MARKET DRIVERS OF THE GLOBAL BEVERAGE CONSUMPTION IN 2010: OPPORTUNITIES FOR A NEW POSITIONING TO THE JUICE CATEGORY

MARCOS FAVA NEVES University of So Paulo, Business School, Markestrat (Marketing & Strategic Projects and Research Center). Av. dos Bandeirantes, 3900. FEARP. Bloco C, sl 64. 14.040-900. Ribeiro Preto SP, Brasil. Email: mfaneves@usp.br / Telephone: 55 16 3456-5555 PATRICIA MILAN Markestrat (Marketing & Strategic Projects and Research Center). Maestro Igncio Stabile , 520 , Alto da Boa Vista Ribeiro Preto - SP - CEP 14025-640 Email: patricia.milan@ymail.com Telephone: 55 16 3456-5555 VINICIUS GUSTAVO TROMBIN University of So Paulo, Business School, Markestrat (Marketing & Strategic Projects and Research Center). Maestro Igncio Stabile , 520 , Alto da Boa Vista Ribeiro Preto - SP - CEP 14025-640 Email: vinicius.trombin@gmail.com Telephone: 55 16 3456-5555 FRANCISCO CRESSONI PEREIRA Markestrat (Marketing & Strategic Projects and Research Center). Maestro Igncio Stabile , 520 , Alto da Boa Vista Ribeiro Preto - SP - CEP 14025-640 Email: francressoni@yahoo.com.br Telephone: 55 16 3456-5555

Review copy for use of the IFAMA 2011 Forum & Symposium. Not for reproduction or distribution. May 21st 2011.

MARKET DRIVERS OF THE GLOBAL BEVERAGE CONSUMPTION IN 2010: OPPORTUNITIES FOR A NEW POSITIONING TO THE JUICE CATEGORY

Abstract
This study analyzes consumer behavior and how its changes affected the Brazilian orange juice industry. Its objective is to provide critical insight and an overview of the factors that are driving the customers purchases with focus on the beverage market, especially fruit-based drinks, serving as inputs for industries and retailers decisions about production and sales. The restructuring of consumer behavior opens great opportunities, making it is essential to draw new strategies, differentiated and focused in every niche market with potential growth. It is necessary to reposition the juice as a liquid feed and not as a beverage anymore. Key words: consumer behavior, beverage market, juice sector, orange juice industry.

MARKET DRIVERS OF THE GLOBAL BEVERAGE CONSUMPTION IN 2010: OPPORTUNITIES FOR A NEW POSITIONING TO THE JUICE CATEGORY

Executive Summary
The consumer behavior started to change with the advent of the internet and the increase in competition among companies. It intensified with the financial crises of 2008 when more importance was given to budget planning, which led to a re-evaluation of the need to buy sophisticated and brand products, making consumers more price oriented. Therefore, this study analyzes consumer behavior and how its changes affected the Brazilian orange juice industry. This papers objective is to provide critical insight and an overview of the factors that are driving the customers purchases with focus on the beverage market, especially fruit-based drinks, serving as inputs for industries and retailers decisions about production and sales. The change in consumer behavior also affected the beverage market, which grew at an annual rate of 3.6% between the years of 2003 and 2009, while world population reached 1.2%, creating a market of 297 billion liters. In this same period, beverage categories with lower added value and low content of juice presented the fastest growth rate in consumption. Fruit still drinks consumption increased by 7.3% per year while juices and nectars grew by 2.1%. In 2009 the total consumption of commercial beverages achieved approximately 1.6 trillion liters, the equivalent to 231 liters per capita. The restructuring of consumer behavior opens great opportunities, since consumers are rethinking what is really important to them. In relation to the juice industry, it is essential to draw new strategies, differentiated and focused in every niche market with potential growth, especially for producers of chilled juices. It is necessary to reposition the juice as a liquid feed and not as a beverage anymore.

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MARKET DRIVERS OF THE GLOBAL BEVERAGE CONSUMPTION IN 2010: OPPORTUNITIES FOR A NEW POSITIONING TO THE JUICE CATEGORY

Introduction
The consumer behavior is changing. Due to the advent of globalization, internet and the increase of competition among companies, customers have sought more information about what they are buying. This access to information has changed the clients consumption habits, leaving behind purchases based on mere impulse and desire to incorporate purchases based on rational decisions. Thus, a list of few factors, among many others, that influence the consumer at the time of the purchase can be made: budget planning, search for aggregated value, redefinition of luxuries, revaluation of brands, search for flexible pricing and waste reduction. According to Hawkins, Mothersbaugh, and Best (2007), the search for information involves three types of concerns: the suitability of an evaluation criterion for solving a problem, the existence of several alternative solutions and the level of performance or characteristics of the alternative. Nowadays the consumer chooses products with more value. Companies that strive for sustainability and have purposes beyond profit are gaining consumers preference. The sustainable production is now indispensable to the organization that aims at market differentiation. The global crisis of 2008 and 2009 brought new changes in consumer behavior. They now give much more importance to financial planning, re-evaluating the need to buy more sophisticated products and looking for promotions. This has led to retailers pressuring the industry for lower prices and discounts that can be passed on to consumers.

Objectives
This study analyzes consumer behavior and how the Brazilian orange juice industry, which is responsible 86% of worlds juice trades, was affected by the latest global financial crisis and the launch of numerous beverages that compete with the orange juice. This papers objective is to provide critical insight and an overview of the factors that are driving the customers purchases, with focus on the beverage market, especially fruit-based drinks, serving as inputs for industries and retailers decisions about production and sales.

Procedures
The ChainPlan Method, developed by Professor Marcos Fava Neves in 2004, is the basis of this paper. In order to achieve the proposed goals, the first step was to carry out a bibliographic review on consumer behavior and on the citrus productive chain. Then, many in-depth and exploratory interviews were conducted with industry experts. In these interviews the fruit and orange juice markets were investigated, as well as the consumer behavior, the main problems encountered during the purchase, marketing of the product and suggestions for quality and image improvements of the product to the final consumer.

46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91

Further, the authors participated in major conferences that discussed market trends, for example, the World Juice, held in October 2009 in Europe, attended by over 250 experts from various companies, and Alimentaria, held in March 2010 in Barcelona, one of the most important events regarding world food.

Bibliographic review Consumer behavior

Consumer behavior is defined as the mental and physical activities executed by clients of consumer goods that result in decisions and actions like buying and using products and services, as well as paying for them. Its principles are more valuable to companies when applied to the development and sustaining of market orientation, which implies in the complete understanding of customers desires and needs, of the competitive environment and of the markets nature in order to obtain total client satisfaction (Sheth et al, 2001). Still according to Sheth et al (2001), the customer can assume one of three rolls: user (effectively consumes the product), payer (the person who finances the purchase) and buyer (the person who participates in obtaining the product in the market). The decision making process by an individual consumer includes the problem recognition, information search, alternative evaluation, purchase and after purchase experience. These five stages are proposed in papers by Kotler (2000), Czinkota et al. (2001), Sheth et al. (2001) and Etzel et al. (2001). The purchase behavior initiates when the buyer identifies a problem or a necessity. It is important to register the circumstances in which the problem or necessity occurred through information gathering with numerous consumers. This will enable the identification of the most frequent stimuli that evoke interests in a certain category of products. Once interested in a product or service, the consumer tends to seek more information. There are four major groups of information sources for the consumer: personal (family, friends, neighbors, acquaintances), commercial (advertising, sales person, sales representatives, packaging, showcases), public (mass communication media, consumer classification organizations) and experimental (use of the product, examination, product manipulation) (Kotler, 2000). In the process of alternative evaluation, the consumer tries to satisfy a need by seeking for certain benefits when choosing a product and then finally views each product as a collection of attributes with different capabilities in delivering the benefits to satisfy his or hers needs. The consumer will pay more attention to those attributes that deliver the desired benefits (Kotler, 2000). Research regarding consumer behavior is important to identify, create and communicate value to the client. In a competitive environment where companies are pressured to do more with less, the survivors will be the ones that research and understand well their clients. In other words, they have knowledge of which values their clients are seeking and how they evaluate what is offered in the market. Therefore, research is a fundamental tool for success in marketing and can be divided into two categories: qualitative and quantitative (Seth et al, 2001).

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The Brazilian citrus production chain

In Brazil, the citrus agro industry system has been presenting itself as a key agent in the countrys agribusiness sector. In the agricultural year of 2008/2009 the GDP value was estimated in US$ 6.5 billion for the Brazilian citrus production chain, which corresponded to approximately 2% of the countrys agribusiness GDP (Figure 1). Of this total, US$ 4.39 billion were generated in the internal market and US$ 2.15 billion in the external market. 34% came from the sales of fresh fruit in the internal market and 28% from orange juice exports (FCOJ and NFC). It is important to note that orange juice exports accounted for 94% of the citrus complex exports (Neves, Trombin and Milan, 2010). Figure 1 represents the citrus production chain system and the value beneath each segment indicates the gross sale of that particular segment in the agricultural year 2008/09. The gross revenue of the citrus sector in this period was of approximately US$ 14.6 billion. This value represents the sum of the estimated sales from the several segments of the productive chain and the financial transactions of the facilitating agents (Neves, Trombin and Milan, 2010). In the agricultural year 2008/2009, the agricultural input industry sold to the citrus sector US$ 819 million. The citrus fruit (orange, lemon/lime and tangerine) revenue totaled US$ 2 billion. From the total fruit production, 67% was destined to the processing industry, 32% to the internal fresh fruit market and 1% was exported as fresh fruit. From the total of oranges processed by the industry, 35% were produced by the industry, 34% were bought from orange producers with pre-established long term contracts and 31% were bought from orange producers on the spot market. The packing house revenue with fresh fruit was of US$ 1.8 billion, 96% of which was obtained in the internal market. Fresh fruit wholesales revenue was of US$ 1.7 billion and the retailers obtained US$ 3.8 billion, of which 58% came from orange sales, 17% from lemon/lime and 25% from tangerine (Neves, Trombin and Milan, 2010). Juice and sub product sales totaled US$ 2.2 billion, of which 95% was obtained in the external market and 5% in the internal market. From the revenue gained from exports, US$ 2.07 billion, 86%, came from juice. Packing companies, wholesalers and retailers presented the following revenue with orange juice or nectar, respectively, US$ 255.7 million, US$ 33.9 million and US$ 459.1 million (Neves, Trombin and Milan, 2010). The facilitating agents revenue with the citrus production chain in 2008/09 was of US$ 877.5 million. Regarding transportation, all freight expenses paid by the citrus sector totaled US$ 396 million, of which 9% was with diesel. Regarding port costs, it is estimated that in 2008 Santos Port earned US$ 71 million relative to clearance, elevation and supervision of orange juice boarding. It is important to state that 97% of Brazils orange juice exports were through the Santos Port. Regarding payroll, US$ 352.7 million were spent on salaries and benefits (Neves, Trombin and Milan, 2010).

Figure 1: The Brazilian citrus production chain.

Brazilian Citrus Production Chain GDP: US$ 6.5 billions / Gross Revenue 2008/2009: US$ 14.6 billions
Before farms Farms After farms

US$ 819 millions

Fertilizers US$ 178.9 millions

US$ 2.0 billions

US$ 10.9 billions

Packing House Inputs US$ 33.1 millions

Packing House US$ 1,958.96 millions

Domestic Market: 1,885.9

Foliar fertilizers US$ 31.2 millions Orange Production US$ 1,667.7 millions Defensives US$ 288.2 millions
US$ millions Fresh Fruit: 485.4

US$ millions Exports: 73.1 Wax: 8.6 Defensives: 5.3 Energy: 19.2

Wholesale Fresh Fruit Domestic Market US$ 1,747.6 millions

Retail Fresh Fruit Domestic Market US$ 3,851.9millions

Juice Industry US$ 2,216.6 millions FCOJ US$ 1,600.3 millions

Exports: 1,545.9 Domestic Market: 54.3

Corretives US$ 11.5 millions

Industry: 1,182.3

Food Industry F I N A L C O N S U M E R

Tractors US$ 54.1 millions

Lemon Production US$ 193.5 millions

US$ millions Fresh Fruit: 174.2 Industry: 19.4

NFC US$ 229.5 millions Other Citrus Juices US$ 17.7 millions

Cosmetic Industry

Implements US$ 35.1 millions

Industrial Inputs US$ 327.9 millions

US$ millions Eletric Energy: 66.4 Bunker C Oil: 76.3

Cleaning Products Industry Essential Oils US$ 72.9 millions Terpene US$ 55.2 millions Frozen Orange Cell US$ 9.1 millions

Irrigation systems US$ 32.5 millions

Tangerine Production US$ 115.4 millions

US$ millions Fresh Fruit: 111.9 Industry: 3.5

Seedlings US$ 39.5 millions

Animal Feed Industry

Bagasse: 12.9 Chemical Products: 26.7 Plastic Bag: 0.9 Extratctors Rent: 33.9

Fuel US$ 141.6 millions

IPE US$ 6.7 millions

Inputs to Produce Ready to Drink Juices / Domestic Market

US$ millions Packing: 46.7

D-Limonene US$ 0.9 millions Citrus Pellets Fibre Pulp US$ 178.8 millions
Exports: 93.5 Domestic Markets: 85.2

Facilitating agentes

Packing Service: 37.8

US$ 877 millions

Facilitating Agents (service providers) US$ millions Primary Transportation From the Farm to the PH or Industry: 171.4 Secondary Transportation From Packing House to Wholesale or Retail: 136.8 Secondary Transportation From Industry/PH to Port: 87.5

Bottling Juice/Nectar Domestic Market US$ 255.7 millions

Wholesale Juice/Nectar Domestic Market US$ 33.9 millions

Retail Juice/Nectar Domestic Market US$ 459.1 millions

Tolls (Road Fee): 18.3 Juice Storage Company: 2.9 Port Costs: 71.0 Labor: 352.7 Diesel: 37.0 Taxes: 188.7

Source: Neves, Trombin and Milan (2010).

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Results and discussion Beverage and juice markets

During seven years (2003 to 2009), the annual growth rate of the world population reached 1.2% while drink consumption reached 3.6%. Therefore, a market of 297 billion liters of beverages was created in this period. In 2009 the total market of commercial beverages achieved approximately 1.6 trillion liters, the equivalent to 231 liters per capita per year. The leader category in share was hot tea with 20.9%, followed by bottled water (15.3%), milk (12.8%), soda (12.5%), beer (11.2%), coffee (8.2%), soft drinks (2.7%), juices and nectars (2.6%) (Figure 2).

Figure 2: Global market share according to beverage category.

148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163

Source: Euromonitor (2010) In 2009, the orange flavor amounted to 0.91% of global drinks; however it participated with 35% in the juices and nectars segment. In the still drinks segment, orange flavor corresponded to 30% of the total (Euromonitor, 2010). From 2003 to 2009, the categories of beverages that presented the fastest growth rate in consumption were those with lower added value and low content of juice. Fruit still drinks consumption increased by 7.3% per year, bottled water 6.6%, milk-based beverages 6.5% and hot teas 4%. Juices and nectars grew by 2.1%. The category juice is naturally contained in fresh fruit or vegetables and is prepared by mechanically squeezing or macerating them. Juice is always 100% fruit juice. Nectar is also made from fruit or vegetables but presents 25% to 99% juice content and usually has added sugar. Still drinks contain 0% to 24% juice. According to data from the Beverage Marketing Corporation, between 2007 and 2008, the consumption of traditional juices in the United States fell by 3.0% while the
5

164 165 166 167 168 169

flavored waters increased at 3.9% and energy drinks at 8.0%. Thus, innovative products with greater functionality are the ones currently presenting higher growth rates (Figure 2). Figure 2: Innovation and growth in the beverage market

170 171 172 173 174 175 176 177 178 179 180

Source: Beverage Marketing Corporation Hemphill (2009) Despite its benefits, the functional drinks market did not react well to the 2008 financial crisis. This is reinforced by a research presented by Food & Associate Consulting and Market Investiga Estudio de Mercados y Opinin (2010), showing that Spanish consumers have radically changed their view regarding the importance given to certain product characteristics. The relevance of health characteristics has decreased by approximately 43%, while price has become the item of greatest significance (Graph 1). Graph 1: Most important features to Spanish consumers 0-10

181 182 183 184

Source: Food Consulting & Associate; Investiga Estudio de Mercados y Opinin (2010).

185 186 187 188 189 190 191 192 193 194 195 196

The food and beverage industry has responded to this shift in consumer behavior. According to Nielsen, 48% of the products launched in Spain in 2007 had a market positioning related to health, while only 18% focused on prices. In two years this situation was reversed. In 2009, 36% of new products were positioned according to price while 29% to health. In general, the juice market faced the crisis of 2008 and 2009 with interesting changes. One of them was that private labels in retail and discount brands have gained share. Across Europe, the growth of these juice brands was 5%. In Germany, since 2005, they have gained more than 60% in market share in the juice category. In Western Europe, they already have a 40% share of fruit and vegetable drinks (Graph 2). Graph 2: Market share by segment in Western Europe in 2008
69.8% 65.7% 52.4%

47.6%
30.2%

34.3%

Juice drinks

Nectars Private labels Brands

100% juice

197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219

Source: Euromonitor Off Trade Volume GBO 2008 Poppel (2009).

World consumption of juice, nectars and still drinks

In 2009, the world consumed 117.7 billion liters of industrialized fruit drinks, divided into 23.5 million liters of juices, 17 million liters of nectars, 42 million liters of still drinks and 35 million liters of concentrated powder juice. From the total, 77% was consumed in only forty countries. During the years 2003 to 2009, the volume consumed of fruit-based drinks increased in 30.2%. Since this increase occurred mainly among lower social classes in emerging countries, the sales growth was more significant for nectars and still drinks (which are diluted in water) and didnt reflect an elevation in demand for orange juice at 66o Brix (Graph 3). The increase in still drinks sales was of 7% per year, which was superior to the growth presented by industrialized beverages, of 3.6% per year, and therefore, reflected in a market share expansion of 3.8%. Concentrated juice and juice powder, which must be diluted in water before consumption, showed a growth rate of 2.2% and their demand is most intense in developing countries, especially India. Contrary to theses expansions is the negative growth rate of 0.8% per year in global consumption presented by juices, with a loss of 0.4% in market share to other beverage categories, especially in traditional markets such as the United States and Europe.
7

220 221

Graph 3: Consumption evolution of industrialized fruit-based drinks, in billions of liters, from 2003 to 2009. 106.290
17,871 14,489 34,294 14,800 24,836 2,006

94.288
16,361 14,313 27,641 11,288 24,625 2003 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254
Juice

97.455
16,783 14,355 29,377 12,351 24,588 2004

101.604
17,491 14,207 31,691 13,425 24,791 2,005

111.255
18,710 14,600 37,234 16,091 24,620 2,007

114.617
19,276 14,612 39,849 16,864 24,016 2,008
Concentrated

117.672
20,137 14,814 42,153 17,074 23,495 2,009
Powder

Nectars (25-99% juice)

Still drinks (0-24% juice)

Source: Elaborated by Markestrat with data from Tetrapak and Euromonitor International. This increases the emerging markets relevance towards sustaining a 2.7% annual growth rate in sales of ready to drink juice-based beverages during seven years. From 2003 to 2006 the demand for ready to drink juice-based beverages in Asia, Middle East and Latin America grew at an annual rate of, respectively, 5.9%, 4% and 2.8%. During this same period, in forty selected countries, nectar beverages presented the largest annual rate of expansion of 7.6% against 3.6% of still drinks and a retraction of 0.3% in juices. In more recent years, from 2006 to 2009, the consumption of ready to drink juice-based beverages intensified in the emerging markets at annual growth rates of 9.8% in Asia, 4.6% in the Middle East and 6.1% in Latin America. In this same period the annual rate of expansion of still drinks elevated to 6.4%, nectar reduced to 2.5% and the retraction in juices intensified to 2.1%.

The orange flavor

Orange is the most consumed flavor in ready to drink fruit-based beverages, with a market share of 35% in 2009, followed by apple, with 16% (Graph 4). In some markets, such as the United States, the orange flavor has been losing space to the apple flavor. In others, such as Russia, Ukraine and Turkey, the apple flavor is more popular than the orange. In the before mentioned forty selected countries, which concentrate 99% of the worlds consumption of fruit-based beverages with orange flavor, a detailed analysis shows that of a total of 63.5 billion liters of ready to drink juice-based beverages consumed in the year 2009, 20.4 billion liters had orange flavor and 7.5 billion had apple flavor. But during the years of 2003 to 2009, it was observed that in the juice category there was a diversification in consumed flavors, with an annual reduction in demand of 1.6% and 2.3% in orange and apple flavors, respectively, and an increase of 2.6% and 1.3% in tomato and mixed fruit flavors, respectively. In the categories of nectars and still drinks, the demand for the orange flavor increased, but in a smaller

255 256 257 258 259 260 261 262 263 264

proportion when compared to other flavors such as peach, grape, mango and mixed fruit. This diversification in flavor demand and consequent loss in market share by the orange flavor has contributed to a global reduction in orange juice demand of 6% from the year 2003 to 2009. This is not the scenario that would be expected when analyzing some key demographic data that show, for the same forty countries and period, an increase of 5% in population, 51% in gross domestic product (GDP), 43% in per capita GDP and 40% in per capita net income (Table 1). Graph 4: Market share of flavors in juice and nectar consumption in 2009.
Others 25% Cranberry 2% Mango 2% Pineapple 3% Peach 4% Grape 3% Orange 35%

265 266 267 268 269 270 271

Mixed fruits 10%

Apple 16%

Source: Elaborated by Markestrat with data from Tetra Pak and Euromonitor International. Table 1: Summary of key demographic data in 40 selected countries that concentrate 99% of the Worlds consumption of beverages with orange flavor in the years of 2003 and 2009.
Data summary in 40 selected countries Population on January 1st Thousands of people Total GDP Per capita GDP Per capita net income Unemployment rate Orange juice consumption in FCOJ at 66o Brix equivalent Billion dolars Dollars per capita Dollars per capita % Thousands of tons 2003 4,388,932 34,711,852 $7,909 $5,235 8.5% 2,406 2009 Variation 4,629,576 52,267,395 $11,290 $7,312 8.1% 2,267 5% 51% 43% 40% -5% -6%

272 273 274 275 276 277 278 279 280 281 282

Source: Elaborated by Markestrat with data from Tetra Pak, Euromonitor International, World Bank and Citrus BR. It is important to note that consumers with elevated per capita income, such as Europe and United States, tend to consume 100% orange juice, which has more aggregated value. Consumers with lower per capita income, such as countries forming the BRICs and Mexico tend to consume larger quantities of nectars and still drinks which are more accessible due to their lower concentration of orange juice (Graph 5).

283 284 285

Graph 5: Orange flavor consumption according to beverage category in selected countries in 2009.
5,673 31% 3,356 1,205 40% 15% 90% 69% 2% 11% 58% 5% 5%
USA China Great Germany France Britain Juice Nectar Japan

1,189 23%

1,078 18% 12%

901

788

784

559 3% 2%

492 5%

53% 87% 82% 95% 62%

62%

70% 36% 9% 4%
Brazil

33% 18%
Mexico Canada Russia

286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315

Still drink Total consumption, in million of liters

Source: Elaborated by Markestrat with data from Tetra Pak and Euromonitor

The orange flavor in traditional markets: Europe and North America

Europe is the main destiny for the Brazilian orange juice. In 2009, Europe consumed 29% of the worlds beverages with orange flavor, of which 56% was in the form of juice, 18% in nectars and 26% in still drinks. Between the years of 2003 and 2009 a 7% reduction in the demand for orange juice was responsible for a 2% retraction in the consumption of orange flavor beverages. This latter wasnt more intense due to an increase in demand of orange flavor nectars and still drinks of 8% and 5%, respectively, during the same period. Germany, with 1.2% of the worlds population and a per capita net income of US$ 27.3 thousand dollars, demanded the equivalent to 191 thousand tons of FOCJ at 66o Brix and was Brazils major orange juice consumer. The countrys total consumption in orange flavor beverages was of 1.2 billion liters (Graph 5). Also in the year 2009, North America consumed 6.2 billion liters of orange flavor beverages, 11.5% less than in 2003. The consumption occurred mainly through juice and in less quantity through still drinks. Nectar consumption is insignificant in this market. The United States, with 4.5% of the worlds population and a per capita net income of US$ 32.9 thousand, was responsible for consuming 5.7 billion liters (Graph 5), or 92% of the total volume. Due to their first place in demand (851 tons of FOCJ at 66o Brix equivalent, or 38% of the Worlds consumption) and rivalry in production with Brazil, the United States is the most influent orange juice market in the World. The United States demand for orange juice has retracted in 24% during the last decade, the equivalent to 263 thousand tons of FOCJ at 66o Brix or 60 million orange boxes with 40.8 kg each. This comes as a result of various factors. The 2000 decade was marked by the dissemination of the Atkins and South Beach diets which promotes the consumption of low calorie drinks. In 2004 and 2005 hurricanes Charlie, Ivan and Francis caused serious injurious to Floridas orchards which lead to a spike in orange juice prices. The retailers had to elevate prices to the final consumer, which in itself
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reduces demand, but this adjustment was less than proportional than the elevation observed in the international markets. This diminished the packing industrys margin which had to cut costs and, consequently, reduced expenses with orange juices marketing and promotion, intensifying the reduction in demand. And then, in 2008, the financial crisis that elevated the unemployment rate to 9.2% changed consumers habits by limiting the consumption of products with more aggregated value, such as orange juice. This same period was also marked by the packing industrys acceleration in beverage innovation which started to offer a more variety of products at lower costs, higher margins, less calories and with a modern design.

The orange flavor in emerging markets: BRICs and Mexico

The group of countries formed by the BRICs plus Mexico, with 43.4% of the worlds population, consumed in the year 2009 the equivalent to 221 thousand tons of FCOJ at 66o Brix, with 80% of the total in the form of still drinks, 10% in nectar and 10% in juice, a typical consumption profile of a population with lower per capita net income. From 2003 to 2009 the demand for these beverages increased in 50%, with still drinks increasing in 62%. China, with 19.6% of the worlds population and a per capita net income of US$ 2.02 thousand, consumed 3.4 billion liters in beverages with orange flavor in the year 2009 (Graph 5), a volume 64% greater than the one consumed in the year 2003. During this period, the annual growth rate in juice consumption was of 13.3% and in still drinks was of 10%. Nectars presented a retraction of 6.3% per year. Although the country showed significant growth rate in juice consumption, in the year 2009 the demand for FCOJ at 66o Brix was of only 74 thousand tons, which reinforces that orange flavor beverage consumption is of mainly still drinks that present low concentration of orange juice. In India, with 17.2% of the worlds population and a per capita net income of US$ 823, mango is the most preferred flavor. In 2009, the demand for FCOJ at 66o Brix was of only 19 thousand tons and for beverages with orange flavor was of 236 million liters, including still drinks and juices. Brazil, with 2.9% of the Worlds population and a per capita net income of US$ 5.23 thousand, consumed 788 million liters of orange flavor beverages (Graph 5) in the year 2009, or the equivalent to 41 thousand tons of FCOJ at 66o Brix. With the exception of Brazil, the orange juice concentration in orange flavor nectars and still drinks commercialized in the BRICs plus Mexico is much inferior to the ones observed in Europe. In Germany, nectars and still drink present an average orange juice concentration of 72% and 11%, respectively. In China, these percentages fall drastically to 25% and 5%, respectively. In this way, the potential market for orange juice is also related to the quality of nectars and still drinks consumed in emerging countries. Since the currently commercialized orange flavor beverages present low concentration of orange juice, an increase in product quality would translate into an increase in orange juice concentration in these beverages and consequently elevate the global demand for orange juice. As an example, if the BRICs plus Mexico maintained their 2009 consumption of orange flavor beverages but increased their quality to the same standards as the one in Germany, the increase in orange demand would be of 142 million boxes with 40.8 kg each.

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Conclusions
The global consumer currently pays more attention to price while following trends in health, well-being, responsible consumption and convenience. Price orientation became more intensive after the recent 2008 financial crises when consumers started to give more attention to budget planning, re-evaluating their necessity of buying sophisticated products and valuing more promotions. After the stronger period of the crisis, the most striking is that the changes caused in consumer behavior do not seem to be fleeting. At least that was what was found at the 13th Annual Global Survey conducted by PricewaterhouseCoopers (PwC) in 2009 and published in 2010. According to the survey, conducted with 1,198 CEOs from companies around the world, over 64% of them are worried about permanent changes in consumer behavior in retail and direct sales. The same percentage believes that in the long run, people will focus more on socio-environmental practices of the organization before making their purchases. Yet according to data from PwC, 91% of the respondents would be willing to change the strategies of these areas of their businesses in response to the crisis. Even if the pre-economic crisis standards return, the pressure for low prices should not be relieved. The feeling that runs through the market is that consumers are more willing to save than spend. Or at least he or she will act more rationally than emotionally at the time of purchase. Regardless of whether the company has undergone restructuring costs recently or not, the implementation of new strategies focusing on low cost are essential for good maintenance on the market. New strategic alliances and joint ventures are items that are on the agenda of many organizations. The restructuring of consumer behavior opens great opportunities, since consumers are rethinking what is really important to them. In relation to the juice industry, it is essential to draw new strategies, differentiated and focused in every niche market with potential growth, especially for producers of chilled juices. It is necessary to reposition the juice as a liquid feed and not as a beverage anymore. These strategies must take into account some key market drivers identified thru out this study: Growth in nectar and still drinks consumption lower social classes of emerging countries. These beverages present lower concentration of juice; Potential improvement in quality of nectars and still drinks consumed in emerging markets; Reduction in orange juice consumption in traditional markets such as United States and Europe; Loss of market share by the orange flavor in the fruit-based beverage market; Promotion and marketing of orange juice.

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