Title: Influence of orangeade on the market for fresh and processed oranges
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Title: Influence of orangeade on the market for fresh and processed oranges
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Creator: Kimmel, D. C.
Publisher: University of Florida, Agricultural Experiment Station
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Special Report
Agricultural Economics
Series No. 51-7




University of Florida Agricultural Experiment Station
Gainesville, Florida






THE INFLUENCE of ORANGEADE on
THE MARKET for FRESH and PROCESSED ORANGES

by

D. C. Kimmel


This is a preliminary report on one phase of Project 562,
"Consumer Demand f'r Citrus Products and Factors Affecting
that Demand", being conducted with Title II funds provided
by the Research and Marketing Act of 1946.







University of Florida
Agricultural Experiment Station
Gainesville, Florida
January 26, 1951






THE INFLUENCE OF ORANGEADE ON THE MARKET
for
FRESH AND PROCESSED ORANGES


The possible effect of the introduction of canned orangeade on the sales of

single-strength orange juice, frozen concentrate, and fresh oranges is a matter

of some concern to the citrus industry. Some information collected as a part of

a study of consumer demand for citrus products, being conducted in a medium-sized

southern city, may give some indication of this effect.

Weekly data on the volume of sales of citrus and possible competing products

are being collected from 20 retail grocery stores in Meridian, Mississippi. The

stores vary in size, type of ownership or management, and in type of trade. In

order that seasonal changes in sales may be observed, the data are being collected

during four different months. Collections have already been made for August and

October, and similar collections are planned for February and April.

There are several ways in which these sales data may be used to indicate the

possible influence of orangeade sales on the sales of the various orange products:

1. For any given month, the total dollar volume of sales of orange products of

all types canned orange juice, fresh orange concentrate, orange sections,

and fresh oranges and orangeade can be calculated. To indicate their

relative importance, orangeade sales can be expressed as a percent of this

total.

2. The change in relative volume between seasons (as represented by selected

months) can be studied.

3. The percentage change in dollar volume of orangeade sales between seasons can

be compared with the percentage change in the total dollar volume of sales of

orange products and orangeade.

Seventeen of the 20 stores from which data are being collected handle orange-

ade. Using data collected from these 17 stores in August and October, the cal-

culations and comparisons suggested above were made and are shown dn Table 1.






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Table 1. Sales of Orangeade, of Total Orange Products*- Plus Orangeade, and
Percentage Changes in Sales Between Months, 17 Meridian, Mississippi
Retail Grocery Stores, 4 Week Periods August and October, 1950.


Change
Store : Orangeade sales -:*- Oct.
number: over
August October : Aug.
$ :% : $ :% : %
: :
0 0


2....:



3...



6....:

7....:

8....:

9....

o10....:

11....:

12.... :

13.:..

14....

15 ....

16....:

17.... :


Total:


7.56

45.86

147.23

53.99

7.44

11.47

17.98

13.20

19.98

15.68

5.91

5.58

10.25

10.85

6.00

8.24

.1 37


3.4

11.0

22.9

10.6

10.8

13.6

12.6

15.3

30.3

23.2

9.5

8.6

6.3

6.0

2.5

4.4

31.A


7.29

34.96

103.07

38.44

8.68

8.06

10.54

7.20

12.36

21.52

3.40

3.10

7.25

1.35

4.59

1.89

1.12


2.6

5.6

14.0

5.6

8.2

6.6

4.7

7.7

21.3

26.2

6.0

2.7

3.7

0.7

1.6

1.0
0 2


- 3.6

-23.8

-30.0

-28.8

116.7

-29.7

-41.4

-45.5

-38.1

737.2

-42.5

-44.4

-29.3

-87.6

-23.5

-77.1
10 0


* -+.C. *


388.59 : 121 : 2747 : -29.3

388.59 : 12.1 : 274.82 2 6.7 : -29.3


STotal orange C
: product
sales
:: August October


:: 225.02 : 277.59

: 418.50 : 625.77 :

: 644.23 : 734.13 :

: 510.54 : 690.10

:: 68.69 : 106.50 :

: 84.52 : 122.80 :

S142.83 : 226.70

:: 86.15 : 94.22

: 66.11 : 58.09 :

: 67.57 82.12

:: 62.38 : 56.74 :

:: 64.67 : 113,95 :

: 162.61 : 199.21 :

:: 179.81 : 184.96

: 237.54 : 285.97 :

: 189.05 : 185.62 :

:: 4.37 : 2659 :


:: 3214.59 : 4071.06


* Fresh oranges, frozen orange concentrate, single-strength canned orange juice,
and orange sections.

**Orangeade sales in terms of dollars and as a percent total sales of orange
products plus orangeade.


change
Oct.
over
Aug.
%


/ 23.4

/ 49.5

/ 14.0

/ 35.2

/ 55.0

/ 45.3

/ 58.7

S9.4

- 12.1

/ 21.5

- 9.0

/ 76.2

/ 22,5

/ 2.9

/ 20.4

- 1.8

/508.4


/ 26.6


*


ft






-3-

Just how important is orangeade in the total market for orange products? In

August, sales of orangeade accounted for 12.1 percent of total sales of orange pro-

ducts and orangeade. The range was from 2.5 to 30.3 percent. Indications are that

sales of orangeade were relatively most important in stores catering to the lower

income groups. An exception was one of the largest stores in town which had a

mixed type of trade. The three stores in which the relative volume of orangeade

sales was lowest catered to higher income groups. Between August and October the

relative volume of orangeade sales declined in all stores except one and represent(

only 6.7 percent of total sales in the latter month.

What change took place in the sales of orangeade between August and October?

Declines in the absolute dollar volume of orangeade sales were registered in 15 of

the 17 stores handling orangeade. The declines ranged from 3,6 to 87.6 percent and

averaged 29.3 percent. It is not generally possible to associate the declines with

any particular type of store as regards size, management, or kind of trade. De-

clines were registered in all but two stores. One of the two stores showing in-

creased sales was small, independently owned, while the other was a small unit of

a local chain. Both catered to low income groups. The greatest decline 87.6

percent occurred in a medium-sized, independently owned store catering to a

middle-income type of trade. The extensive decline in this store may have been

associated with the intensive sales promotion given to hot-pack orange concentrate.

While orangeade sales were declining throughout the city, total dollar sales

of orange products and orangeade rose 26.6 percent. Fourteen of the 17 stores

showed increased sales ranging from 2.9 to 508.4 percent in October over August.

Greatly increased sales of fresh oranges were more than sufficient to offset

declines in all processed items.

A product referred to in an earlier paragraph, but not included in the cal-

culations shown in Table l,.is hot-pack orange concentrate marketed in consumer-

size cans. This product was introduced into Meridian in mid-August. First records






-4-


of sales were obtained in October. The 11 stores handling this product in October

had sales of $158.02. It is interesting to note that one-third of all sales of

hot-pack orange concentrate were made by one store. The product is still too new

in the city to warrant any conclusions as to its ultimate competitive position in

the market for orange products.

To sum up, our study of sales in a number of stores in one southern city in-

dicates that:

1. Orangeade sales, accounting for 12.1 and 6.7 percent of total orangeade and

orange product sales in August and October, respectively, are a factor to be

considered in evaluating the market for orange products.

2. It is possible that orangeade is considered primarily as a hot weather bev-

erage witness the 29.3 percent decline in sales between August and October.

But it must be noted that the following factors may have, and probably did,

contribute to the decline:

a. The appearance of fresh Florida oranges on the market in October.

b. The downward readjustment, between August and October, in single-

strength and in frozen orange juice prices which was not accompanied

by a like adjustment in orangeade prices.

c. The introduction of hot-pack orange concentrate.

3. Orangeade, under price relationships existing among orange products in August,

offers more competition for orange products in the lower income areas. But

here it is necessary to recognize that the type of sales program employed by

a store may be more influential in determining volume of sales than is the

income group catered to.

One thing does seem reasonably clear from our data. There still exists a

certain market for fresh oranges which cannot be filled by orangeade or any pro-

cessed orange product. This conclusion is based on the fact that when fresh Florida

oranges became available in October, total dollar sales of orange products in-






- 5-


creased 26.6 percent despite declines in sales of single-strength orange juice,

frozen concentrate, and orangeade.

The above information is very general. It is hoped that more specific infor-

mation as to whether orangeade is purchased as a substitute for, or in addition to,

the various orange products, will be available from the consumer phase of the

general study from which the above observations were made.









































DCK:gg 1/29/51
Ag. Econ. Exp. Sta. c 500




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