World Orange Juice Consumption Forecast: Balancing Supply and Demand

Transcription

1 World Orange Juice Consumption Forecast: Balancing Supply and Demand Robert Norberg Dep. Exec. Dir. of Research & Operations FLORIDA DEPARTMENT OF CITRUS Bartow, FL fdocgrower.com The International Citrus and Beverage Conference 51st Annual Program Clearwater, FL September 2011

2 Source: CSIRO Agriculture Output Must Grow 70% to Meet World Demand, UN Says fdocgrower.com Source: Wired Magazine, Issue 16.11

3 Introduction The world OJ situation has changed dramatically in recent years due to supplyside disruptions and demand-side influences. However, the world OJ situation can still provide significant opportunities for orange producers, even though many challenges remain. 3

4 HISTORICAL AND CURRENT WORLD ORANGE-JUICE SITUATION 4

5 World OJ Production, by Country Brazil US EU-27 Mexico South Africa China Australia Turkey South Korea Israel Morocco Belize Costa Rica , % FL & BRZ , ,667 1, ,511 1, , % FL & BRZ ,200 1,600 2,000 2,400 2,800 3,200 3,600 Million SSE Gallons 5

6 World OJ Consumption, by Country EU-27 US Canada Japan China Russia Australia Brazil South Korea South Africa Israel Turkey Mexico Morocco India Ukraine ,191 1,154 79% US & EUR ,235 1,399 85% US & EUR ,201 1, , ,163 87% US & EUR ,200 1,600 2,000 2,400 2,800 3,200 3,600 Million SSE Gallons 6

7 DRIVERS OF FUTURE WORLD ORANGE-JUICE SITUATION 7

8 Factors that Influence Global Demand for OJ Economic Stability and Recovery New Markets and Population Growth Influencing Consumer Attitudes with Marketing Messages Availability and Pricing 8

9 Global Economic Stability and Recovery 9

10 Economic Recovery Emerging Economies: Countries with growing global economic interactions and responsibilities Source: Wikipedia. 10

11 Economic Recovery Developing Economies: Increased industrialization and information access for citizens Source: Wikipedia. 11

12 Terms Used to Describe Blocks of Developing Countries BRIC: Brazil, Russia, India and China BRICET: BRIC + Eastern Europe and Turkey BRICS: BRIC + South Africa BRICM: BRIC + Mexico BRICK: BRIC + South Korea Next Eleven: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa 12

13 Global Economic Growth Forecasts 13 Source: International Monetary Fund.

14 Global Economic Recovery Most economists agree a recovery will occur, but at different rates by country Source: United Nations. 14

15 New Markets and Population Growth 15

16 9,500,000,000 World Population Growth 2.6B more Mouths to Feed 9,000,000,000 8,500,000,000 8,000,000,000 7,500,000,000 7,000,000,000 6,500,000,000 6,000,000, Source: U.S. Census Bureau

17 India Population Maturation 2011 to 2050 Source: U.S. Census Bureau. 17

18 China Population Maturation 2011 to 2050 Source: U.S. Census Bureau. 18

19 Consumer Perceptions and Attitudes 19

20 Influencing Consumer Attitudes with Motivating Marketing Messages Functional Attributes Health and Nutrition Drivers Nature s Perfect Beverage Emotional Connections Vibrant, Sunny and Energizing Fun & Joyful, yet Safe & Comforting 20

21 Global OJ Availability 21

22 Factors that Influence Global Availability of OJ Disease pressures, and other production issues in traditional growing regions Rising cost of production and risks Potential for new production areas Global distribution and supply-chain 22

23 BALANCING WORLD ORANGE JUICE SUPPLY AND DEMAND 23

24 Demand May Surpass Supply if: U.S. and Europe recover and grow Economic recovery Consumer attitudes are influenced Emerging Markets Demand More OJ Population and Income Effects Florida and Brazil crops remain flat If this happens prices, both retail and wholesale, rise. 24

25 World OJ Demand Growth Scenario 5,000 4,500 4,000 3,500 (Million Single Strength Gallons) 3,000 2,500 ROW 2,000 1,500 1, U.S f f f f 25

26 5,000 4,500 4,000 World OJ Supply Growth Scenario (Million Single Strength Gallons) 3,500 3,000 2,500 2,000 1,500 1,000 Growth ROW Brazil Florida f f f f 26

27 2,500 Filling the OJ Growth Opportunity (Million Single Strength Gallons) 2,000 1,500 1, ROW Brazil 0 Florida f f f f 27

28 Million SSE Gallons 1,800 Satisfying U.S. OJ Growth Florida s Opportunity 1,600 1,400 1,200 1, FL Growth Imports FL Baseline f f f f 28

29 Defining the Florida Opportunity US Market Growth = Maximum Profits Florida s Opportunity is defined as: 1. Replace a Portion of Current Imports Last 12mo: 265mm ~$1.65/ssg 2. Satisfy Future Consumption Needs Demand Growth (400mm ssg over 20 years): Population growth, Income recovery, and Motivating marketing pressures on consumers Supply can expand without impacting current price levels. 29

30 Million Boxes Florida s Supply Challenge to Meet Future US Opportunities Boxes Trees Million Trees

31 Florida Planting and Loss Requirements to Meet Opportunity 0.00% % New Plantings % -3.00% -4.00% Million Trees -5.00% Loss Rate %

32 SUMMARY & CONCLUSIONS 32

33 If supply does not keep pace with demand, there will be upward pressure on commodity prices. With per capita incomes rising globally and in many poor countries expected to increase by as much as 50%, food demand will become more inelastic such that larger price swings would be necessary to affect demand. Great Food Crunch. Global food demand is colliding with strained supply. If in 2050 people in low-income countries, including China and India, consume as much meat and dairy as was consumed per person in the United States and Europe in 1966, and if feed conversion efficiencies improve at the same rate from 2009 to 2050 as they did from 1966 to 2008, then demand for feed grains will more than double between now and In a directionally changing world, with continually rising demand for agricultural products driven by population and income growth pressing on a finite land base, tradeoffs among these sustainability goals often occur. The sharp rise in food prices has sparked fears of a global food shortage. Is a slowdown in agricultural productivity growth contributing to the rise in commodity prices?

34 Summary & Conclusions After expanding for many years until the first decade of the 21 st century, the world OJ situation has leveled and declined in recent years due to a combination of factors: Availability issues caused by disease pressure and weather events Negative shifts in the attitudes and economics of consumers Advent of competitive and substitute products 34

35 Summary & Conclusions (Cont.) However, future prospects for OJ are more positive as: Disease issues are being mitigated Consumer attitudes and perceptions continue to be positive World economies recover and grow 35

36 Summary & Conclusions (Cont.) Citrus growers should take advantage of these future opportunities by expanding production capabilities. Investments into new production capacity is viable considering the current citrus economics environment Future opportunities are enhanced with relevant consumer communications 36

37 fdocgrower.com