China beckons as next big market for orange juice

Bloomberg

China could be the panacea for an orange-juice industry grappling with sliding sales in developed markets, at least for low-cost producers not caught up in trade wars.
Citrosuco fits that description. The Brazilian company produces twice as much as the entire Florida industry, at about a third of the cost. For decades, it has sold the commodity to well-known brands in Europe and the US including PepsiCo Inc’s Tropicana. But in China, local retailing and bottling startups have emerged as the best way to target a new generation of consumers.
Chinese demand for fresh juice first surfaced this year, and Citrosuco hosted a group of Chinese influencers from industries including food and beverage and fashion to tout its health and sustainability credentials.
“We’ve been trying to sell orange juice to China for a decade, without success,” Chief Executive Officer Mario Bavaresco Junior said in an interview from the company’s Matao plant, the world’s largest. “Now, we’re trying to do that in a different way — not offering the commodity itself anymore but as a product with origin tracked.”
Given the vast majority of US orange juice is consumed in North America, the commodity hasn’t been caught up in Washington’s tariff spat with Beijing to anywhere near the same extent as soybeans or cotton. But the trade war has accelerated the process of China opening up to new markets and products, which is of particular benefit to non-US producers.
For now, Citrosuco’s Chinese sales are only 10% of what it ships to top customer Europe. But Bavaresco said the company, owned by Brazil’s Fischer and Votorantim groups, is just scratching the surface. “It’s an unimaginable market in terms of size. We just need to figure out how to catch it.”
Orange-juice sales in markets such as the US and Europe have been slowing as health-conscious consumers avoid sugary drinks and experiment with new beverage offerings.
At the same time, Florida’s orange industry has battled greening disease, which has shrunk growing areas and pushed up costs.
Citrosuco, which grows half of the fruit it uses to make juice, says it produces oranges for about $4 a box, compared with Florida’s average cash cost of $14. In addition, ICE Futures prices for orange juice have slumped more than 30% in the past year to the lowest levels in a decade.