Apple Juice Market - China Dominates In Global Apple Juice Production And Trade
Fruit And Vegetables February 19, 2015
From 2007-2012, global production of single-strength-equivalent apple juice showed a steady decline, with a CAGR of -3.5%. In 2013, however, production in physical terms on the global apple juice market had an estimated increase by 12%, reaching 9.1 million tonnes, which is far below the highest level of production of single-strength-equivalent apple juice recorded in 2007 (12.1 million tonnes).
The country with the largest apple production in 2013 were China (39.7 million tonnes), which accounted for 49,1% of total output. It was distantly followed by the USA with 4.1 million tonnes. U.S. production declined by 0.4% annually from 2007-2013, while China displayed healthy growth by 7.1% annually. Upward trends were observed in the volume of harvested areas for apples. There was a gradual increase up to 5,217 thousand HA from 2007-2013, representing a compound annual growth rate (CAGR) of 1.4%.
The yield of apples fluctuated significantly in the analyzed period. Its lowest point was in 2007 at 143 968,2 Hg/Ha and the highest was in 2013 with 155 736,4 Hg/Ha. The variance in yields can be explained mainly by the different climatic conditions.
The output of the seven major producers of single-strength-equivalent apple juice, namely China (3,546 thousand tonnes), Poland (629.2 thousand tonnes), Turkey (564.4 thousand tonnes), the USA (331.1 thousand tonnes), Argentina (314.6 thousand tonnes), Chile (280.0 thousand tonnes), Hungary (268.0 thousand tonnes) and Brazil, represent more than three-fours of global output.
In 2013, the USA, Germany, the UK, the Russian Federation, Japan and the Netherlands were the main destinations of apple juice imports and together made up roughly 60% of total imports. In physical terms, 67.5% of exports came from China, Poland, Germany, Ukraine and Austria.
China dominates in global apple juice production and trade. In 2011, China exported 76.9% of its total apple juice output. Of this amount, 52.3% was supplied to the United States, where Chinese apple juice held 47.3% share of total U.S. consumption.
In China, only a small percentage of apples are grown specifically for juice processing. The juice industry uses apples that are small, misshapen, or off-color to sell on the fresh market. On average, about 20-30% of apples are below fresh-market standards.
In the last few years, the supply of apples in China as the main raw material for juice has fallen. As a result, juice processors sometimes bid against each other to purchase apples. They also have to compete with the growing domestic demand for fresh fruits, which resulted in upward pressure on fresh apple prices. Moreover, apple-processing companies find it difficult to procure the high-acid apple varieties demanded by juice buyers. The market for higher priced fresh fruit attracts the best quality apples and farmers prefer to plant sweeter varieties favored by the fresh market. As robust demand seems to have caught up with the apple supply, China's limited supply of this raw material may act as a restraint on the apple juice industry's growth in the country.
One of the main global trends in the apple juice industry in the last few years has been a shifting of potential market opportunities from developed countries to developing ones. While the economically mature markets of the USA, Canada, Australia and Western Europe are close to their saturation point in terms of apple juice consumption, emerging economies, such as China, India, Russia, Brazil, Eastern European and South American countries are far from saturated. They share a few similar characteristics, including rising population, an improved economic situation, rising disposable incomes and urbanization.
The food processing industry has always been heavily reliant on international trade to source its main raw materials. Large food companies try to reduce the volatility in raw material prices. One of the main ways to do this is by establishing long-term pricing agreements and backward integration (contractual farming). These factors will strongly influence the market in the medium term.
Apple juice manufacturers have to find a delicate balance between managing increasing overhead costs, due to commodity and logistical price increases, and growing retail price increases. A popular retail strategy includes promotional price activity for brands, thus narrowing the gap with private label and B-brand alternatives.
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Source: World: Apple Juice - Market Report. Analysis And Forecast To 2025
