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Orange-Juice Sales Continue to Plunge While Prices Rise

The Wall Street Journal - 07/26/2012

By Alexandra Wexler
 

NEW YORK--Orange-juice sales continue to tumble as many U.S. consumers opt out of the popular breakfast beverage due to high prices.

Total domestic retail sales of orange juice were off 5.4% in terms of volume--and 0.6% in terms of revenue--for the four weeks ending July 7 versus the same period in 2011, according to Nielsen data published by the Florida Department of Citrus.

Meanwhile, prices for the beverage increased 5%, data said.

Sales of reconstituted, or from-concentrate, orange juice fell even more sharply--down 11% in terms of volume from a similar four-week period a year ago, while prices rose 2.8%.

Reconstituted orange juice, such as Coca-Cola Co.'s (KO) Minute Maid, is made by melting and mixing water with frozen orange-juice concentrate, the type of juice traded on the ICE Futures U.S. exchange in New York.

Revenue from sales of reconstituted orange juice is off 8.5% from a similar four-week period a year ago.

On the other hand, sales of the more popular not-from-concentrate juice, or NFC, such as PepsiCo Inc.'s (PEP) Tropicana Pure Premium, were flat in terms of volume despite prices rising 4.7% for the four weeks ending July 7, according to Nielsen. That means revenue for that juice actually rose 4.7% over the past four weeks from a similar period a year ago, demonstrating a more-profitable niche in the market.

Industry experts say consumers who spend the extra money to buy NFC juice aren't as easily deterred from their routine purchases by higher prices as are consumers who normally buy the less-expensive reconstituted juice.

"When dealing with the recon customer, you're dealing with someone who's much more price sensitive," said Doug Ackerman, executive director of the Florida Department of Citrus. "When the price goes higher you're going to see this customer opt out of orange juice altogether."

Not-from-concentrate doesn't have the same price sensitivity, he added.

Front-month orange juice for September delivery on ICE was 0.5% lower at $1.0970 a pound, down 35% for the year, in afternoon trade Thursday.

 

Write to Alexandra Wexler at alexandra.wexler@dowjones.com
(http://professional.wsj.com/article/BT-CO-20120726-717811.html?mod=djempersonal&mg=reno64-wsj)