Juices and Nectars: Industry and Market Growth Outlook To 2015
While the global recession dominated the headlines in 2009, 2010 was a year of recovery for fruit/vegetable juices. Off-trade volume sales, affected by the global recession, in 2009 increased by only 2% vs. 2008 but in 2010 growth at 5% was back to pre-recession growth rates.
Globally, Euromonitor International projects that the fruit/vegetable juice category will maintain this strong growth trend through 2015.
It might appear that the category is back to business as usual but that is not the case. There are many changes happening, driven by health trends and an increasingly affluent world. 100% juice fuelled a dominant value share of the global fruit/vegetable juice market in 2010, but to maintain that position it is likely to need a new global strategy.
Specifically, due to its high price it depends disproportionately on developed markets where, due to maturity of the business, it has experienced little growth in the past five years. Unless manufacturers are successful in channelling new investment behind value-protection spin-offs in the high-volume developed markets, 100% juice is projected to lose its leadership position in the future. By 2015 the juice value leader is projected to be juice drinks (with up to 24% juice content).
Juice drinks value leadership driven by local drinking cultures
Although China surpassed the US as the leader in off-trade fruit/vegetable juice volume in 2008, the US maintains a strong lead in value, generating over 20% more revenue than China in 2010.
The main reason for the difference between value and volume is the preference in China for relatively low priced juice drinks (with up to 24% juice content) and in the US consumers prefer the relatively high priced, perceived to be more healthful 100% juices. However, by 2015 China is projected to also surpass the US in value.
Russia and China each have a different juice culture. China is dominated by a juice drink culture. The majority of Russia’s value growth to 2015, however, will be contributed by 100% juice.
In Russia 100% juice growth depends on the economy
Fruit/vegetable juice returned to growth in 2010 and is expected to continue to see a positive performance in the 2010-2015 period. Russians continue to be focused on health issues and a healthy diet, which limits the growth of carbonates, but gives good opportunities for fruit/vegetable juice.
Over the past five years, 100% juice has been the fastest growing fruit/vegetable juice category based on value in Russia. 100% juice has had grown almost 90% in value since 2005 and now accounts for half the value of all juice sold.
Fruit/vegetable juice consumption depends a lot on the overall economic situation in Russia. Russia has a different culture of juice consumption than other countries. Juice in Russia is not a commodity of daily demand. Many families buy juice just for the holidays. That means that in the case of dramatic changes in the economy, juice consumption can vastly decrease, as happened in 2009.
Capitalizing on the health trend and the desire for higher quality products enabled by an improving economy, Ya was introduced by PepsiCo through its Lebedyansky OAO subsidiary. Ya is pasteurised 100% not from concentrate juice that is positioned as a high-quality product, supported by the use of glass packaging. The new product attracted to the market consumers of freshly squeezed juices.
Consumers’ desire for healthier soft drinks across the world along with increasing disposable incomes in developing countries provides opportunity for fruit/vegetable juice. However, “healthy” can have different connotations in different cultures. What is perceived as healthy in one culture may not be perceived as healthy in another culture.
This may provide opportunity for manufacturers to open up new opportunities by slightly modifying existing products. For example, while a juice drink may be off-trend in one culture, it may be possible to find a new market and add a few ingredients to make it particularly attractive to a different culture. Perhaps, in the future we will see more strategic alliances among second-tier companies to take advantage of globalization opportunities.