5 MARKETS FOR ORGANIC CITRUS JUICES

The bulk of organic citrus juice consists of orange juice. Juices of other organic citrus products are almost negligible. There is some production of organic grapefruit juice (e.g. in Cuba, Israel and the United States) and lemon juice (Argentina, Spain) but volumes have been very low so far.

Orange juice is marketed in two main forms: frozen concentrated (FCOJ) and not-from-concentrate (NFC). While FCOJ has long dominated the market, consumption of NFC has increased rapidly in recent years, notably in North America.

5.1 The market of the European Union

The EU market for organic fruit and vegetable juices was forecast to reach a value of US$90 million in 2002 (Organic Monitor 2002d). The main markets are the United Kingdom, Germany, Italy and France (see Table 11). Retail sales have increased by over 20 percent annually since 1998. Although no precise consumption estimates are available, industry sources report that Scandinavian countries are important markets too.

Most retail sales of organic orange juice are in the form of NFC, which consumers associate with health. The volume of NFC organic citrus juice sold in the EU was estimated to range between 12 and 13 million litres in 2002. The main markets are the United Kingdom (which accounts for some 40% of total volume) Germany, France and Italy. Many European organic juice companies process fresh organic oranges imported from Italy and Spain. These two countries also process part of their organic citrus crop. Italy is estimated to produce 1.5 million litres of organic citrus NFC. Foreign suppliers of organic NFC citrus juices include Israel, Brazil, the United States, Costa Rica and Argentina (see Table 12).

It should be noted that some suppliers have the capability to ship much bigger volumes to Europe but do not do so because prices are reportedly not very attractive. Costa Rica, for example, declared a total production of 5 000 tonnes in 2002. Also, suppliers sometimes sell organic juices as conventional in order not to add downward pressure on organic prices.

Organic FCOJ (OFCOJ) is used for producing reconstituted orange juices, for blending with other fruit juices (juice mixes) or as ingredient for the foodstuff industry. The EU (notably Italy) produces OFCOJ but quantities are reported to be small. Brazil is by far the EU's largest supplier of OFCOJ (Table 13). The leading exporter is the Montecitrus company, followed by Brazil Organic. Other suppliers include the United States, Israel and Costa Rica. Cuba exports from 200 to 500 tonnes of OFCOJ and OFCGJ (grapefruit) to Germany and Switzerland, where they are used as ingredients for baby foods.

Caution is needed when considering these figures. Some suppliers tend to overstate their exports. Also, not all exported volumes are necessarily sold, as FCOJ can be stored for a long time. Finally, as in the case of NFC, organic FCOJ is sometimes sold as conventional in order to avoid further depressing organic prices. As a result, the actual size of the market for OFCOJ is presently lower than the sum of the above export figures.

Main consumption countries

In the following section, the information regarding market size, growth rate, sales breakdown and competitive structure has been compiled from market research done by Organic Monitor in 2001.

The United Kingdom

Sales of organic citrus NFC juices were estimated at US$11 million in 2002 for a volume of 4.9 million litres. After a period of rapid expansion in the late 1990s, market growth has decelerated (+7 percent from 2001 to 2002). The main product is orange juice, but there is also a substantial share of grapefruit juice. The market is dominated by three companies (Gerber Foods, Grove Fresh and Prince Soft Drinks) that control approximately 85 percent of sales. In 2001, 94 percent of organic juices were sold by supermarkets, with Sainsbury, Tesco and Waitrose having a high market share. The main origins are Florida (orange and grapefruit juices) and Italy (orange). The UK also imports juices from Brazil (orange FCOJ), Costa Rica (orange FCOJ) and Argentina (concentrated lemon juice).

Projected growth of the UK market for organic NFC citrus juice

Source: Organic Monitor 2002

Germany

Some 1.5 million litres of organic citrus NFC juices were sold in 2002 for a retail value of approximately US$3.4 million. The German market has grown rapidly in recent years (+ 30 percent in 2002) due to the fact that large-scale retailers have just started to carry organic juices. This is reflected by their low share (8 percent) of the organic citrus juice market compared to that of natural food stores (92 percent). The import and distribution of organic citrus juice is highly concentrated, with two companies (Beutelsbacher and Voelkel) controlling 90 percent of the market. Most German organic juice companies do not produce citrus juice. The main supplying countries are Israel, Italy, Spain and Brazil. Together they account for 3 quarters of total volumes.

Projected growth of the German market for organic NFC citrus juice

Source: Organic Monitor 2002

France

Sales of organic citrus NFC juices were estimated at US$3 million in 2002 for a volume of 1.5 million litres. After a period of rapid expansion in the late 1990s (+25 percent in 1999), growth has decelerated (+15 percent in 2002). The market is dominated by two companies (Vitamont-Vitalia and Jacoby) that control approximately 75 percent of sales. Other importers include Vitagermine and Alterbio. Retail sales are split between large-scale retailers (Carrefour, Casino, Atic, Monoprix and Auchan) for two thirds and natural food stores for one third. France sources the bulk of its organic citrus and juices from the EU. Italy is the leading supplier, followed at a distance by Spain. Together with Israel, these countries account for 85 percent of total volume. There are also imports from Costa Rica, Brazil, Argentina (orange NFC) and Florida.

Projected growth of the French market for organic NFC citrus juice

Source: Organic Monitor 2002

Italy

The organic citrus NFC juice market has enjoyed very strong growth since 1999. In 2001, sales rose by as much as 50 percent, as retailers started to carry organic juices. Sales were estimated at US$2 million for a volume of 1.15 million litres in 2002. As in France, supermarkets now control about two thirds of the sales. The leaders on the organic retail market are Esselunga and Coop Italia. The natural food store chain NaturaSi also plays an important role. Many Italian firms process organic citrus fruit, the largest being Confruit G and Abafoods. Most of them are located in the citrus-producing regions of Sicily and Calabria. Organic NFC citrus juice production in Italy was reportedly 1 500 tonnes. Due to its abundant production, Italy does not import much organic citrus juice (less than 10 percent of consumed quantities). Brazil is the main foreign supplier.

Projected growth of the Italian market for organic NFC citrus juice

Source: Organic Monitor 2002

Prices

The Market News Service of the International Trade Centre gave the following prices in December 2002:

Examples of prices for Brazilian orange juices (US$/tonne, FOT Netherlands)

Source: MNS for bulk packed juices, Europe, ITC December 2002

However, in February 2003, one importer mentioned that organic NFC prices were down to 750 US$/tonne, a 25 percent difference with the conventional equivalent, while the OFCOJ price had declined to 1800 US$/tonne. According to traders, the current price premium is rarely over 30 percent.

Organic orange juice prices have declined in recent years due to the growing imbalance between supply and demand. Demand has risen, as seen above, but not as fast as supply. High expectations of market growth have led to rapid output expansion in several countries, in particular Brazil. However, these expectations have failed to materialize so far, resulting in a surplus situation. Some importers have even abandoned the organic orange juice segment, where competition has become fierce. Presently price prospects are not good. Trade sources expect the price premium to fall to 20 percent.

Market prospects

Organic Monitor project that consumption of all organic juices in the EU will reach 100 million litres within a few years. They estimate that organic juices only had a 0.57 percent share of the European juice market in 2001. Organic citrus juices account for a very small fraction of the total citrus juice consumption in the EU. Consequently, there is a strong potential for increased consumption. The combination of rising supply, decreasing prices and increased availability of organic citrus juices in supermarkets will foster demand. It is very plausible that their share of the total citrus juice market will reach the current average share of organics in the food market, i.e. 2 percent, in the medium term. Germany, the Scandinavian countries and Italy have a particularly dynamic market, mainly driven by the launch of organic juices in supermarkets. Other countries such as Austria and France also offer good prospects. In addition, ten Central and Eastern European countries (the so-called “Accession countries”) will join the EU in mid-2004.

FAO has projected the volume of NFC organic citrus juice that could be consumed in the EU in 2010 using various growth scenarios. The three scenarios assume that consumption grows annually at different rates: 5, 10 and 15 percent. These rates were mentioned as probable by industry sources, although some experts outside the trade think they are rather conservative. The industry might want to dampen consumption growth expectations in order to avoid stimulating oversupply. The scenarios also include the Accession countries from 2005, using growth rates of 20, 20 and 25 percent. Higher growth rates for these countries are justified by the fact that individual consumption is currently extremely low and will converge towards the EU average in the long run. Depending on the scenario, total EU-25 organic NFC consumption is projected to range between 20 and 40 million litres in 2010 (see Figure 1).

However, it should be noted that the organic citrus juice market is already abundantly supplied, and that existing suppliers have the potential to increase shipments substantially. Brazil produces large quantities of organic FCOJ at low prices and could raise its production considerably. As a result, potential new entrants to the EC organic citrus juice market would need to be extremely competitive. They would need to either produce at prices comparable to those of Brazil, which seems unlikely, or supply high quality juices. Citrus juices imports into the EC face tariffs ranging from 12 to 15 percent ad valorem with an additional duty of 20.6 €/100 kg. This is much higher than the average tariff on fresh citrus. Those countries which have a preferential trade agreement with the EC would therefore have an advantage.

5.2 The market of the United States

The US is the largest market for orange juice in the world. It consumed an estimated 12.8 million tonnes of citrus juices in 2000, accounting for 40 percent of world consumption It is also the second-largest orange producer after Brazil. The bulk of US orange juice is produced in Florida, where production is split almost equally between FCOJ and NFC juice. Individual consumption of orange juice (39 litres in 2000) is amongst the highest in the world. Consumption of grapefruit juice is also high (5 litres).

Very little data are available on the US market for organic citrus juices. Although there are various brands of organic orange juice on the market, consumption is extremely low, probably below 0.3 percent of total juice consumption. Organic orange juice is produced in Florida, but output is very limited. Organic OJ is produced by small processors, as the large juice processors (e.g. Minute Maid, Tropicana) have not been interested in the organic segment so far.

Based on the organic citrus acreage data and on an estimated yield of 25 to 30 tonnes per hectare, it is possible to obtain a rough estimate of the US production of organic citrus juice. Organic citrus production in California, Texas and Arizona is sold on the fresh market. Florida citrus are traditionally grown for processing. Total Florida output of organic citrus can be assumed to range between 60 000 and 75 000 tonnes. Assuming that 80 percent of the fruit is processed and that 1 kg of fruit yields 0.5 kg of single strength juice, the Florida output of organic citrus juice can be estimated to range between 25 and 30 000 tonnes. The actual share of organic citrus that is processed might be somewhat lower, as it seems that organic growers prefer to sell to the fresh market, where they obtain a higher return.

In addition to its domestic supply, the US imports organic citrus juices, in particular from Mexico and Brazil. The tariff on concentrated citrus juice imports ranges between 34 and 38 percent in ad valorem equivalent. The tariff on non-concentrated citrus juice is much lower (below 5 percent in ad valorem equivalent). According to trade sources, Florida accounts for 90 percent of US organic citrus juice consumption. Adding 10 percent to allow for imports, total US consumption can be estimated to range between 27 000 and 33 000 tonnes in single strength juice equivalent (SSE).

Most organic orange juice is found in NFC form, which is preferred by consumers in spite of its higher price. Organic juice is associated with health and for this reason most consumers do not want a juice that has been reconstituted from concentrate. Several firms market organic orange juice, including McLean Marketing, Organic Valley, Horizon Organic, Odwalla, Indian River Organics, Lakewood Organic Juices, Organic Ingredients and Cascadian Farms. Organic OJ can be found in conventional supermarkets and natural food stores.

The United States exports organic citrus juice to Canada, the EU and Japan. Recently, however, it has lost ground to Brazil in the latter two markets. No data are available on exported volumes.

Consumption of citrus juices in the United States is projected to be close to 12 million tonnes SSE in 2010 (FAO 2003). Assuming that by then organic juices will have reached the current average market share of organic foods (from 2 to 3 percent), total demand for organic citrus juice in 2010 could range between 240 000 and 360 000 tonnes. Although these figures are ten times higher than current consumption, they represent an average consumption of 1 litre per person per year only.

5.3 The Japanese market

Japan is the third largest market for citrus juices after the US and the EU. Japan consumed over 635 000 tonnes of citrus juices in 2000, 70 percent of which was imported. However, consumption per capita is relatively low (2 kg per year). For the reasons explained in section II.3 there is a lack of data on Japanese consumption of organic citrus juices. Japan imports organic FCOJ from Brazil and organic NFC juice from the US.

There are good prospects for an increase in organic orange juice consumption, as Japanese consumers have high incomes and are concerned about the healthiness of their foods. Also, organic juices should benefit from the expected increase in demand for both organic beverages and citrus juice overall. In addition, juices do not face the same phytosanitary barriers to imports as fresh produce does, in particular they do not have to be fumigated, which makes their export much simpler and does not put at risk their organic label. However, potential exporters should be aware that the tariff on citrus juice imports is 25 percent ad valorem.

5.4 Other markets

Although their markets are smaller, Australia, New Zealand, Canada, Switzerland and Norway have high individual consumption of organic foods and therefore provide opportunities for organic orange juice exports. Canada has a well-developed NFC juice market and imports organic orange juice from the US. New Zealand imports organic FCOJ from Brazil. In addition, sales of organic products have recently taken off in some emerging economies (Hungary, Poland, the Czech Republic, Slovenia, the Republic of Korea and Singapore). Although these markets are still very small, they offer good potential.