August, 1998
Is the juice market ready for a rebound?
With apple juice prices at historical lows, there should be only one way to go - up.
The Chinese apple juice concentrate has been getting cheaper all year. In June it
was selling in the U.S. for $3.50 a gallon, the lowest in the past eight years. Before
the Chinese entered the market two years ago the lowest juice concentrate had ever
sold in the U.S. on average for a year was $5.20 in 1994 when there was a record U.S.
apple crop, according to The Food Institute.
Average price in the last four years have been: $10 in 1995; $9.43 in 1996; $6.44
in 1997, the first year China sold juice to the U.S., and $4.80 in the first six
months of 1998.
A historical analysis of the cyclical nature of the concentrate market would indicate
that current market conditions are favorable for a rebound in the apple-juice concentrate
market, said Jim Cranney, U.S. Apple's vice president for industry services
"The typical story would be that after a period of low concentrate prices, retailers
would pass price savings on to consumers," he said. "Consumers would respond to lower
prices by demanding more single-strength juice and the market would rebound in response to greater demand for concentrate. Market conditions for this scenario are perfect."
But, before the industry becomes to enamored by that prospect, Cranney suggests that
we ask ourselves the pertinent question. Are we really facing a market that represents
the historical status quo? He suggests that we are not.
"The debut of China as a credible supplier of concentrate has changed the supply equation,
and unrelenting consolidation in the retail industry is an issue worthy of consideration,
since it could influence the price savings that are passed on to consumers," he said. "In addition to those factors, there is always the issue of the impact
of extreme weather conditions. Before we can count on Southern Hemisphere concentrate
supplies, the crop must make it through a gauntlet of unsavory weather conditions.
These factors make it particularly difficult to anticipate future market developments."
The Great Lakes Fruit
Growers News