Why has orange juice become so expensive in recent years?

While market watchers agonise over rising oil prices amid escalating conflict in the Middle East, the soaring price of another commodity beginning with O has largely escaped the attention of headlines.

But shoppers are unlikely to have missed the astronomical rise in the cost of orange juice in recent years – and experts warn prices at the checkout could continue to climb.

Orange juice futures in New York stood at $4.69 per pound as of 4 October, having increased by about 45 per cent this year and more than quadrupled since 2022.

The average volume price of orange juice at major UK supermarkets jumped by 8.4 per cent in the year ending 7 September, according to market research firm Circana.

Alex Lawrence, its senior strategic insight director, notes that price growth was slowing.

But Britons are drinking less orange juice than they had previously, with total volumes down 5.2 per cent on last year – suggesting price hikes have taken their toll on demand. 

And UK shoppers are not alone; research from Rabobank published in April found consumption fell across all prominent markets over the prior year by 15 to 25 per cent.

Premium brands were particularly impacted, with volumes down by around 8 per cent in the US in 2023.

Jump: Orange juice futures in New York stood at $4.69 per pound as of 4 October, having increased by about 45 per cent this year and more than quadrupled since 2022

Rabobank forecasts demand shrinking by another 20 per cent this year, which ‘should limit the possibility of another significant rise in prices’.

However, this is dependent on harvests in Brazil – the world’s biggest orange juice grower and exporter – hitting around 260 million boxes ‘with reasonable juice yields’ for the 2024/25 season.

If this figure is achieved, this would still be around 15 per cent down on the 305 million boxes from the prior year’s harvest.

Yields in Brazil, where three-quarters of total orange juice exports originate, have been hit by a double whammy of severe drought and crop diseases.

The country is undergoing a second year of extreme drought, with the Amazon basin at all-time low levels, devastating the so-called ‘citrus belt’ – a region covering São Paulo and the Triângulo Mineiro regions.

Extreme heat stress puts orange groves at greater risk of citrus greening, a bacterial disease where psyllid insects infect and eventually kill citrus trees by turning oranges bitter and sour.

Fundecitrus, a trade association for citrus growers and juicemakers, has estimated that 38 per cent of orange trees showed symptoms of the disease in 2023, a jump of more than half on the previous year.

Disease has similarly affected output in Florida, sometimes nicknamed the ‘Orange State,’ where production has plummeted by 92 per cent in the past two decades.

Environmental threat: Extreme heat stress puts orange groves at greater risk of citrus greening, a bacterial disease where psyllid insects infect and eventually kill citrus trees

However, rather than heat, greening has been exacerbated by severe cyclones, including Hurricanes Charley, Ian and Michael.

Many growers have responded by drastically reducing acreage or leaving the orange business altogether, with many selling their land to real estate developers eager to cash in on the state’s growing population.

While other countries like Mexico and South Africa are increasing orange juice production, it is not enough to compensate for the long-term decline in Florida and weaker harvests in Brazil.

Worldwide orange juice output is anticipated to be 3 per cent lower at 1.5 million tons in 2023/24, according to the US Department of Agriculture (USDA).

To avoid shortages, orange juice makers traditionally freeze their stock, which can help preserve their product for up to two years.

However, three consecutive years of supply-demand imbalance have seriously depleted stocks, leading to higher consumer prices.

The USDA predicted that global frozen concentrated orange juice inventories will close the 23/24 harvest at only 150,000 metric tonnes.

This would be a 25 per cent drop on the previous year and nearly two-thirds below the 10-year average of 400,000 metric tonnes.

Although Rabobank’s Padilla forecasts a more balanced market in the short term because of subdued demand, he warned this was reliant on the quantity of oranges produced in Brazil.

He wrote: ‘If harvest expectations for Brazil turn out to be worse than expected and below our estimated range…as a result of weather instability and greening, prices would need to climb again to find a new equilibrium.’

Starting production in other regions could help alleviate shortages, yet orange trees take anywhere from three to seven years to bear fruit, depending on whether they are grafted or seed-grown.

Many farmers are instead harvesting much earlier during the season, but this can negatively impact crop supplies and quality.

If you have noticed changes in how your favourite orange juice drink tastes, it might be due to changes in its Brix levels – a liquid’s sugar concentration, which influences sweetness and nutrient content.

Floridian citrus growers are currently lobbying the US Food and Drug Administration (FDA) to lower the required Brix level of not-from-concentrate pasteurised orange juice by 0.5 percentage points to 10 per cent.

Rising prices: Orange juice is set to cost more this year due to the shortage of oranges – which could also mean mandarins are used as an alternative

The FDA is investigating whether this change would dramatically affect American consumers’ appetite for orange juice.

Drinkers can react quite badly if their favourite brand changes the composition and taste of their products whilst simultaneously hiking prices.

Circana said the price of an average supermarket juice bottle rose by 10.8 per cent in the year to May, something on which grocers are reluctant to comment.

Sainsbury’s, Tesco, Morrisons, and Marks & Spencer did not respond to questions about their orange juice pricing. 

Meanwhile, a Waitrose spokesperson said: ‘All retailers have seen external factors impacting the price of orange juice, but we’re working with our suppliers to keep prices low.’

Whether the big British supermarkets have increased prices or not, Circana figures showed their orange juice volume sales were down 5.8 per cent in the 52 weeks ending 7 September.

Food and drink costs in the UK – and elsewhere – have surged heavily in the last three years, partly due to energy prices skyrocketing following the loosening of Covid-related restrictions and Russia’s invasion of Ukraine.

However, UK food and drink inflation has normalised, hitting 2 per cent in the second quarter of 2024, compared to 19.1 per cent in March last year.

Orange juice futures have also shrunk from the record $5.89 per pound reached in early September.

‘Commodity prices looked to have peaked only in the last month and remain very high compared to previous levels,’ says Circana’s Alex Lawrence.

He anticipates price inflation will continue slowing over the coming year as juice manufacturers prioritise boosting volume sales.

At the same time, Rabobank predicts global orange juice demand will further shrink, falling to 1.1 million metric tonnes in 2024/25.

Not only are higher prices discouraging purchases, but the bank says trade is being hurt by concerns over high sugar content, competition in the drinks sector, and ‘lack of engagement’ from younger shoppers.

That might keep a lid on price rises, but consumers will need to see improved crop yields and action to combat greening if prices are to come down to more affordable levels.

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