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The high price of orange juice is dampening sales in several large juice markets, especially in the Northeast, according to the Florida Department of Citrus.
Bob Norberg, a market researcher for the department, told the Florida Citrus Commission that the rise in prices has caused sales declines in "our biggest markets," according to a report in The Lakeland (Fla.) Ledger. He attributed those sales declines to "sticker shock," and Wal-Mart's huge affect on sales trends.
Orange juice is averaging about $4.80 a gallon nationwide. "There's an amount of sticker shock that happens to consumers once you raise prices," Norberg reportedly told the Commission. "It takes a while for them to feel they're still getting value."
Citing sales trends reported by ACNielsen, Norberg said the Northeast market is to blame for an overall 3.1 million-gallon decrease (down 0.6 percent) in orange juice sales from October 2004 through May 14, 2005. In the Northeast alone, sales declined 5.9 percent since October, including a 6.8 percent year-to-year plunge during the most recent month.
Sales in the Southeast and Midwest were flat over the same period, while the Western market (west of the Mississippi) was up 4.2 percent since October, Norberg said.
Additionally, sales in the biggest Northeast markets -- including Buffalo, New York City and Boston -- showed the biggest declines. Sales declines in the top eight U.S. markets for orange juice accounted for 77 percent of the national decrease. Six of those markets are in the Northeast.
According to the Ledger, Norberg told the commission he needed more time to assess the reasons behind the Northeast decline, but suggested one factor might be the rising price of not-from-concentrate (NFC) orange juice products, which account for a larger share of total orange juice in the Northeast compared with other regions. The major brands also are not discounting NFC orange juice as much as they have previously, he said.
Nationally NFC sales have declined 3.3 percent since October while the average price has gone up 2.2 percent. The average price differential between NFC orange juice and other refrigerated OJ products has widened from $1.54 per gallon to $1.72 since May 2004 and the amount of NFC orange juice sold on sale declined five percentage points to 45 percent by May.
Norberg also suggested that Wal-Mart might also be playing a major in the regional sales trends.
Nationally, Wal-Mart's OJ sales have increased 16.9 percent since October, he said. That includes a 3.1 percent increase in NFC sales despite a 4.2 percent price increase.
But Wal-Mart has a very small presence in the Northeast, particularly when compared to the Western and Southeast markets, Norberg said. Thus, Wal-Mart's increase in sales disproportionately boosted the Western and Southeast region figures.
National OJ sales had been declining by about 3 percent annually until the 2004-05 citrus season, when the Citrus Department began working with Wal-Mart officials to enhance marketing efforts with the chain, according to the Ledger.