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The Honolulu Advertiser
Posted on: Saturday, October 14, 2006

Orange squeeze to raise juice prices

By Travis Reed
Associated Press

Tropicana and other juicers that get their fruit from Florida face a profit squeeze as the state's production shrivels. The government predicts this year will be the worst orange harvest since 1990.

PHIL COALE | Associated Press

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ORLANDO, Fla. — Orange juice prices, already at historic highs, are expected to climb further as production in Florida's hurricane-ravaged groves bottoms out.

But it's not just consumers who will be affected: Juice makers like PepsiCo Inc.'s Tropicana Products and The Coca-Cola Co.'s Minute Maid, which get the vast majority of their juice from Florida, are facing a profit squeeze from rising domestic prices and imports from Brazil that come with margin-killing tariffs.

The U.S. Department of Agriculture this week predicted Florida would produce 135 million 90-pound boxes of oranges, down about 40 percent from production levels before the 2004 hurricane season. It would be the third year in a row of subpar production, and the worst orange harvest since freezes crippled crops in 1990.

"I can tell you that we'll monitor this, and decide what course we need to take as we analyze the information," Minute Maid spokesman Ray Crockett said, declining to answer specific questions about possible price hikes.

Both Minute Maid and Tropicana had just announced price increases to retailers even before the USDA announcement. Tropicana instituted a 10 percent bump, citing "continued pressures on supply and cost" that are strengthening. The company said it expected prices to continue to rise as the Florida harvest falls.

Coca-Cola last month announced a 3 percent to 6 percent hike in wholesale list prices for Simply Orange and Minute Maid orange juice, effective this month.

A 9 percent jump in average retail prices this year to $4.89 a gallon was met with a 6 percent drop in volume, per an ACNielsen report for four weeks ended Sept. 2