Naked Juice, the owner of Tropicana, has reported financial strains due to increased orange prices, driven by the citrus greening disease.
- The company’s projected profits have decreased from an expected $375m to $322m for the current year.
- Florida’s orange crop has been significantly affected by the disease, causing a surge in production costs for Naked Juice.
- To mitigate risks, Naked Juice now sources 75% of its oranges from Brazil, benefiting from advanced disease management.
- Market leaders caution that the cost of orange-related products is likely to increase, impacting consumers.
Naked Juice, the corporate owner of well-known juice brand Tropicana, has revealed that its financial performance is under significant pressure, as a result of soaring orange prices. This surge is primarily attributed to the pervasive impact of the citrus greening disease, which has severely affected the quality and supply of oranges. As a result, Naked Juice now anticipates an underlying profit of $322m (£241m) for the year, a substantial decline from its prior forecast of $375m (£279.8m).
The citrus greening disease has led to devastating consequences for orange crops, especially in Florida, where production challenges have escalated due to the disease altering the colour and taste of the fruit. This has resulted in a notable increase in the cost of sourcing healthy fruit, with orange prices more than doubling to $6,500 (£4,800) per tonne.
In response to these challenges, Naked Juice has adjusted its supply chain strategy by increasing its dependency on Brazilian oranges. Currently, the company utilises a combination strategy sourcing 75% of its orange supply from Brazil, where technological advancements in disease control are more effective, thereby reducing exposure to price volatility.
Industry expert, Gerald Phelan from S&P Global Ratings, highlighted the adaptive measures taken by Naked Juice in geographically diversifying its orange sourcing. By leveraging Brazil’s comparatively better disease management, the company aims to stabilise its supply chain amidst the ongoing agricultural crisis.
Nick Canney, CEO of a competing brand, Innocent, has also commented on similar challenges facing the orange industry, noting that the price trajectory for juice and related products continues upward. He emphasised the necessity of maintaining affordability for consumers while managing the inevitable forward movement of prices owing to the current market and environmental conditions.
As the juice industry grapples with agricultural challenges, increased production costs appear inevitable, promising further impacts on consumer pricing.
