The spread of citrus greening disease has significantly impacted orange prices and Tropicana’s profits.
- Underlying profits for Naked Juice are expected to fall from a prior forecast, illustrating financial strain.
- Orange crops in Florida have been heavily affected, raising production costs for Tropicana due to scarcity of healthy fruit.
- Orange prices have escalated to unprecedented levels, exceeding $6,500 per tonne, impacting sourcing strategies.
- Brazil has become a crucial supplier due to better disease management, altering Tropicana’s sourcing dynamics.
The citrus greening disease, affecting the colour and taste of oranges, has led to steep price increases and significant profit challenges for Tropicana. The disease has ravaged orange crops in Florida, a primary sourcing region for Tropicana, thus exacerbating production costs.
Naked Juice has communicated to its lenders a reduction in their forecasted profits, expecting approximately $322m (£241m) this year. This projection is significantly lower than the earlier estimate of $375m (£279.8m).
The surge in orange prices, reported to exceed $6,500 (£4,800) per tonne, poses substantial challenges for juice producers. To mitigate these challenges, Tropicana has strategised diversifying its sources.
Florida’s orange supply issues have necessitated a shift to Brazilian oranges, which now comprise 75% of Tropicana’s supply. This shift is attributed to Brazil’s more effective technology application, allowing it to keep the disease’s spread relatively contained.
Nick Canney, CEO of a rival juice and smoothie brand, highlighted the broader impact of adverse conditions like drought and disease on orange pricing. He emphasised the need to balance affordability without engaging in profiteering. “Over time, it will definitely move prices forward again,” he remarked, illustrating the extensive implications for the industry.
The disruption caused by citrus greening disease and subsequent price increases have forced significant strategic adjustments within the juice industry.
