Research in Focus - Challenges and Strategies in Global Fruit/Vegetable Juice Sales

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Several inherent challenges exist in global fruit/vegetable juice sales. In a recent Euromonitor International Global Briefing, entitled 'Global Consumer Preferences within Fruit/Vegetable Juice', Richard Haffner, Euromonitor’s head of beverage research, analyses these challenges and offers strategies for growth opportunities in global fruit/vegetable juice sales.

There are several challenges for fruit/vegetable juice sales in the global arena. Unlike other categories in the soft drink industry, fruit and vegetable juice sales are driven by regions with diverse consumer preferences in juice types and flavors, making the building of uniform global brands especially challenging. Understanding the challenges and opportunities is the first step in creating a strategy for fruit/vegetable juice companies to compete globally.

In contrast to other soft drinks categories that reflect global brand dominance, the fruit/vegetable juice category does not have one key global player. Rather, regional brands are the powerhouses of sales. Consumer preferences develop around local brands, and these are often far ahead of international brands in terms of distribution reach.

Local competition is especially fierce in China where several strong domestic players are already prevalent. These companies understand local consumer tastes as well as their country’s distribution networks, which makes it difficult for multi-nationals to compete with them.

Putting up the most competition for domestic players is The Coca-Cola Co with its Minute Maid Brand. Though it commands just 5% of global fruit/vegetable juice off-trade volume sales, Minute Maid has emerged as the clear market leader, according to Euromonitor data. Coca-Cola makes use of its global distribution network and local product development infrastructure to tailor the brand to regional tastes in a way few competitors can match.

In addition to its ability to capitalise on regional taste variations, Minute Maid has also kept up with the continuing health trends in the fruit/vegetable juice category, raising its profile of 100% juice to meet demands for healthier juices. In many parts of the world, Minute Maid conveys its healthfulness as a 100% juice product. However, in China the most important characteristic is the vitamins and minerals the product contains, not necessarily the juice content. So, in China, Minute Maid Pulpy is perceived to be a healthful product but only contains 10% juice. In order to be successful, juice producers will need to expand into healthier juice types, while keeping in mind each region’s important characteristics.

Though Coca-Cola has been the most successful global player in the category, it too has faced roadblocks for growth. In 2009, its US$2.4bn application to acquire local Chinese juice maker Hui Yuan was rejected by the Chinese Ministry of Commerce. The deal would have been the cola giant’s largest overseas acquisition transaction. The decision was the first major file since China’s anti-monopoly law became effective in 2008, and was a timely reminder of the stern domestic competition that overseas companies face.

Other companies have taken a less dramatic approach to teaming up with local players. Nestlé recently made progress with its expansion in China through its purchase of a majority stake in Xiamen Yinlu Group. With this move, Nestlé will more than double its current value share in the Chinese soft drinks market, according to Euromonitor data. These lower profile deals have been successful whereas larger deals like Coca-Cola’s attempt have attracted scrutiny and wasted time.

In fruit/vegetable juice, it would appear that the local companies have stolen a march on the soft drinks giants. However, a partnership between the two could benefit all and sundry, going forward.

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