Juice toasts a bright future

Consumers’ increasing preference for fresh juice is good news for the industry, which has struggled with poor crops and wild weather.

By Jason Baker of IBISWorld

The $927.1 million fruit juice drink manufacturing industry has been growing moderately for the past five years and has struggled with high prices for juice, a result of poor seasons and wild weather.

But the future is looking brighter.

The worst orange crop in 20 years in 2003-04 forced manufacturers to look overseas for fruit for the first time. But as consumer taste for healthy drinks has grown, the industry has expanded. The retail price of fresh chilled juice increased during 2006-07 in response to rising fruit price as a result of crop damage from Cyclone Larry in Queensland.

Fruit prices returned to normal levels in the 2007 March quarter, reducing pressure on the price of fresh juice this year. IBISWorld estimates an average annual rate of 3.2% for the past five years, but steady revenue growth is anticipated for this year.

Export levels have remained low over the past five years, while the value of fruit juice imports is expected to grow substantially over the current period. Industry employment and establishment numbers have risen roughly in line with industry revenue.

IBISWorld forecasts that industry will grow at an average rate of 4.5% per annum over the next five years to reach $1.2 billion in 2012-13. It is anticipated that the industry will remain in a mature phase of its life cycle.

Despite strong growth from minor segments such as chilled juice, further player concentration and brand rationalisation is expected. There is likely to be increased competition from substitutes, particularly soft drinks. Although per capita consumption of soft drinks is stagnant, a growing array of sugar-free beverages will complete closely with juice in the increasingly health-conscious market.

Value-added growth may be curbed by the rapidly increasing price of frozen concentrated orange juice, which reached a 15-year high in 2006 on the New York Board of Trade. This is due to concerns about an impending hurricane season affecting crops in Florida.

This is likely to affect costs for ambient juices using imported orange juice, even though it is mostly sourced from Brazil. The industry’s workforce is expected to increase at modest rates over the outlook period.

The market players

San Miguel Foods Australia Holdings Pty Ltd

Brands: Sunburst National Foods Juice Ltd, Sunjuice, Suncoast, Berri Plus, Squeeze, Mr Juicy, Mildura, Quelch, Daily Juice, Valencio, Prima, Berri Harmonics, Fruitful Superjuice, Berri,

Market share: 55%

Golden Circle Limited

Brands: Golden Circle, Original Juice Company, Excello, Adam’s Ale.

Market Share: 18.00%

Coca-Cola Amatil Limited

Brands: Goulburn Valley, Frutopia.

Market Share: 4.00%

Private Labels

Coles Myer (under the brands of Coles, Bi-Lo, Farmland), Woolworth’s (Home Brand) and IGA (Black & Gold) sell their own juice brands. Private label juices account for a growing proportion of industry revenue (around 10%). The big manufacturers supply the retailers with the juice, but keep their arrangements secret to protect their brands.

P&N Beverages

Brekky Juice Pop Tops, Smart Juice and FUZE.

Market share: 7–9%

Cadbury Schweppes Australia Limited

In 2001, Cadbury Schweppes acquired the Spring Valley brand name from Bonlac Foods Ltd

Market share: 1–2%

Nudie

Nudie Crushie is sold in about 5000 outlets in Australia.

Market share: 1–2%

Baco’s Apple Tree (Est. market share: > 1%)

The company entered the market with its range of cloudy apple juice in 2004, and is the fastest-growing premium fruit juice in Australia. The company focuses on distributing to the cafe segment, in which image is an important element of marketing. The Epstein family runs the business, who were also originally behind Spring Valley juice (currently marketed by Cadbury Schweppes).

Wild About Fruit (Est. market share: > 1%)

Formerly known as Ashwan Orchards, Wild About Fruit produces a range of apple-based juices, which are free of preservatives and added sugar. The company has released a range of exotic juice combinations such as apple-carrot-beetroot-lemon under the Wild Child brand.

Boost Juice Australia

Although Boost Juice is a chain of fresh juice bars, established in 2000, it is a close competitor with juice manufacturers. In 2004, Boost Juice acquired Viva Juice. The acquisition added 24 stores to the company’s network. Boost Juice has recently entered into the juice drink manufacturing industry by launching one litre and 350ml bottled products into Woolworths and Coles.