16th November 2017

The Australian Fruit Juice Market

It is evident that there have been some problems over the past couple of years due to a lack of Valencia fruits, the shortages have been attributed to a combination of short crops and higher than usual demand from the Asian fresh market and this has resulted in higher prices of fruit and left insufficient supplies for the processors.

Fruit Juice Australia comments that production has been in steady decline for the past two years and forecasts for the 2017-18 crop indicate a further 5% reduction in the Valencia supply, with the total crop predicted to fall from 262 000 tonnes last season to 250 000 tonnes this season. They expect this supply shortfall combined with industry growth will mean demand will increase significantly into the future.

Recent conversations with Australian processors agreed that there is still an acute shortage of Valencia fruit for the processing sector and that this will continue for many years into the future while the industry responds by planting more trees. Producers add that rising material cost prices for juice processors over the past twelve months is not a short-term problem resulting in them having to pass these costs in part on to consumers.

Historically Australia has not experienced the need to import not from concentrate (NFC) juice due to plentiful supplies at home. But the poor fruit supply recently has created the need for much higher imports in 2017 (refer to graph 1)  with imports of nearly 2 million litres in May 2017 versus almost zero at the same point in the previous year. Australian imports of FCOJ amount to around 30 000 tonnes per year.

Orange juice consumption

Data on Australian orange juice consumption is notoriously difficult to obtain but figures received indicate that sales of juice from concentrate far outstrip sales of NFC (refer to graph 2) but reconstituted juice sales have declined by 27% over the past decade while NFC uptake has declined by 8% over the same period. NFC uptake is expected to remain strong for the rest of 2017. (see graph 3)

The fresh chilled market within Australian grocery has returned to growth, performing strongly with a compounded annual growth rate of 10.9% in value and 5.4% in volume in the first half of the year. Looking at chilled versus ambient the figures for moving annual domestic sales show chilled AUD551m ahead of ambient AUD447m. Research shows that Supermarkets are the most common place to buy packaged fruit juice in an average four-week period (5.1 million Australians purchase fruit juice at Supermarkets). Between June 2016 and August 2017, 6.6 million Australians reported drinking packaged fruit juice in any given seven days – up 25% from the year before which compared to other regions globally is a huge proportion of the population.  Golden Circle tops the table of the most widely consumed juices in any given week with supermarket own brands in second place and Berri and Daily Juice third and fourth respectively.

Taking an overview of the market the supply of FCOJ is not going to be a problem next season and pricing out of Brazil is predicted to remain stable in the medium term. The problems in Florida could mean higher volumes in fruit crush to NFC this season to meet the demands of the US market which is not necessarily good news for the Australian market – given the stable demand for NFC juice, another lacklustre Valencia crop and continued strong fresh fruit exports to Asia. Nevertheless, Australian consumers seem to be willing to pay for fresh premium juice so the answer could lay in increasing imports and raising prices at the retail level.

Sources: Global Data, Fruit Juice Australia, Roy Morgan Research

By Caroline Calder Trade Data Share: