429_Symposium Paper on Juice Drinks

8/2/2019 429_Symposium Paper on Juice Drinks

1/17

MARKET DRIVERS OF THE GLOBAL BEVERAGE CONSUMPTION IN 2010:OPPORTUNITIES FOR A NEW POSITIONING TO THE JUICE CATEGORY

MARCOS FAVA NEVES

University of So Paulo, Business School,Markestrat (Marketing & Strategic Projects and Research Center).

Av. dos Bandeirantes, 3900. FEARP. Bloco C, sl 64. 14.040-900. Ribeiro Preto SP,

Brasil.

Email:[email protected]/ Telephone: 55 16 3456-5555

PATRICIA MILANMarkestrat (Marketing & Strategic Projects and Research Center).

Maestro Igncio Stabile , 520 , Alto da Boa Vista

Ribeiro Preto - SP - CEP 14025-640

Email:[email protected]: 55 16 3456-5555

VINICIUS GUSTAVO TROMBINUniversity of So Paulo, Business School,

Markestrat (Marketing & Strategic Projects and Research Center).




FRANCISCO CRESSONI PEREIRAMarkestrat (Marketing & Strategic Projects and Research Center).




Review copy for use of the IFAMA 2011 Forum & Symposium. Not for reproduction or

distribution. May 21st

2011.
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


2/17


Abstract

This study analyzes consumer behavior and how its changes affected the Brazilianorange juice industry. Its objective is to provide critical insight and an overview of thefactors that are driving the customers purchases with focus on the beverage market,especially fruit-based drinks, serving as inputs for industries and retailers decisions aboutproduction and sales. The restructuring of consumer behavior opens great opportunities,making it is essential to draw new strategies, differentiated and focused in every nichemarket with potential growth. It is necessary to reposition the juice as a liquid feed and notas a beverage anymore.

Key words: consumer behavior, beverage market, juice sector, orange juice industry.


3/17


Executive Summary

The consumer behavior started to change with the advent of the internet and theincrease in competition among companies. It intensified with the financial crises of 2008when more importance was given to budget planning, which led to a re-evaluation of theneed to buy sophisticated and brand products, making consumers more price oriented.

Therefore, this study analyzes consumer behavior and how its changes affected theBrazilian orange juice industry. This papers objective is to provide critical insight and anoverview of the factors that are driving the customers purchases with focus on thebeverage market, especially fruit-based drinks, serving as inputs for industries and retailersdecisions about production and sales.

The change in consumer behavior also affected the beverage market, which grew atan annual rate of 3.6% between the years of 2003 and 2009, while world populationreached 1.2%, creating a market of 297 billion liters. In this same period, beveragecategories with lower added value and low content of juice presented the fastest growth ratein consumption. Fruit still drinks consumption increased by 7.3% per year while juices andnectars grew by 2.1%. In 2009 the total consumption of commercial beverages achievedapproximately 1.6 trillion liters, the equivalent to 231 liters per capita.

The restructuring of consumer behavior opens great opportunities, since consumersare rethinking what is really important to them. In relation to the juice industry, it isessential to draw new strategies, differentiated and focused in every niche market withpotential growth, especially for producers of chilled juices. It is necessary to reposition the

juice as a liquid feed and not as a beverage anymore.


4/17

1

MARKET DRIVERS OF THE GLOBAL BEVERAGE CONSUMPTION IN 2010:1OPPORTUNITIES FOR A NEW POSITIONING TO THE JUICE CATEGORY2

3

4

Introduction5

6The consumer behavior is changing. Due to the advent of globalization, internet and7

the increase of competition among companies, customers have sought more information8about what they are buying. This access to information has changed the clients9consumption habits, leaving behind purchases based on mere impulse and desire to10incorporate purchases based on rational decisions.11

Thus, a list of few factors, among many others, that influence the consumer at the12time of the purchase can be made: budget planning, search for aggregated value,13redefinition of luxuries, revaluation of brands, search for flexible pricing and waste14reduction. According to Hawkins, Mothersbaugh, and Best (2007), the search for15information involves three types of concerns: the suitability of an evaluation criterion for16

solving a problem, the existence of several alternative solutions and the level of17 performance or characteristics of the alternative.18Nowadays the consumer chooses products with more value. Companies that strive19

for sustainability and have purposes beyond profit are gaining consumers preference. The20sustainable production is now indispensable to the organization that aims at market21differentiation.22

The global crisis of 2008 and 2009 brought new changes in consumer behavior.23They now give much more importance to financial planning, re-evaluating the need to buy24more sophisticated products and looking for promotions. This has led to retailers pressuring25the industry for lower prices and discounts that can be passed on to consumers.26

27

Objectives2829This study analyzes consumer behavior and how the Brazilian orange juice industry,30

which is responsible 86% of worlds juice trades, was affected by the latest global financial31crisis and the launch of numerous beverages that compete with the orange juice. This32papers objective is to provide critical insight and an overview of the factors that are33driving the customers purchases, with focus on the beverage market, especially fruit-based34drinks, serving as inputs for industries and retailers decisions about production and sales.35

36

Procedures3738

The ChainPlan Method, developed by Professor Marcos Fava Neves in 2004, is the39basis of this paper. In order to achieve the proposed goals, the first step was to carry out a40bibliographic review on consumer behavior and on the citrus productive chain. Then, many41in-depth and exploratory interviews were conducted with industry experts. In these42interviews the fruit and orange juice markets were investigated, as well as the consumer43behavior, the main problems encountered during the purchase, marketing of the product and44suggestions for quality and image improvements of the product to the final consumer.45


5/17

2

Further, the authors participated in major conferences that discussed market trends,46for example, the World Juice, held in October 2009 in Europe, attended by over 250 experts47from various companies, and Alimentaria, held in March 2010 in Barcelona, one of the48most important events regarding world food.49

50

Bibliographic review5152

Consumer behavior5354

Consumer behavior is defined as the mental and physical activities executed by55clients of consumer goods that result in decisions and actions like buying and using56products and services, as well as paying for them. Its principles are more valuable to57companies when applied to the development and sustaining of market orientation, which58implies in the complete understanding of customers desires and needs, of the competitive59environment and of the markets nature in order to obtain total client satisfaction (Sheth et60al, 2001).61

Still according to Sheth et al (2001), the customer can assume one of three rolls:62user (effectively consumes the product), payer (the person who finances the purchase) and63buyer (the person who participates in obtaining the product in the market).64

The decision making process by an individual consumer includes the problem65recognition, information search, alternative evaluation, purchase and after purchase66experience. These five stages are proposed in papers by Kotler (2000), Czinkota et al.67(2001), Sheth et al. (2001) and Etzel et al. (2001).68

The purchase behavior initiates when the buyer identifies a problem or a necessity.69It is important to register the circumstances in which the problem or necessity occurred70through information gathering with numerous consumers. This will enable the71identification of the most frequent stimuli that evoke interests in a certain category of72

products. Once interested in a product or service, the consumer tends to seek more73information. There are four major groups of information sources for the consumer: personal74(family, friends, neighbors, acquaintances), commercial (advertising, sales person, sales75representatives, packaging, showcases), public (mass communication media, consumer76classification organizations) and experimental (use of the product, examination, product77manipulation) (Kotler, 2000).78

In the process of alternative evaluation, the consumer tries to satisfy a need by79seeking for certain benefits when choosing a product and then finally views each product as80a collection of attributes with different capabilities in delivering the benefits to satisfy his or81hers needs. The consumer will pay more attention to those attributes that deliver the desired82benefits (Kotler, 2000).83

Research regarding consumer behavior is important to identify, create and84communicate value to the client. In a competitive environment where companies are85pressured to do more with less, the survivors will be the ones that research and understand86well their clients. In other words, they have knowledge of which values their clients are87seeking and how they evaluate what is offered in the market. Therefore, research is a88fundamental tool for success in marketing and can be divided into two categories:89qualitative and quantitative (Seth et al, 2001).90

91


6/17

3

The Brazilian citrus production chain9293

In Brazil, the citrus agro industry system has been presenting itself as a key agent in94the countrys agribusiness sector. In the agricultural year of 2008/2009 the GDP value was95estimated in US$ 6.5 billion for the Brazilian citrus production chain, which corresponded96

to approximately 2% of the countrys agribusiness GDP (Figure 1). Of this total, US$ 4.3997 billion were generated in the internal market and US$ 2.15 billion in the external market.9834% came from the sales of fresh fruit in the internal market and 28% from orange juice99exports (FCOJ and NFC). It is important to note that orange juice exports accounted for10094% of the citrus complex exports (Neves, Trombin and Milan, 2010).101

Figure 1 represents the citrus production chain system and the value beneath each102segment indicates the gross sale of that particular segment in the agricultural year 2008/09.103The gross revenue of the citrus sector in this period was of approximately US$ 14.6 billion.104This value represents the sum of the estimated sales from the several segments of the105productive chain and the financial transactions of the facilitating agents (Neves, Trombin106and Milan, 2010).107

In the agricultural year 2008/2009, the agricultural input industry sold to the citrus108 sector US$ 819 million. The citrus fruit (orange, lemon/lime and tangerine) revenue totaled109US$ 2 billion. From the total fruit production, 67% was destined to the processing industry,11032% to the internal fresh fruit market and 1% was exported as fresh fruit. From the total of111oranges processed by the industry, 35% were produced by the industry, 34% were bought112from orange producers with pre-established long term contracts and 31% were bought from113orange producers on the spot market. The packing house revenue with fresh fruit was of114US$ 1.8 billion, 96% of which was obtained in the internal market. Fresh fruit wholesales115revenue was of US$ 1.7 billion and the retailers obtained US$ 3.8 billion, of which 58%116came from orange sales, 17% from lemon/lime and 25% from tangerine (Neves, Trombin117and Milan, 2010).118

Juice and sub product sales totaled US$ 2.2 billion, of which 95% was obtained in119

the external market and 5% in the internal market. From the revenue gained from exports,120US$ 2.07 billion, 86%, came from juice. Packing companies, wholesalers and retailers121presented the following revenue with orange juice or nectar, respectively, US$ 255.7122million, US$ 33.9 million and US$ 459.1 million (Neves, Trombin and Milan, 2010).123

The facilitating agents revenue with the citrus production chain in 2008/09 was of124US$ 877.5 million. Regarding transportation, all freight expenses paid by the citrus sector125totaled US$ 396 million, of which 9% was with diesel. Regarding port costs, it is estimated126that in 2008 Santos Port earned US$ 71 million relative to clearance, elevation and127supervision of orange juice boarding. It is important to state that 97% of Brazils orange128 juice exports were through the Santos Port. Regarding payroll, US$ 352.7 million were129spent on salaries and benefits (Neves, Trombin and Milan, 2010).130

131


7/17

4

Figure 1: The Brazilian citrus production chain.

Source: Neves, Trombin and Milan (2010).

Defensives

US$ 288.2 millions

Fertilizers

US$ 178.9 millions

CorretivesUS$ 11.5 millions

Orange Production

US$ 1,667.7 millions

Implements

US$ 35.1 millions

Tractors

US$ 54.1 millions

Seedlings

US$ 39.5 millions

Fuel

US$ 141.6 millions

FINAL

CONSUMER

Before farms

US$ 819 millionsFarms

US$ 2.0 billions

Facilitating Agents (service providers) US$ millions

Primary Transportation From the Farm to the PH or Industry: 171.4 Tolls (Road Fee): 18.3 Juice Storage Company: 2.9Secondary Transportation From Packing House to Wholesale or Retail: 136.8 Port Costs: 71.0 Labor: 352.7

Secondary Transportation From Industry/PH to Port: 87.5 Diesel: 37.0 Taxes: 188.7

IPE

US$ 6.7 millions

Brazilian Citrus Production ChainGDP: US$ 6.5 billions / Gross Revenue 2008/2009: US$ 14.6 billions

Facilitating agentes

US$ 877 millions

Wholesale

Fresh Fruit

Domestic Market


Retail

FreshFruit

Domestic Market

US$ 3,851.9millions

Cleaning ProductsIndustry

Animal FeedIndustry

FoodIndustry

Cosmetic Industry

Bottling

Juice/Nectar

Domestic Market

US$ 255.7 millions

Wholesale

Juice/Nectar

Domestic Market

US$ 33.9 millions

After farms

US$ 10.9 billions

Irrigation systems

US$ 32.5 millions

Foliar fertilizers

US$ 31.2 millions

US$ millions

FreshFruit: 485.4

Industry: 1,182.3

LemonProduction

US$ 193.5 millions

US$ millions

FreshFruit: 174.2

Industry: 19.4

TangerineProductionUS$ 115.4 millions

US$ millions

FreshFruit: 111.9

Industry: 3.5

Packing HouseInputs

US$ 33.1 millions

US$ millions

Wax: 8.6

Defensives: 5.3

Energy: 19.2

Industrial Inputs

US$ 327.9 millions

Inputs to Produce Ready to Drink

Juices/ DomesticMarket

US$ millions

Eletric Energy: 66.4

Bunker C Oil: 76.3

Bagasse: 12.9

Chemical Products: 26.7

Plastic Bag: 0.9

ExtratctorsRent: 33.9

Packing: 46.7

Packing Service: 37.8

US$ millions

Packing House


JuiceIndustryUS$ 2,216.6 millions

FCOJ


Exports: 1,545.9

Domestic Market: 54.3

NFC

US$ 229.5 millions

Citrus Pellets Fibre PulpUS$ 178.8 millions

Exports: 93.5Domestic Markets: 85.2

Essential Oils

US$ 72.9 millions

Frozen Orange Cell

US$ 9.1 millions

DomesticMarket: 1,885.9

Exports: 73.1

OtherCitrusJ uices

US$ 17.7 millions

Terpene

US$ 55.2 millions

D-LimoneneUS$ 0.9 millions

Retail

Juice/Nectar

Domestic Market

US$ 459.1 millions


8/17

5

Results and discussion132133

Beverage and juice markets134135

During seven years (2003 to 2009), the annual growth rate of the world136population reached 1.2% while drink consumption reached 3.6%. Therefore, a market of137297 billion liters of beverages was created in this period. In 2009 the total market of138commercial beverages achieved approximately 1.6 trillion liters, the equivalent to 231139liters per capita per year. The leader category in share was hot tea with 20.9%, followed140by bottled water (15.3%), milk (12.8%), soda (12.5%), beer (11.2%), coffee (8.2%), soft141drinks (2.7%), juices and nectars (2.6%) (Figure 2).142

143

144

Figure 2: Global market share according to beverage category.145146

147

148Source: Euromonitor (2010)149

150

In 2009, the orange flavor amounted to 0.91% of global drinks; however it151participated with 35% in the juices and nectars segment. In the still drinks segment,152orange flavor corresponded to 30% of the total (Euromonitor, 2010).153

From 2003 to 2009, the categories of beverages that presented the fastest growth154rate in consumption were those with lower added value and low content of juice. Fruit155still drinks consumption increased by 7.3% per year, bottled water 6.6%, milk-based156beverages 6.5% and hot teas 4%. Juices and nectars grew by 2.1%. The category juice157is naturally contained in fresh fruit or vegetables and is prepared by mechanically158squeezing or macerating them. Juice is always 100% fruit juice. Nectar is also made159from fruit or vegetables but presents 25% to 99% juice content and usually has added160sugar. Still drinks contain 0% to 24% juice.161

According to data from the Beverage Marketing Corporation, between 2007 and1622008, the consumption of traditional juices in the United States fell by 3.0% while the163


9/17

6

flavored waters increased at 3.9% and energy drinks at 8.0%. Thus, innovative products164with greater functionality are the ones currently presenting higher growth rates (Figure1652).166

167

Figure 2: Innovation and growth in the beverage market168

169

170Source: Beverage Marketing Corporation Hemphill (2009)171

172

Despite its benefits, the functional drinks market did not react well to the 2008173financial crisis. This is reinforced by a research presented by Food & Associate174Consulting and Market Investiga Estudio de Mercados y Opinin (2010), showing that175Spanish consumers have radically changed their view regarding the importance given to176

certain product characteristics. The relevance of health characteristics has decreased by177 approximately 43%, while price has become the item of greatest significance (Graph 1).178179

Graph 1: Most important features to Spanish consumers 0-10180

181Source: Food Consulting & Associate; Investiga Estudio de Mercados y Opinin182

(2010).183

184


10/17

7

The food and beverage industry has responded to this shift in consumer185behavior. According to Nielsen, 48% of the products launched in Spain in 2007 had a186market positioning related to health, while only 18% focused on prices. In two years187this situation was reversed. In 2009, 36% of new products were positioned according to188price while 29% to health.189

In general, the juice market faced the crisis of 2008 and 2009 with interesting190changes. One of them was that private labels in retail and discount brands have gained191share. Across Europe, the growth of these juice brands was 5%. In Germany, since1922005, they have gained more than 60% in market share in the juice category. In Western193Europe, they already have a 40% share of fruit and vegetable drinks (Graph 2).194

195

Graph 2: Market share by segment in Western Europe in 2008196

197Source: Euromonitor Off Trade Volume GBO 2008 Poppel (2009).198

199

200

World consumption of juice, nectars and still drinks201202

In 2009, the world consumed 117.7 billion liters of industrialized fruit drinks,203divided into 23.5 million liters of juices, 17 million liters of nectars, 42 million liters of204still drinks and 35 million liters of concentrated powder juice. From the total, 77% was205consumed in only forty countries. During the years 2003 to 2009, the volume consumed206

of fruit-based drinks increased in 30.2%. Since this increase occurred mainly among207

lower social classes in emerging countries, the sales growth was more significant for208nectars and still drinks (which are diluted in water) and didnt reflect an elevation in209demand for orange juice at 66o Brix (Graph 3).210

The increase in still drinks sales was of 7% per year, which was superior to the211growth presented by industrialized beverages, of 3.6% per year, and therefore, reflected212in a market share expansion of 3.8%. Concentrated juice and juice powder, which must213be diluted in water before consumption, showed a growth rate of 2.2% and their demand214is most intense in developing countries, especially India.215

Contrary to theses expansions is the negative growth rate of 0.8% per year in216global consumption presented by juices, with a loss of 0.4% in market share to other217

beverage categories, especially in traditional markets such as the United States and218Europe.219

Juice drinks Nectars 100% juice

Private labels Brands

30.2%34.3%

47.6%

69.8%65.7%

52.4%


11/17

8

Graph 3: Consumption evolution of industrialized fruit-based drinks, in billions of liters,220from 2003 to 2009.221

222Source: Elaborated by Markestrat with data from Tetrapak and Euromonitor223

International.224225

This increases the emerging markets relevance towards sustaining a 2.7% annual226growth rate in sales of ready to drink juice-based beverages during seven years. From2272003 to 2006 the demand for ready to drink juice-based beverages in Asia, Middle East228and Latin America grew at an annual rate of, respectively, 5.9%, 4% and 2.8%. During229this same period, in forty selected countries, nectar beverages presented the largest230annual rate of expansion of 7.6% against 3.6% of still drinks and a retraction of 0.3% in231

juices. In more recent years, from 2006 to 2009, the consumption of ready to drink232

juice-based beverages intensified in the emerging markets at annual growth rates of2339.8% in Asia, 4.6% in the Middle East and 6.1% in Latin America. In this same period234the annual rate of expansion of still drinks elevated to 6.4%, nectar reduced to 2.5% and235the retraction in juices intensified to 2.1%.236

237

238

The orange flavor239240

Orange is the most consumed flavor in ready to drink fruit-based beverages, with241a market share of 35% in 2009, followed by apple, with 16% (Graph 4). In some242markets, such as the United States, the orange flavor has been losing space to the apple243flavor. In others, such as Russia, Ukraine and Turkey, the apple flavor is more popular244than the orange.245

In the before mentioned forty selected countries, which concentrate 99% of the246worlds consumption of fruit-based beverages with orange flavor, a detailed analysis247shows that of a total of 63.5 billion liters of ready to drink juice-based beverages248consumed in the year 2009, 20.4 billion liters had orange flavor and 7.5 billion had249apple flavor. But during the years of 2003 to 2009, it was observed that in the juice250category there was a diversification in consumed flavors, with an annual reduction in251demand of 1.6% and 2.3% in orange and apple flavors, respectively, and an increase of2522.6% and 1.3% in tomato and mixed fruit flavors, respectively. In the categories of253

nectars and still drinks, the demand for the orange flavor increased, but in a smaller254

24,625 24,588 24,791 24,836 24,620 24,016 23,495

11,288 12,351 13,425 14,800 16,091 16,864 17,074

27,641 29,377 31,69134,294 37,234 39,849 42,153

14,313 14,35514,207 14,489

14,600 14,612 14,81416,361 16,78317,491 17,871 18,710 19,276

20,137

2003 2004 2,005 2,006 2,007 2,008 2,009

Juice Nectars (25-99% juice) Still drinks (0-24% juice) Concentrated Powder

94.288 97.455 101.604106.290 111.255

114.617 117.672


12/17

9

proportion when compared to other flavors such as peach, grape, mango and mixed255fruit.256

This diversification in flavor demand and consequent loss in market share by the257orange flavor has contributed to a global reduction in orange juice demand of 6% from258the year 2003 to 2009. This is not the scenario that would be expected when analyzing259

some key demographic data that show, for the same forty countries and period, an260increase of 5% in population, 51% in gross domestic product (GDP), 43% in per capita261GDP and 40% in per capita net income (Table 1).262

263

Graph 4: Market share of flavors in juice and nectar consumption in 2009.264

265Source: Elaborated by Markestrat with data from Tetra Pak and Euromonitor266

International.267268

Table 1: Summary of key demographic data in 40 selected countries that concentrate26999% of the Worlds consumption of beverages with orange flavor in the years of 2003270and 2009.271

Data summary in 40 selected countries 2003 2009 Variation

Population on January 1st Thousands of people 4,388,932 4,629,576 5%

Total GDP Billion dolars 34,711,852 52,267,395 51%

Per capita GDP Dollars per capita $7,909 $11,290 43%

Per capita net income Dollars per capita $5,235 $7,312 40%

Unemployment rate % 8.5% 8.1% -5%

Orange juice consumption

in FCOJ at 66o

Brixequivalent

Thousands of tons 2,406 2,267 -6%

Source: Elaborated by Markestrat with data from Tetra Pak, Euromonitor International,272World Bank and Citrus BR.273

274

It is important to note that consumers with elevated per capita income, such as275Europe and United States, tend to consume 100% orange juice, which has more276aggregated value. Consumers with lower per capita income, such as countries forming277the BRICs and Mexico tend to consume larger quantities of nectars and still drinks278which are more accessible due to their lower concentration of orange juice (Graph 5).279

280

281

282

Orange35%

Apple16%

Mixed fruits10%

Grape3%

Peach4%

Pineapple3%

Mango2%

Cranberry2%

Others25%


13/17

10

Graph 5: Orange flavor consumption according to beverage category in selected283countries in 2009.284

285

286Source: Elaborated by Markestrat with data from Tetra Pak and Euromonitor287

288

The orange flavor in traditional markets: Europe and North America289290

Europe is the main destiny for the Brazilian orange juice. In 2009, Europe291consumed 29% of the worlds beverages with orange flavor, of which 56% was in the292

form of juice, 18% in nectars and 26% in still drinks. Between the years of 2003 and2932009 a 7% reduction in the demand for orange juice was responsible for a 2% retraction294in the consumption of orange flavor beverages. This latter wasnt more intense due to an295increase in demand of orange flavor nectars and still drinks of 8% and 5%, respectively,296during the same period. Germany, with 1.2% of the worlds population and a per capita297net income of US$ 27.3 thousand dollars, demanded the equivalent to 191 thousand tons298of FOCJ at 66o Brix and was Brazils major orange juice consumer. The countrys total299consumption in orange flavor beverages was of 1.2 billion liters (Graph 5).300

Also in the year 2009, North America consumed 6.2 billion liters of orange301flavor beverages, 11.5% less than in 2003. The consumption occurred mainly through302

juice and in less quantity through still drinks. Nectar consumption is insignificant in this303market. The United States, with 4.5% of the worlds population and a per capita net304income of US$ 32.9 thousand, was responsible for consuming 5.7 billion liters (Graph3055), or 92% of the total volume. Due to their first place in demand (851 tons of FOCJ at30666o Brix equivalent, or 38% of the Worlds consumption) and rivalry in production with307Brazil, the United States is the most influent orange juice market in the World.308

The United States demand for orange juice has retracted in 24% during the last309decade, the equivalent to 263 thousand tons of FOCJ at 66o Brix or 60 million orange310boxes with 40.8 kg each. This comes as a result of various factors. The 2000 decade was311marked by the dissemination of the Atkins and South Beach diets which promotes the312consumption of low calorie drinks. In 2004 and 2005 hurricanes Charlie, Ivan and313

Francis caused serious injurious to Floridas orchards which lead to a spike in orange314

juice prices. The retailers had to elevate prices to the final consumer, which in itself315

69%

5%

58% 62%70%

36%

4%18%

95%

33%

5%

2%

15%12%

11%

9%

3%

62%

31%

90%

40%

23% 18%

53%

87% 82%

2% 5%

USA China Great

Britain

Germany France Japan Brazil Mexico Canada Russia

Juice Nectar Still drink

5,673 3,356 1,205 1,189 1,078 901 788 784 559 492

Total consumption, in million of liters


14/17

11

reduces demand, but this adjustment was less than proportional than the elevation316observed in the international markets. This diminished the packing industrys margin317which had to cut costs and, consequently, reduced expenses with orange juices318marketing and promotion, intensifying the reduction in demand. And then, in 2008, the319financial crisis that elevated the unemployment rate to 9.2% changed consumers habits320

by limiting the consumption of products with more aggregated value, such as orange321juice.322

This same period was also marked by the packing industrys acceleration in323beverage innovation which started to offer a more variety of products at lower costs,324higher margins, less calories and with a modern design.325

326

The orange flavor in emerging markets: BRICs and Mexico327328

The group of countries formed by the BRICs plus Mexico, with 43.4% of the329worlds population, consumed in the year 2009 the equivalent to 221 thousand tons of330FCOJ at 66o Brix, with 80% of the total in the form of still drinks, 10% in nectar and331

10% in juice, a typical consumption profile of a population with lower per capita net332income. From 2003 to 2009 the demand for these beverages increased in 50%, with still333drinks increasing in 62%.334

China, with 19.6% of the worlds population and a per capita net income of US$3352.02 thousand, consumed 3.4 billion liters in beverages with orange flavor in the year3362009 (Graph 5), a volume 64% greater than the one consumed in the year 2003. During337this period, the annual growth rate in juice consumption was of 13.3% and in still drinks338was of 10%. Nectars presented a retraction of 6.3% per year. Although the country339showed significant growth rate in juice consumption, in the year 2009 the demand for340FCOJ at 66o Brix was of only 74 thousand tons, which reinforces that orange flavor341beverage consumption is of mainly still drinks that present low concentration of orange342

juice.343In India, with 17.2% of the worlds population and a per capita net income of344

US$ 823, mango is the most preferred flavor. In 2009, the demand for FCOJ at 66o Brix345was of only 19 thousand tons and for beverages with orange flavor was of 236 million346liters, including still drinks and juices.347

Brazil, with 2.9% of the Worlds population and a per capita net income of US$3485.23 thousand, consumed 788 million liters of orange flavor beverages (Graph 5) in the349year 2009, or the equivalent to 41 thousand tons of FCOJ at 66o Brix.350

With the exception of Brazil, the orange juice concentration in orange flavor351nectars and still drinks commercialized in the BRICs plus Mexico is much inferior to352

the ones observed in Europe. In Germany, nectars and still drink present an average353 orange juice concentration of 72% and 11%, respectively. In China, these percentages354fall drastically to 25% and 5%, respectively.355

In this way, the potential market for orange juice is also related to the quality of356nectars and still drinks consumed in emerging countries. Since the currently357commercialized orange flavor beverages present low concentration of orange juice, an358increase in product quality would translate into an increase in orange juice concentration359in these beverages and consequently elevate the global demand for orange juice. As an360example, if the BRICs plus Mexico maintained their 2009 consumption of orange flavor361beverages but increased their quality to the same standards as the one in Germany, the362increase in orange demand would be of 142 million boxes with 40.8 kg each.363

364365


15/17

12

Conclusions366367

The global consumer currently pays more attention to price while following368trends in health, well-being, responsible consumption and convenience. Price369orientation became more intensive after the recent 2008 financial crises when370

consumers started to give more attention to budget planning, re-evaluating their371necessity of buying sophisticated products and valuing more promotions.372

After the stronger period of the crisis, the most striking is that the changes373caused in consumer behavior do not seem to be fleeting. At least that was what was374found at the 13th Annual Global Survey conducted by PricewaterhouseCoopers (PwC)375in 2009 and published in 2010. According to the survey, conducted with 1,198 CEOs376from companies around the world, over 64% of them are worried about permanent377changes in consumer behavior in retail and direct sales. The same percentage believes378that in the long run, people will focus more on socio-environmental practices of the379organization before making their purchases. Yet according to data from PwC, 91% of380the respondents would be willing to change the strategies of these areas of their381

businesses in response to the crisis.382Even if the pre-economic crisis standards return, the pressure for low prices383

should not be relieved. The feeling that runs through the market is that consumers are384more willing to save than spend. Or at least he or she will act more rationally than385emotionally at the time of purchase. Regardless of whether the company has undergone386restructuring costs recently or not, the implementation of new strategies focusing on low387cost are essential for good maintenance on the market. New strategic alliances and joint388ventures are items that are on the agenda of many organizations.389

The restructuring of consumer behavior opens great opportunities, since390consumers are rethinking what is really important to them. In relation to the juice391industry, it is essential to draw new strategies, differentiated and focused in every niche392market with potential growth, especially for producers of chilled juices. It is necessary393to reposition the juice as a liquid feed and not as a beverage anymore.394

These strategies must take into account some key market drivers identified thru395out this study:396

Growth in nectar and still drinks consumption lower social classes of emerging397countries. These beverages present lower concentration of juice;398

Potential improvement in quality of nectars and still drinks consumed in399emerging markets;400

Reduction in orange juice consumption in traditional markets such as United401States and Europe;402

Loss of market share by the orange flavor in the fruit-based beverage market;403 Promotion and marketing of orange juice.404

405

406

407

408


16/17

13

References409410

AGRAFNP. Consultoria e Informaes em Agronegcio. AGRIANUAL Anurio da411Agricultura Brasileira. So Paulo, 2010. 523 p.412AgraFNP. Consultoria e Informaes em Agronegcios. Disponvel em413

Acesso em: out/2010414ANP. Agncia Nacional do Petrleo. Disponvel em Acesso415em: out/2010416BACEN. Banco Central do Brasil. Disponvel em < http://www.bcb.gov.br/> Acesso417em: Out/2010.418Banco Mundial. Disponvel em Acesso em: out/2010419BB. Banco do Brasil. Disponvel em < http://www.bb.com.br/> Acesso em: Out/2010.420BEHR, B. The USA Market for Orange and Grapefruit Juice. Nice: FoodNews World421Juice, 2009. 30 slides, color.422CAGED. Cadastro Geral de Empregados e Desempregados. Disponvel em423 Acesso em: out/2010424

CEPEA. Centro de Estudos Avanados em Economia Aplicada (CEPEA). Disponvel425em Acesso em: Out/2010.426CitrusBR. Associao Nacional dos Exportadores de Sucos Ctricos. Disponvel em427 Acesso em: Out/2010.428CONAB. Companhia Nacional de Abastecimento. Disponvel em429 Acesso em: out/2010430CZINKOTA, M. R. Marketing e as Melhores Prticas. Bookman, 2001.431Dhler. Natural Food & Beverage Ingredients. Disponvel em432 Acesso em: out/2010433DILLON , K. LEDSHAM, A. A Retailer Perspective on Juice. Nice: FoodNews World434Juice, 2009. 63 slides, colorido.435ETZEL, M. J.; WALKER, B. J.; STANTON, W. J. Marketing. Makron Books, 2001.436Euromonitor Internacional. International market intelligence on industries, countries and437consumers. Disponvel em Acesso em: out/2010438FAO. Food and Agriculture Organization. Disponvel em Acesso439em: Out/2010.440FDOC. Florida Department of Citrus. Disponvel em 441Acesso em: out/2010442FLORIDA DEPARTMENT OF CITRUS. Economic and Market Research Department.443Citrus Reference Book. Flrida, 2010. 102 p.444Fundecitrus. Fundo de Defesa da Citricultura. Disponvel em445

Acesso em: out/2010446 GV Agro Pesquisa. Centro de Excelncia para o Desenvolvimento do Agronegcio.447Disponvel em < http://www.eesp.fgv.br/centro_de_estudo.php> Acesso em: Out/2010.448HAWKINS, D. I., BEST, R., MOTHERSBAUGH, D. L. Comportamento Do449Consumidor: Construindo A Estrategia De Marketing. 10 (Campus). Rio de Janeiro:450Campus; 2007.451HEMPHILL, G. The Shifting U.S. Beverage Market and What It Means for Juice. Nice:452FoodNews World Juice, 2009. 42 slides, colorido.453IBGE. Instituto Brasileiro de Geografia e Estatstica. Disponvel em454 Acesso em: Out/2010.455ICE Futures. Disponvel em Acesso em: out/2010456

IFAS. Institute of Food and Agricultural Sciences. Disponvel em457 Acesso em: out/2010458


17/17

14

IGD Retail Analysis. Disponvel em Acesso em:459out/2010460Ipeadata. Disponvel em Acesso em: out/2010461KOTLER, P. Administrao de Marketing. 10. ed. Prentice Hall, 2000.462MIDC. Ministrio do Desenvolvimento, Indstria e Comrcio Exterior. Disponvel em463

Acesso em: Out/2010.464Ministrio da Agricultura da Espanha. Disponvel em 465Acesso em: out/2010466MySupermarket. Disponvel em Acesso em:467out/2010468NEVES, M.F. Mtodo para planejamento e gesto estratgica de sistemas469agroindustriais (GESIS). R.Adm, So Paulo, v.43, n.4, p. 331-343, out./nov./dez.2008.470Neves, M. F.; Trombin, V.G., Milan, P. 2010. O retrato da citricultura brasileira.471Ribeiro Preto: Markestrat, 2010. 137p.472Nielsen. Disponvel em Acesso em: out/2010473ONU. Organizao das Naes Unidas. Disponvel em Acesso474

em: out/2010475Planet Retail. Disponvel em Acesso em: out/2010476POPPEL, R. V. The Juice Market in Europe: Responding to Current Market Conditions477and Identifying Drivers of Growth. Nice: FoodNews World Juice, 2009. 50 slides,478colorido.479PricewaterhouseCoopers. Disponvel em Acesso em:480out/2010481RAIS. Relao Anual de Informaes Sociais. Disponvel em 482Acesso em: out/2010483SECEX. Secretaria Executiva do Desenvolvimento Agrrio. Disponvel em484 Acesso em: Out/2010.485SHETH, J. N.; MITTAL, B.; NEWMAN, B. I. Comportamento do Cliente: indo486alm do Comportamento do Consumidor. Atlas, 2001487SHUTTLEWORTH, R. Implications of the economic downturn on the consumption of488

juice and juice drinks. Nice: FoodNews World Juice, 2009. 63 slides, colorido.489SINDAG. Sindicato Nacional da Indstria de Produtos para Defesa Agrcola.490Disponvel em Acesso em: out/2010491Siscomex. Sistema Integrado de Comrcio Exterior. Disponvel em Acesso em:493Out/2010.494TetraPak. Disponvel em Acesso em:495

out/2010496

USDA. United States Department of Agriculture. Disponvel em497 Acesso em: Out/2010.498WOLLAERT, G. Opportunities in Juice Around the World. Nice: FoodNews World499Juice, 2009. 39 slides, colorido.500

Documents

429_Symposium Paper on Juice Drinks