Orange juice sector squeezed by shortages and price hikes as extreme weather and inflation bite

20 Feb 2024 --- Orange juice prices are currently at “historic heights,” according to suppliers, and with no clear end in sight for the situation to improve, supply shortages are becoming more significant, leaving companies under pressure to deliver alternative solutions.

Food Ingredients First investigates orange prices and citrus supply chains and the knock-on effect this will have on the wider industry by speaking with experts at IFF, Givaudan and Symrise.

Karel Coosemans, global innovation program director, Re-Master Citrus at IFF, says: “Orange juice costs have skyrocketed and it’s a huge concern across the industry, affecting both producers and consumers.”

With main processors sold out, there is a supply shortage that will remain firm for some time, he flags. “There’s certainly no indication that the situation will improve before the arrival of the 2024/2025 crop.”

Demand and prices “on the up”
According to Dawn Streich, global product manager for Citrus, Givaudan Taste & Wellbeing, demand for orange products in the market “remains strong.”

HLB (Huánglóngbìng), also known as Citrus Greening disease, affects citrus supply chains and prices.“The 2024/2025 crop is predicted down in Brazil for the fourth year in a row while prices are in historically high ranges,” she explains.

Meanwhile, Richard Hartfall, citrus platform director at Symrise, argues that “prices and availability of citrus are fluctuating.”

He says that crop shortages, reduced fruit quality and climate-related challenges are all being impacted by events such as hurricanes causing damage to citrus cultivation areas like Florida, resulting in less global availability of citrus and increasing prices.

“These environmental challenges are impacting global citrus/orange crop yields and fruit quality, increasing prices and supply challenges.”

Weathering away
Coosemans at IFF tells us that the main cause of this decline in crops and rise in prices is brought about by a combination of several factors.

“It’s a perfect storm; extremes of climate — hurricanes and freezes — had a huge impact on Florida in the 2022/2023 season and they continue to exert lasting effects. Climate change has also caused droughts in Mexico, Brazil and Spain.”

On top of that, he explains that Huanglongbing (HLB), also known as greening disease, has been a huge driver for crop reductions in Florida, Mexico and Brazil.

“It [HLB] continues to increase at an alarming rate with no real solution in sight. At the same time, producers struggling to fulfill their 2023 contracts have been hit by economic factors, such as inflation in South America and competition for resources in the US citrus belt.”

Givaudan’s Streich stands by the opinion that challenges in the citrus space are “not new.”

Disease and weather events have always presented challenges in citrus production, she outlines. “Our citrus experts work daily on innovation and supply to navigate these challenges while working closely with our customers on customized solutions to manage volatility in price and supply.”

Offering alternative solutions
Coosemans believes that manufacturers are adopting alternative strategies in light of the current situation.

“Many are looking to reduce the amount of juice in their products, which can obviously create taste challenges. We’re seeing increasing interest in our flavor technology solutions, which can allow for a reduction in juice levels while maintaining a rich taste.”

Meanwhile, IFF is helping customers replace some of the Frozen Concentrated Orange Juice (FCOJ) in their products with other fruit juices that taste similar to orange, like mandarin, or with juices with a more neutral taste that can add flavor.

“For example, if you had 20% orange juice in a recipe, we can get that down to 10% by adding in 10% white grape juice and adding flavors to keep your juice percentage the same and your product just as delicious.”

NFC vs. FCOJ
Sjors Peters, global innovation marketing leader for beverages at IFF, believes that consumer perceptions around taste, naturality and health have continued to drive demand for Not From Concentrate (NFC) over FCOJ.

“The preference for NFC juice over FCOJ has also been accentuated by the lack of carryover from previous crops. One effect of higher NFC production has been a drastic reduction in the availability of orange essence oil,” he says.

Coosemans adds that Europe traditionally supplemented their orange juice needs with concentrated juice from Brazil and Florida years ago.

“A shortage of Florida juice availability for the US producers increased the demand for imported Not From Concentrate (NFC) with the US juice brands. Starting last summer, Brazil is re-routing part of their crop to manufacture more NFC instead of the lower-valued juice concentrate for the US market, creating shortages in the concentrate supply chain for Europe. As a result, prices on the US market (spot and NFC) are much higher than those on the EU market (characterized by contractual agreements),” he explains.

Interestingly, Streich at Givaudan highlights that NFC juice “may be preferred by a segment of consumers due to the perception of less processing and fresher flavor.”

She adds that the company’s customers and consumers are becoming increasingly aware of the challenges with citrus due to the attention it has received in the media. “We want to deliver the promise of great citrus taste well into the future.”

Ripe opportunities
Meanwhile, IFF’s Peters notes that although “this is a tough market, there are also significant opportunities.”

“This isn’t just a story about a crisis, but also about innovation and resilience,” he highlights.

“It is a situation that’s required many of our customers to make full use of the range of our capabilities — from conducting consumer sensory panels to running product trials in their manufacturing facilities.”

Citrus flavors are popular across several categories, including beverages and confectionery.“We can help manufacturers adjust their formulations based on their goals,” he continues. “With our Flavorfit taste modulation toolbox, we can improve the perception of sweetness and ensure the same mouthfeel.”

IFF’s texturants can also improve consistency without adding more juice and IFF Natural Colors provide a similar visual experience. “For customers who need to keep a 100% juice content claim, we can accommodate that and help them navigate the regulatory implications,” states Peters.

Occasionally, the solution is to use juice or concentrate from oranges from other parts of the world, he underscores. “They may not be as sweet as what was previously used, but we can overcome that with our taste modulators, which improve sweet taste, mask acidity and bitterness and improve the overall flavor.”

Hartfall explains that Symrise is facing continuous demand for citrus taste solutions across all product applications.

“We aim to support our customers in navigating the challenges of price and supply fluctuations in the citrus market while simultaneously providing sustainable and high-quality solutions.”

In line with this, Symrise is expanding its citrus taste offerings with improved sustainable and innovative solutions. “Incorporating novel citrus taste ingredients contributes to an increased security of supply that also helps balance price fluctuations,” says Hartfall.

“We are leveraging several technologies, industrial and university partnerships, as well as sensory-guided analysis to create more sustainable citrus taste solutions and contribute to the authentic aroma profile of the final product.”

Hartfall believes that key benefits of Symrise’s approach are a “significantly broader product palette for the industry in addition to traditional citrus ingredients with secure availability” while also “providing a cushion against the volatile fluctuations inherent in crops.”

He concludes that these “solutions can offer a longer-term price stability, cost-competitive alternatives and improved reliability in terms of quality and availability.”

By Elizabeth Green

To contact our editorial team please email us at editorial@cnsmedia.com