Juice: A Market With Great Potential

Wednesday, September 20th, 2017

Libby Costin, vice president marketing, Tetra Pak, shares more with APFI on the global juice market and how manufacturers can take advantage of this prime opportunity.

How does the global juice market look at the moment?

In 2015, the global category for juice, nectars and still drinks (JNSD) accounted for 187 billion litres and is forecast to grow by 1.6 percent compound annual growth rate (CAGR) between 2015 and 2018—driven by developing markets and niche hotspots.

100 percent juice accounts for 20.2 billion litres and is forecast to stabilise and begin to grow between 2015 and 2018. Juice has been operating in a tough global economy over the last few years, resulting in declining volumes, but this is beginning to stabilise and growth opportunities are opening up.

The US, Germany and Japan are the top juice consuming countries, consuming a combined 9.9 billion litres of juice in 2015. In the US, consumers drank more than 6.7 billion litres of 100 percent juice, just under a third of the worldwide total. Per capita this amounted to 20.9 litres per person per year, the fourth highest per capita consumption globally after Canada (30.1 litres per person per year), Norway (25.4 litres) and Germany (21.7 litres).

Orange is still the most popular flavour globally accounting for 46 percent of 100 percent juice sales, followed by apple with 17 percent, but both are seeing a decline, while the health-conscious option of mixed vegetable and mixed fruits is seeing a rise in demand.

Cranberry and mango have also seen significant growth, albeit from a much smaller base. But outstripping them all in growth is coconut water, which has exploded from a niche to a fashionable mainstream product in just a few years. In the last year, Americans drank nearly 94 million litres of packaged coconut water, up 15 percent on the previous 12 months.

100 percent juice is still a significant part of the diet, with over 40 percent of consumers saying they drink it every day and health conscious consumers saying they are willing to pay more for premium juices associated with healthy choices.

What are some common trends being seen globally with regard to juice?

We see three key product trends driving growth in 100 percent juice, they are; ‘all natural’, ‘vegetable nutrition’ and ‘speciality 100 percent juice’ and it’s about finding the right combination of product, price and promotion to tap into these trends and make sure they are well communicated.

There is a clear shift towards products that consumers see as natural and ‘All Natural’ rated highest as the most desired attribute from juice by consumers in our research. The regions where this trend is most profound is Latin America (64 percent) and Middle East/Africa (53 percent). Brands are already responding to this with new product launches with natural claims with CAGR 25 percent to 2015, especially clean labelled products with “no additives or preservatives”.

The traditional flavours of orange and apple are in decline as mixed vegetable and mixed fruit grow in popularity. Vegetable blends are becoming increasingly popular in established markets where they are blended with fruit juice to lower the natural sugar content and also add health benefits. Eighteen percent of consumers say that mixed vegetables and fruits is one of their most frequently consumed flavours.

As a result, vegetable and tomatoes are now among the top ten flavours globally now ranking eighth and tenth. New product launches with vegetable as an ingredient has seen a CAGR of 43 percent between 2012 and 2015. Mixing vegetables and fruit from the same colour palette helps to balance taste with nutritional benefit, such as kale, spinach and apple.

And thirdly, consumers are looking for products offering functional benefits that can reduce their stress, reduce their risk of disease, detox and/or promote healthy living. Sixty-one percent of consumers say they are interested in products with proven medical health benefits, as they become increasingly interested in intrinsic health benefits coming from their food and drink. They pay much more attention to the ingredients, where it comes from and how it is promoted. The number of new product launches offering functional health benefits saw CAGR of 31 percent between 2012 and 2015.

What are some challenges with catering to these trends for manufacturers?

There is a lot of opportunity for producers to position the products they offer as pure and healthy, with the notion of provenance and origin becoming increasingly important to consumers. Especially with the sugar debate and 45 percent of consumers now looking for low sugar, no added sugar or sugar-free products.

With less people consuming breakfast, this will reduce the occasions available to consume 100 percent juice, plus in developed countries, demographics are shifting, with less and less children. This slow reduction of children, the prime consumers of juice, is having an impact on consumption volumes. Creating out of the home consumption opportunities in portion packs will be key when addressing these changing lifestyle habits to meet the modern consumers’ needs.

A demand for greater definition around what constitutes “natural” will create further opportunities, one of the great benefits of 100 percent juice is that it is natural and can be positioned and promoted that way, such as ‘from nothing but the fruit,’ which, when communicated in the right way to consumers, can be very appealing.

In developed markets, the rise of new technologies such as high pressure processing (HPP) is also helping to create new positioning opportunities, particularly in the premium segment. However, HPP is a non-thermal preservation that can only achieve commercial sterility with water products, unless the process is combined with heat.

What are some opportunities for juice and related products around the world?

China has seen CAGR of 11 percent for the past five years for ready-to-drink products and is now the eight biggest juice consuming country, consuming 545 million litres in 2015. It is expected to continue growing at 7.7 percent to 2018.

Latin America, especially Brazil, is forecast a 10.9 percent growth to 2018, as more people trade up from home squeezed to packaged ready-to-drink juice. The fastest growing markets in terms of consumption per capita are Africa, Middle East and Latin America. Other hotspots include India, Indonesia and Malaysia with a combined growth forecast of 5.9 percent to 2018.

Consumers have a positive perception of 100 percent juice, they see it as tasty, natural and healthy. This links juice well to the biggest mega trend impacting the food and drink industry on ‘health and wellness’. More than 60 percent of consumers, rising to 70 percent in the emerging markets, rate eating healthy and nutritious food as ‘very important’. They are not only searching for healthy food and drink; they are also willing to pay more for them.

With over 70 percent of consumers snacking in between meals, and some even skipping the meal itself—especially breakfast, a traditional juice consuming occasion—on the go consumption is rising, creating an opportunity for portion packs. This also addresses any possible concerns about sugar content—with 72 percent of consumers believing it comes down to how much you drink. For example, 150ml is now cited in the UK as the recommended daily intake of juice, equating to a recommended “five a day”.

Are these also seen in Asia Pacific at present?

While Greater China is very much an under-developed market for juice, its dynamism and sheer size make it undeniably attractive. The ready-to-drink market as a whole has seen 11 percent CAGR for the past five years to reach 151 billion litres. The main growth driver has been packaged water, which now accounts for nearly 60 percent of that total, with dairy and juice, nectars and still drinks pretty evenly split for the remainder.

China already has a taste for fruit: it’s now the world’s second-biggest market (after the US) for juice, nectars and fruit-flavoured still drinks, consuming more than 10.5 Billion litres—around 14 percent of global volume. Even so the per capita annual consumption is still relatively low for 100 percent juice at 0.4 litres, suggesting there is plenty of room for growth.

There are a number of reasons for 100 percent juice’s continued growth: low penetration; new products and brands, including imports; and strong interest in health categories. 100 percent juice is positioned as a premium natural product for nutrition and health, rather than a low-cost thirst quencher.

Snacking is a huge opportunity here, with 74 percent of Chinese consumers attracted to liquid snacking between meals—the highest proportion in the world. We see tasty and satisfying fruit smoothie-type juices as a potential trend for urban consumers with a hectic lifestyle.

As middle classes trade up from home squeezed to packaged juice due to increased incomes, this will also drive growth in India, Indonesia and Malaysia which will be the fastest growing markets in terms of volumes.