A Bitter Analysis of World’s Orange Juice Market
Marcos Fava Neves
12 Set 2016 17:36
By Marcos Fava Neves
In the last 5 years we had a chance to study in depth the data about world’s OJ consumption. This study is lead by Markestrat team, and gathers data from Citrus BR associates, USDA, Tetrapak, Compass, Nielsen, Planet Retail and other recognized international organizations that collect date.
This analysis is performed in 40 countries (markets) that represent more than 99% of FCOJ consumption (not considering juice produced directly from the fruit). The numbers for 2015 aren’t confortable.
During 2015 the world consumed 1,938 million tons of orange juice (converted to FCOJ). It represented a 5.3% drop (108,000 tons) from the 2.046 million tons of 2014. If we move to a ten years comparison, the consumption drop was of 19.2% (2.397 million tons in 2005). At the same time the world’s population had a 12% increase and per capita income increased 39%. In a decade of growing food markets, we lost sales.
As the largest consumer, the 11% fall in the USA in 2015 (from 688,000 to 613,000 tons) was the major responsible for the world’s consumption decline. When compared to 2005, the USA lost 38% (it was 988,000 tons), and the per capita consumption fell from 18 to 10 liters in 10 years.
Germany and France are second and third positions as largest consumers, with around 150,000 tons/year. They both fell 4% in 2015. When compared to 2005, the decline was of almost 30% in Germany (it was 208 thousand tons) and 8% in France. Canada and United Kingdom are 5th and 6th major markets, around 110,000 each also fell, but UK had the largest loss, of almost 8%.
From the 7th to 20th position in the consumption ranking we have countries with consumption varying from 20,000 to 60,000 tons. In these, Saudi Arabia, Mexico, Japan and Argentina had a growth of more than 5%. Brazil, Australia, Spain, South Africa and Italy stayed the same and Belgium, the Netherlands, South Korea, Russia and Poland had demand falling more than 5%.
The negative surprise in this year’s analysis came from emerging economies, mostly China. This market had a growth of 133% since 2005, and is already the 4th largest, but fell 6% in 2015, coming from 141,000 to 132,000 tons.
Data about per capita consumption shows some interesting figures. Developed economies have around 10 to 15 liters/inhabitant/year and emerging countries around 2 to 4 liters. Chinese drink only 0.5 liter/person/year. Yes, there is potential to increase, but the issue is that we face a lot of competition looking at this growth, coming from other juices, nectars, flavored waters, teas, coconut water and others.
In our study, orange still remains in almost all these 40 most important markets as the most consumed juice with more than 50% share in the 100% fruit juice category. Orange only loses to apple in Germany and Russia, and to juice and vegetable mixes in Japan and Turkey.
Consumption numbers for orange juice are not promising. This is one of the only cases in all agribusiness commodities where the market falls, comparing with grains, meats and several others that have booming markets ahead. But due to several reasons, OJ production is falling faster than demand, bringing higher prices that may even complicate even more this scenario. It is challenging and we will have to think a lot in strategies to try to revert.
As a final comment, I invite the CW reader to visit and follow the website where I put all my course materials (articles, slides, analysis) and the sequence that I am following so the interested readers can follow all our work, classes and releases of new research. Here is the address: www.markestrat.org/agribusiness.
Marcos Fava Neves is a professor at the University of São Paulo (Brazil), international adjunct professor at Purdue University (Indiana) and author of “The Future of Food Business” (World Scientific, 2014).
