Brazilian orange juice production not expected to recoverThis article is powered by Foodnews
Vlamir Breternitz is boss of Atlantica, one of Brazil’s leading independent orange juice processors. In this exclusive interview, he gives his outlook on the Brazilian orange juice industry and its prospects to IEG Vu managing editor Neil Murray.
What do you think is the long-term future of orange juice? As an ingredient in beverages, or will it still be universally drunk as a pure fruit juice?
In the long term, it could be an ingredient. In the medium term, it will remain a pure fruit juice, mainly in the emerging markets. I am talking about FCOJ here: NFC is rising easily.
Do you think Brazilian orange production will recover to its former levels? If not, what do you think is a likely ceiling?
Never. There are no new plantations and even natural replanting is not being done. Also, no new small plants are available or being invested in. So 300-320 million boxes could be a ceiling for some of the coming years.
Do you think Brazilian FCOJ is realistically priced, considering the market, or will a lower price increase its sales?
No. An enormous part of the process goes to the US and Europe and in those markets, NFC plays an important role. FCOJ can be kept at a lower price and the profit from NFC sales positively offsets the whole deal. For companies that sell mainly in Europe, and only sell FCOJ in drums, the price must be a minimum USD2,150 per tonne fob. Working below this level makes the business unsustainable. It is indispensable to have marketing of the product, and new usage, to increase sales. It is not a question of price for the customer’s sake but, yes, an attention to profits from the farmer’s side. This is also why it is preferable to produce NFC juice when you have the same oranges to be processed.
Can the recurring problem of low ratio juice production be solved? If so, how?
No. To avoid greening problems, the orange groves are moving to the south-east area of São Paulo and there, ratios are naturally lower.
The Big Three producers dominate the market. Where are the openings and opportunities for the independents?
In the short term, outside Europe and the US. In the long term, if the Big Three continue to focus on NFC, the demand for concentrate on the traditional markets may have to be supplied by others.
Do you think Florida’s orange production will ever recover to, say, over 100 million boxes?
If the solution for the greening is not discovered, no.
Will Brazilian domestic consumption of pre-packed orange juice explode or grow slowly?
It will grow slowly, based on new lifestyle habits (people do not have enough time to keep squeezing oranges for fresh juice) and consumption powering an increase, with consumers looking to better products which means more pure juice content.
What juice processors do you particularly admire and why?
The ones who have respect for farmers and the whole market itself, who look to the future of the business and not to the short term.
What other juices do you think you are likely to supply that you do not supply now?
What can independent fruit juice suppliers and brokers offer to major buyers?
In Europe, not much. We can’t (and we don’t want to) compete with the big processors; logistics counts… We know our size and the space in which we work very well. We must talk about what we know and so looking at us, we offer our passion for serving customers based on market information, the fields’ overview, transparent figures, quality service on paperwork, on availability, and on supply, and on going deeper and being more interested in customers’ needs.
What is the best thing about being in the business?
It’s a very active business. Every day, week, month, year and season is different. It is also priceless to have the view of so many different cultures from the customer’s side (last year we exported to 37 different countries). It makes us feel that we are making a difference in the lives of so many people involved with agriculture. To be near so many successful life histories from the fields is also invigorating.
And what is the worst?
Newcomers who are not committed to quality, responsibility, sustainability, long-term business and lack of information about the market, seasons, trends, etc. Also, those customers not committed to the same points despite being so informed.