Kerry: Reducing reliance on citrus commodities as orange crisis continues to bite

12 Aug 2024 --- The orange crisis continues unabated as climate-driven extreme weather, citrus greening disease and political instability in key orange-growing regions have severely disrupted supply chains and driven up prices to unprecedented levels.

In an exclusive interview with Food Ingredients First, Kerry’s Erlon Pereira dives into the perfect storm of challenges facing the orange (and juice) industries, as well as difficulties in the citrus flavors sector.

Supply chain constraints due to heatwaves, drought and citrus greening disease — an incurable bacterial infection that causes bitter, stunted fruit and kills trees within a few years — have led to soaring prices, up by more than 20% in a year.

This price increase continues to create significant challenges for companies in the F&B industry while harvests are at a low.

For instance, Brazil’s recent extreme heat waves have led to one of the worst harvests in over three decades, with production expected to decline by 24% in the 2024-2025 season.

Meanwhile, the surge in prices is forcing manufacturers and consumers to adapt, considering alternative fruit juices like pear, apple and grape to mitigate costs and supply chain disruptions.

Kerry’s citrus alternatives

With the natural orange flavor market expected to reach US$72.72 billion by 2031, finding cost-effective alternatives is critical, and Kerry can offer vital insight into what must be done to sustainably grow and prosper while maintaining product integrity and consumer trust and satisfaction.

“Beverage manufacturers are under pressure. Not only are they experiencing drastic price increases of 200-300% in concentrated orange juice, but the future security of supply is also in jeopardy,” Pereira says.

Pereira says beverage manufacturers are experiencing drastic price increases of 200-300% in concentrated orange juice.“The impact of citrus greening disease on orange crops in Florida and Brazil, combined with unpredictable weather events, is having a significant impact on future availability. Not only that, but natural citrus flavors that depend on citrus oils naturally derived from the fruit are also impacted.”

“Even if manufacturers aren’t using orange juice in their formulations, any of their orange, lemon and lime or grapefruit flavored drinks are likely to have experienced unpredictable price increases.”

Pereira explains how Kerry Group is poised to assist companies navigating these complexities with its advanced citrus portfolio.

“We’ve been working with beverage manufacturers for quite some time to help address the challenges they are facing with the citrus commodity market. Depending on the product application, whether it be a juice, soft drink or an alcoholic drink, we have a comprehensive toolkit available that our applications teams can use to help our customers reduce their reliance on citrus commodities or truly reinvent their product with innovative consumer-focused concepts.”

“Through the creative application of some of hero technologies like our citrus flavors and extracts, Tastesense portfolio and Emulgold fiber, to name a few, we can create drinks that are natural, sustainable and which have an improved nutritional profile.”

“With our citrus portfolio, our natural flavor solutions pack a punch on taste, but also deliver exceptional flavor stability up to 12 months. We have solutions that enable us to create flavors with minimal reliance on volatile citrus oils.”

“With our Tastesense tools, we build back the sweetness and mouthfeel lost in beverages with reduced juice content. We can effectively mask off-notes that beverage manufacturers experience with concentrated orange juice or sweeteners. Our Emulgold technology has proven to be particularly effective in giving juice-based beverages a rich and smooth mouthfeel.”

Kerry has “supercharged” its innovation pipeline in this space and is working with customers to test some exciting new tools that deliver on its promise of delivering sustainable nutrition.

“While beverage manufacturers need to consider how to future-proof their existing products and brands, we are also helping them consider the next-generation of juice drinks that will add value and provide growth opportunities for the challenged juice category,” Pereira says. 

What is the outlook?

The industry needs to protect the availability and quality of orange crops not yet impacted by citrus greening, says Pereira.Given the ongoing impact of citrus greening disease and unpredictable weather events in Brazil, which accounts for 70% of the world’s supply of concentrated orange juice, Kerry does not envisage a significant improvement in availability or price in 2024 or the medium term. 

“This is a problem that is not going away. We’ll be taking a multi-disciplinary approach to keep on top of it; from our sourcing team keeping in touch with the commodity market trends to our RDA teams exploring new technology solutions to our sales teams keeping in touch with our customers and their needs to our marketing teams understanding the consumer insights that will drive the future of the juice and wider beverage category.”

“Our primary focus right now is engaging with the beverage manufacturers who may be impacted most by this crisis and supporting them with innovative product concepts that will clearly address the consumer needs for affordability, improved nutrition and exciting refreshment while also addressing the beverage manufacturers’ need for supply security and cost stability.”

“The industry needs to respond to this crisis by finding ways to introduce new products and innovations in the juice category while simultaneously addressing two important needs. Firstly, to preserve and protect the availability and quality of orange crops that are not yet impacted by citrus greening disease. Secondly, to reinvigorate and add value to the juice category, which has been under pressure since the early 2000s.”

By Gaynor Selby