“Our industry is facing tremendous challenges today: high supply, large crop, declining demand and low-carb consumer trends. During times like these, the inclination for some is to reduce investment until better times come along. However, better times tomorrow will be the result of the investments we make today. A healthy business requires many building blocks to lay a foundation for growth. There are five P’s that relate directly to the building blocks of a healthy business: Product innovation; Packaging innovation; Pricing; Placement and Promotion.
“With regards to product innovation, the beverage category is much different than it was 10 or 15 years ago, or even five years ago. In the past year, over 1,500 new beverage products were introduced at retail. Many of these new competing products, such as water and a wide variety of juice drinks and juice blends, are challenging orange juice’s equity in the supermarket. The orange juice category has not kept pace with new innovations. The most recent example of product innovation for orange juice was the introduction of “calcium-fortified,” which - not coincidentally - spurred a period of growth for the category. But that was several years ago. What have we done lately?
“The second P relates to packaging innovation. Ten years ago people drank water free from the tap. Today, water is still free from the tap, but people are paying a substantial price for bottles of water, which they take with them everywhere they go. Consumers demand convenience. Unfortunately, orange juice offers few options in that regard. Today, orange juice is served the same way it was 20 years ago - in a glass. Portability is a key to enabling us to expand orange juice consumption beyond breakfast.
“Thirdly, is the issue of price. The number one reason consumers buy orange juice today is because it’s “on sale.” There are normally three tiers of pricing for most product categories: low end, middle tier, and premium. However, our industry’s pricing practices have virtually eliminated product/price category segmentation. Often, branded orange juice is priced at or below private label orange juice. In this situation, it will be difficult to achieve category growth.
“Placement must also be considered. What we’re talking about here is our presence on the supermarket shelf. Core packaging for orange juice hasn’t changed much over the years, and most of the packaging that is out there looks the same. From the consumer’s perspective, there is not much differentiation between one brand and the next, nor between one form (eg NFC with pulp) and the next (eg From Concentrate with no pulp). As an industry, we need to do a better job of managing our category. We need to make it easier for consumers to quickly find what they’re looking for when it comes to orange juice. We also need to protect our turf on the shelf. Orange juice is getting squeezed out by the aggressiveness of other new products in the refrigerated section.
“Finally, promotion - it’s important to build consumer awareness for your products. When it comes to promoting the product, the beverage category is the most competitive category in the supermarket. Advertising spending for the beverage category as a whole is up 47.8 per cent over 10 years, yet spending against the orange juice category (brands and FDOC combined) is down. No business can expect to achieve growth by spending less to promote while its competition spends more.
“Our industry’s historic lack of product/packaging innovation, combined with reduced spending in face of increased competition, have contributed to business declines, and left us vulnerable to the economy and cultural trends (eg low-carb diets). Now we face the questions that every business leader eventually faces, especially in challenging times: “Do we spend to build the long-term future of our business, or do we pull back and hope for better times to come along?
“We need to ask ourselves some questions. Can we afford NOT to invest in packaging and product innovation? Can we continue to spend less while our competition spends more, and still expect growth? Are we, as an industry, doing everything we can to compete and prosper in our new world?” We’re asking the industry to pull together to explore the building blocks of a healthy business. We must establish roles for the various segments of our industry (eg role of FDOC versus role of processing community versus role of growers). We must invest in our future, and set realistic expectations for what we can achieve based on the relative size of that investment.”
• Elsewhere, the Florida citrus industry’s quest for a seedless tangerine is gathering steam.
The Lake Alfred research centre hosted a “Fresh Citrus New Varieties Day” on December 8, 2003 to discuss creating a Florida grown seedless tangerine to counter the onslaught of Spanish Clementines in the US market. The meeting was part of the charge issued by the Fresh Orange and Specialty Fruit Advisory Council, a board set up by the Florida Citrus Commission and comprised of fresh citrus industry leaders.
Specialty fruit growers believe finding a seedless variety that can grow in Florida is paramount to the future of the tangerine industry. A team of IFAS and USDA scientists, lead by Dr Fred Gmitter and Dr Calvin Arnold, have already laid the research foundation for creating a seedless tangerine. However, the process is still expected to take four to seven years.
“We are working with anyone that can help us,” says Bob Morrissey, the FDOC’s director of strategic alliances. “But this is going to be a long-term process.”
The initial phase of the effort is to identify what qualities are most important to consumers; taste, seeds, size, peelability, packaging or convenience. The information will then be reviewed by plant breeders and scientists to develop specific research guidelines. The eventual goal is to remove seeds from the Sunburst and Honey tangerines as well as create new seedless mandarin varieties.
The research is a collaborative effort between the FDOC, the US Department of Agriculture, Florida Citrus Packers, Florida Citrus Mutual and the University of Florida Institute for Food and Agricultural Sciences.
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