Lake Wales, Florida, Mar. 15 - It competes against two beverage giants for market share, but Florida's Natural carries its own weight against these conglomerates and can make a claim they can't.
A carton of Florida's Natural, a grower cooperative, will always contain juice pressed from only Florida oranges.
"We really only have one business, and that's making orange juice. Our owners only have one business and that's growing oranges," said Walt Lincer, vice president of sales and marketing for Lake Wales-based Florida's Natural.
While PepsiCo (PEP) owns Tropicana Products and Coca-Cola Co. (KO) owns Minute-Maid, the juice that is trucked out of Lake Wales' massive 540-acre processing plant every day comes from the groves of 1,000 producers, who in total own 50,000 acres. At full production, the plant can extract juice from 10 million pounds of oranges every 24 hours.
Florida's Natural holds about a 17% market share of the not-from-concentrate, or NFC, retail market. Out of the total chilled juice market that includes NFC as well as frozen concentrate, its share is about 10%, according to data from research firm A.C. Nielsen.
Other juice companies use Florida oranges, but they also import juice from countries such as Brazil, the world's largest orange grower, to use in their products. Juice is also imported from Mexico and other countries, but the lion's share comes from Brazil.
"We only use Florida, which I think makes us unique because Florida oranges are the best and it gives us a point of difference with consumers," said Lincer.
In last year's 2006-07 growing season, total U.S. orange juice imports reached 79.5 million gallons. So far in the current 2007-08 crop year, however, imports have jumped to 117.8 million gallons, for a 48.2% increase, according to data from the Florida Department of Citrus.
Imports of NFC juice in 2007-08 are up a staggering 141.5$ from last year, the FDOC said.
So while the Florida crop has rebounded to an estimated 167 million boxes in the current 2007-08 crop year, from 17-year-low production of 129 million boxes, orange juice imports have actually risen.
Some growers speculate the increased exports may be an economic play on the part of some of these companies in an effort to possibly drive down Florida orange prices and make it cheaper to process oranges.
"We're a co-op of growers and whatever we sell, less-cost, goes back to all the growers, and that's our motivation. A corporation, on the other hand, would certainly be motivated to reduce ingredient costs," said Dave Crumbly, vice president of agricultural services at Florida's Natural. Crumbly is also the smiling grower seen in commercials carrying a crate of oranges and handing a carton of orange juice in his gloved hand to a woman shopping for groceries - with the slogan, "It's as close to the grove as you can get."
However, it is much more efficient to import frozen concentrate orange juice, or FCOJ, since it is concentrated and water is added later. It makes less sense to import NFC since a large percentage of the product is water.
"You're shipping, in essence, a bunch of water," said Lincer.
While Florida's Natural admits there is a need to import Brazilian product, they would prefer to see more FCOJ imported. Fewer NFC imports also benefit growers since more of their oranges would be crushed to make the product.
Florida's Natural began in 1933 and this year it is observing its 75th anniversary. They have seen many changes in the industry. The killing freezes in the 1980s took production down to a paltry 110 million boxes in 1989-90. The industry recovered and by the late 1990s the Sunshine State had moved the bulk of its production to central and southern Florida and was back to producing well over 200 million boxes of oranges a year. But 2004 wreaked havoc on the Florida crop.
Hurricanes Slash Production, Company Adjusts
"In 2004, we were looking as an industry at the largest crop in the history of the state until Hurricane Charley. So you can imagine the marketing plans prior to Hurricane Charley were based on how could you sell more with probably a little less emphasis on what the return was going to be," Lincer said.
Additional hurricanes in 2004 and 2005, along with diseases such as the bacterial citrus canker and citrus greening diseases, severely cut production. The Florida real estate boom also caused many growers to sell their land, and millions of bearing trees were lost.
"So we went from looking at 240-plus (million 90-pound boxes) to 129 in what amounted to a relatively short period of time - a couple of years," he said.
Since the crop was dramatically reduced, Florida's Natural downsized by closing two plants and focused intensely on its brand.
Now that the crop has rebounded to 167 million boxes, the company feels it is well-positioned to meet the needs of the marketplace. While transportation costs are rising dramatically as crude oil hit $111 dollars a barrel last week and costs of fertilizer, sprays and other inputs are rising, farmers are receiving about $1.40 per pound solid for their oranges, which is a fair price and one in which they can be profitable, said Lincer and Crumbly, who are also producers.
"The land values are not what they were a year ago, and the grower is making a little bit of money now...so he's not in a rush to sell the property or get out of the business," said Crumbly.
Though the U.S. economy is effectively in a recession, the need for food around the world and the desire for foods, even ones considered a luxury, are expected to support future orange juice sales.
"We think we'll be affected by it. But with incomes going up in places like India and China, has there ever been a better time to be a farmer? Because the world is short of food and we export our brand to something like 40 countries," said Lincer.