EUR2.4/kg.

European Union imports of pineapple juice are concentrated, and three top importers (the Netherlands, France and Spain) together account for more than 60% of total European imports.

The largest imports from countries outside the European Union are from Thailand and Costa Rica. Together they hold almost 80% of the total market. Although the Philippines is one of the largest exporter of pineapple juice in the world, they are traditionally more focused on the US market.

Imports from Brazil showed very significant average annual growth of 103% over the last five years. Other growing exporters are China (56% annual growth) South Africa (37%) and Kenya (15%).

The leading external destinations for pineapple juice processed in Europe are Saudi Arabia, Iran and Egypt. There was a very high export increase to Iran, from EUR129 thousand in 2012 to EUR3.4 million in 2016. This export to Iran is mainly recorded from Germany.

Sources:  CBI, PT Great Giant Pineapple, ITC Trade Map, Central American Data, Thai Statistics Office,

Juice blending –

 In today’s world, beverage processing must be more efficient and sustainable than ever before. By reinventing the standard JNSD processing line, Maria Norlin, Sub-category Manager for JNSD & Beverage and her team at Tetra Pak divided the process into two separate streams, one for concentrate and one for water.

This would help producers to minimise environmental impact while saving in both energy and water consumption – the story of this unmatched innovation unfolds below.

The JNSD portion of the beverage industry is stable and conservative in many ways, with industrial practices built up over decades to ensure product safety and production efficiency. However, a range of consumers trends – from increased concerns for health and calls for more natural alternatives to growing environmental awareness -– are putting pressure on JNSD manufacturing to rethink traditional practices.

We at Tetra Pak took the challenge and explored how we could make juice production more sustainable while maintaining product safety and shelf-life. We also wanted lower processing costs, to achieve these goals, we needed to find innovative solutions which save energy and water. And we did this by combining existing technologies-– filtration and UV treatment. Our experimentation and innovative equipment and processing parameters yielded extremely satisfying results.

This was the start of a long-term project to develop a low-energy JNSD line. Traditionally, we pasteurize the full volume (juice concentrate + water), where the most energy-intensive process step is heat treatment. In the new line, we pasteurize the smallest possible volume, the concentrate. The rest which is water is treated separately with more cost-effective aseptic technologies such as filtration and UV light. This new technology can greatly cut down heat treatments -– reducing energy consumption by about 67%. It also reduces water used in cleaning in place (CIP) and sterilization in place (SIP) by about 50%.

THE CHALLENGE: RETHINKING THE JNSD LINE WITH EXISTING TECHNOLOGIES

In JNSD solutions commonly used today (Figure 1), all ingredients are blended with water before going to the pasteurizer for heat treatment to deactivate harmful microorganisms. Even with modern pasteurizers though, which use regenerative heat to drive efficiencies, this is an energy-intensive approach which faces added challenges at scale. For instance, each product change in a large system volume of 2,000 litres is likely to create significant product loss and require additional, resource-intensive cleaning steps.

Informed by these challenges and past attempts to address them –- such as adding water to the concentrate as steam and then diluting it with cold water -– we decided to pursue a completely new approach. By leveraging existing technologies and the natural properties of water, we reinvented the traditional, resource intensive JNSD line and split it into two streams: one for water and one for concentrate and pre-mixes.

Unlike JNSD products, water is a clear liquid, which makes it very suitable for UV light treatment to ensure the required reduction of pathogens. Water is also free from cloud, particles, and the pulp typically found in juices and juice-based beverages, which allows for filtration that targets spoilage organisms.

In our new line concept, these lower-energy processes (i.e. UV light and filtration) are used to purify the water first, before it is blended with the concentrate –- which is still treated by heat, but at a greatly reduced volume (about 30%) given the absence of water. 

THE OUTCOME: LESS ENVIRONMENTAL IMPACT, MORE OPERATIONAL SAVINGS

To verify that our new line concept met the formal test requirements we had established, we built a test plant and ran an operational test with nearly 8,000 juice packages.

As the summary table demonstrates, pilot testing was highly successful. The required log reductions for food safety and food spoilage were achieved –- and surpassed -– with a combination of filters and UV treatment. Our targets for reduced operational cost were also met, with yearly savings estimated at 92 thousand Euros when assuming a production time of 20 hours a day, 5 days a week.

In terms of investment costs, based on the filtration and UV equipment we selected, our new JNSD line was only 5% more expensive than the current solution. Accounting for operational savings, this investment cost would be paid back before our ROI target of a maximum of 6 months.
Importantly, beyond surpassing our food safety targets and showcasing operational costs savings of 67% relative to current solutions, pilot testing underscored significant sustainability gains – which were also a key focus area of ours.

At Tetra Pak, we are committed to helping drive more environment-friendly processing solutions – which are also in high demand from our customers given heightened consumer awareness around sustainability and increasing demands for businesses to take climate actions.

To that end, in developing this new line, we set targets of reducing water consumption by 25% and energy consumption by 40%, both of which we surpassed. In pilot testing, energy consumption was estimated to reduce by 67% and water consumption by 50% from 96,000 l/week to 48,000 l/week. By processing ingredients in two separate streams, whereby only 30% of the volume is heat treated through pasteurization, producers are better equipped to meet one of modern manufacturing’s most common challenges: producing more, with less.