Orange juice prices have skyrocketed recently, with prices up a whopping 134% since 2020. This increase is due to a number of reasons. Climatic adversities, market forces, and geopolitical strife have further complicated production and importation. Consumers in the UK have recently begun experiencing the squeeze. Customers are responding with prices of £3.50 to £4 for a glass of simple orange juice.
The global orange juice market has been heavily impacted by negative circumstances impacting key producing areas. Brazil, the world’s largest orange juice producer, saw its worst harvest since 1988. In some counties, two out of every three orange trees had at least one malady. Brazil’s latest orange crop recovery is on the rebound. Past impacts of bad yields still rattle the market.
In the case of the United States, Florida’s orange production has tanked to its lowest point since the Great Depression. The state’s production woes add salt to the wound, severely restricting the supply of oranges that can be processed for juice. According to industry experts, “It’s very difficult to get oranges out of Florida [because of the shortages] and it’s too expensive,” highlights Maxim McDonald, a prominent figure in the industry.
By the close of 2022, the cost of orange juice shot up to an incredible $5.30 a pound. This increase is consistent with a worldwide trend of increasing expenses. This phenomenon isn’t limited to orange juice—other kitchen staples have experienced dramatic price hikes. According to the latest figures from the Office for National Statistics, butter prices have increased by almost 19%. At the same time, chocolate and coffee prices have skyrocketed by 15%. The same inflationary trend is reflected in milk prices which are up more than 12%, affecting all dairy and other food products alike.
The geopolitical landscape has further complicated matters. To protect the domestic market, the Trump administration slapped a 10% tariff on orange juice imports from Brazil. That decision has created huge upward pressure on prices paid in the U.S. market. U.S. orange juice exports to Canada have already plummeted to a 20-year-low. This decline comes in the wake of the counter-tariffs that the Canadian government recently implemented.
Despite these challenges, global consumption of orange juice has decreased by 30% since its heyday two decades ago. That’s what U.S. consumers drink in one year, which comes out to nearly 2.5 billion gallons. In the UK, they represent just one-tenth of that total. This dramatic decline in consumption raises uncertainties on future demand and how strong of a support it will be for price stability.
The UK currently imports orange juice from many countries, including Spain, Morocco, Egypt and South Africa. Each of these nations face their own climate-related challenges and sustainability risks. With the market controlled by just a few large industrialized conglomerates, these smaller, innovative producers are squeezed out of the market, impacting both price and availability.
Giles Hurley, a key player in the industry, remarked on the current situation: “The volatility in the harvest appears to have reduced.” He noted that, “Our buying team is doing everything they can to ensure that that saving is passed on to consumers.” Even some analysts are saying retailers still haven’t passed on costs they had to swallow at the beginning of previous price jumps.
Steve McCorriston, chief economist for the Food Marketing Institute, suggested that retailers still haven’t fully passed the cost increases on at first. As always, in turn, they are now looking to claw back some of the margins they lost. This creates an additional layer of difficulty in understanding what’s happening with prices right now.
Though somewhat more difficult to quantify, shifting dynamics around consumer preferences are having a profound impact on the market. Philip Coverdale points out that “when young children are not regularly given juice from an early age, they are less likely to be regular juice drinkers in later years.” This move from consumption at home to away from home may have further, lasting effects on orange juice demand.
Producers are facing unprecedented hurdles and consumers are faced with soaring prices at the grocery store. It is too early to tell how these developments may affect the future of orange juice on the UK market. The industry’s true mettle will be determined as it continues to chart a course through an expanding ecological and financial gauntlet.