Case spotlight: Orange Juice Losing Its Sheen in the USA

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This case was featured in the September 2022 issue of Connect.

Who - the protagonists

The processors and distributors of orange juice in the USA.

What?

In the second half of the last century orange juice was a hugely popular drink in the USA, especially as it was a staple item on people’s breakfast menu.

The discovery of ‘orange juice from concentrate’ by a group of scientists after World War II meant that, by 1970, 90% of Florida’s oranges were being used to extract the concentrated form.

The subsequent introduction of pasteurised and ready-to-drink orange juice further raised its popularity in the 1980s and 1990s.

Orange juice

Why?

A number of factors led to the decrease in the popularity of orange juice in the USA at the turn of the millennium.

Firstly, citrus greening disease, which destroys full-grown orange trees by damaging their roots, was spread by a tiny insect Citrus Psyllid in the USA, infecting 90% of groves in Florida, which supplied more than 80% of the country’s orange juice.

The declining productivity, and the increasing spraying of insecticides to control the disease, drove the cultivation cost up. 34,000 people in the groves lost their jobs, while two thirds of the processing units shut down because of the unavailability of sufficient supply.

Secondly, there were negative headlines in the media about the harmful effects of fruit juice consumption such as ‘fruit juice as bad as sugary drinks’ and ‘greater consumption of fruit juice increasing diabetes risk’.

Thirdly, a smaller percentage of Americans, especially from the younger demographic, were eating breakfast, and supplements containing Vitamin C were being consumed instead.

Where?

The Sunshine State of Florida is located in the south-eastern region of the USA, and is the third most populous state in the country with over 21 million people living there.

When?

Between 2000 and 2019, the consumption of orange juice in the USA dropped by 1,046 metric tons to 556, production also decreased from 988 metric tons to 297, and the average price rose from $1.840 per 473.2ml to $2.406.

Key quote

“Orange juice is the worst breakfast drink.”
One particularly negative headline in the American media in 2018.

What next?

The orange juice market was in a bad state in America.

Orange growers were facing lower yields because of the damaged crop, processors were finding the processing of small quantities of oranges economically unviable, and distributors were having a tough time selling the product. Customers, too, were discouraged by the rising prices.

What could the processors and distributors do to prevent the shrinking of the market further?

AUTHOR PERSPECTIVE 

Inspired on her travels

Veena said: “When travelling in the USA, I always noticed orange juice served with breakfast. This observation made me believe that orange juice was the most popular drink in the USA.

“Given this view and perception, a news article on orange juice indicating a sharp reduction in its consumption, along with a sharp rise in its price in the USA, surprised me and caught my attention.

“While reading the article, I had the idea of writing a case on the orange juice market to teach the basics of demand and supply analysis. To build on this idea, I read several articles on the topic in various newspapers, magazines, and journals.”

USA flags

Overcoming challenges

Veena continued: “While developing the case I faced several challenges from the perspective of achieving the learning objectives.

“Firstly, the USA is the geographic region of the case. Alien to the USA culture, I had to understand the consumer behaviour in the country.

“Secondly, the supply side was more challenging to build up as it required a good amount of time to comprehend the orange cultivation process, citrus greening disease, the processing challenges of the processors, and the marketing difficulties of the distributors.

“Thirdly, relevant qualitative information was available sufficiently in newspapers, magazines, and various internet sites, but I was also keen on incorporating quantitative data, such as own-price elasticity, which could enrich the case analysis and discussion. I had to put extra effort into scanning various research articles to obtain quantitative information. These efforts paid off as I could obtain not only the own-price elasticity estimates but also the expenditure elasticity estimates.

“Lastly, I wanted to keep the length of the case short in tune with the short attention span of this millennium's students. Pruning the case by retaining the relevant information and maintaining the clarity in the write-up was a challenge.”

Positive teaching experience

She added: “I have taught this case several times at the Institute of Management Technology - Nagpur, India. The teaching experience has been overwhelmingly positive.

“Though the case is small in length, I gave it as a pre-read so that students from varied backgrounds go through the case facts and understand the implications at their own pace.

“During the case discussion, students could quickly identify the demand and supply determinants of orange juice and the reasons for a sharp reduction in the quantity demanded and the price decline. But, while discussing the strategic implications of the case facts, they ignored the quantitative aspects presented at the end of the case. I repeatedly encouraged them to look at the quantitative facts along with qualitative aspects while suggesting the pricing and other strategies.”

Enthralled students

Veena commented: “Before the case discussion, students viewed economic concepts and principles as abstract terms and could not relate to them. But, by the end of the case discussion, they could associate all the concepts and principles learned in the previous sessions with the case facts.

“They were thrilled to use the concept of own-price elasticity for the pricing of orange juice and the concept of expenditure elasticity for segmentation decisions. Some of them even indicated their intentions to apply the case learnings in other domains, such as the impact of climate change on consumer behaviour and production.

“Overall the students found the case interesting, as it enforced critical thinking.”

Case writing tips

Veena concluded: “To write a good case, the case writer should have clarity on the teaching/learning objectives behind the case. Simultaneous work on the teaching note and the case development brings synchronisation between the two. It enables pruning down the irrelevant material and incorporating the relevant facts in the case. Better synchronization between the two expedites the process of achieving the desired objectives.

“A good case also requires an in-depth understanding of the functioning of the company, and the industry and the market in which the company is operating. As the company provides a lot of information to the case writers in field-based cases, it becomes comparatively easy compared to the published source-based cases. While writing the published source-based cases, extensive research on various aspects from secondary sources improves the understanding of the case writers and enriches the quality of the case.”

THE CASE 

The case

Who - the protagonists

The processors and distributors of orange juice in the USA.

What?

In the second half of the last century orange juice was a hugely popular drink in the USA, especially as it was a staple item on people’s breakfast menu.

The discovery of ‘orange juice from concentrate’ by a group of scientists after World War II meant that, by 1970, 90% of Florida’s oranges were being used to extract the concentrated form.

The subsequent introduction of pasteurised and ready-to-drink orange juice further raised its popularity in the 1980s and 1990s.

Orange juice

Why?

A number of factors led to the decrease in the popularity of orange juice in the USA at the turn of the millennium.

Firstly, citrus greening disease, which destroys full-grown orange trees by damaging their roots, was spread by a tiny insect Citrus Psyllid in the USA, infecting 90% of groves in Florida, which supplied more than 80% of the country’s orange juice.

The declining productivity, and the increasing spraying of insecticides to control the disease, drove the cultivation cost up. 34,000 people in the groves lost their jobs, while two thirds of the processing units shut down because of the unavailability of sufficient supply.

Secondly, there were negative headlines in the media about the harmful effects of fruit juice consumption such as ‘fruit juice as bad as sugary drinks’ and ‘greater consumption of fruit juice increasing diabetes risk’.

Thirdly, a smaller percentage of Americans, especially from the younger demographic, were eating breakfast, and supplements containing Vitamin C were being consumed instead.

Where?

The Sunshine State of Florida is located in the south-eastern region of the USA, and is the third most populous state in the country with over 21 million people living there.

When?

Between 2000 and 2019, the consumption of orange juice in the USA dropped by 1,046 metric tons to 556, production also decreased from 988 metric tons to 297, and the average price rose from $1.840 per 473.2ml to $2.406.

Key quote

“Orange juice is the worst breakfast drink.”
One particularly negative headline in the American media in 2018.

What next?

The orange juice market was in a bad state in America.

Orange growers were facing lower yields because of the damaged crop, processors were finding the processing of small quantities of oranges economically unviable, and distributors were having a tough time selling the product. Customers, too, were discouraged by the rising prices.

What could the processors and distributors do to prevent the shrinking of the market further?

AUTHOR PERSPECTIVE 

Author perspective

Inspired on her travels

Veena said: “When travelling in the USA, I always noticed orange juice served with breakfast. This observation made me believe that orange juice was the most popular drink in the USA.

“Given this view and perception, a news article on orange juice indicating a sharp reduction in its consumption, along with a sharp rise in its price in the USA, surprised me and caught my attention.

“While reading the article, I had the idea of writing a case on the orange juice market to teach the basics of demand and supply analysis. To build on this idea, I read several articles on the topic in various newspapers, magazines, and journals.”

USA flags

Overcoming challenges

Veena continued: “While developing the case I faced several challenges from the perspective of achieving the learning objectives.

“Firstly, the USA is the geographic region of the case. Alien to the USA culture, I had to understand the consumer behaviour in the country.

“Secondly, the supply side was more challenging to build up as it required a good amount of time to comprehend the orange cultivation process, citrus greening disease, the processing challenges of the processors, and the marketing difficulties of the distributors.

“Thirdly, relevant qualitative information was available sufficiently in newspapers, magazines, and various internet sites, but I was also keen on incorporating quantitative data, such as own-price elasticity, which could enrich the case analysis and discussion. I had to put extra effort into scanning various research articles to obtain quantitative information. These efforts paid off as I could obtain not only the own-price elasticity estimates but also the expenditure elasticity estimates.

“Lastly, I wanted to keep the length of the case short in tune with the short attention span of this millennium's students. Pruning the case by retaining the relevant information and maintaining the clarity in the write-up was a challenge.”

Positive teaching experience

She added: “I have taught this case several times at the Institute of Management Technology - Nagpur, India. The teaching experience has been overwhelmingly positive.

“Though the case is small in length, I gave it as a pre-read so that students from varied backgrounds go through the case facts and understand the implications at their own pace.

“During the case discussion, students could quickly identify the demand and supply determinants of orange juice and the reasons for a sharp reduction in the quantity demanded and the price decline. But, while discussing the strategic implications of the case facts, they ignored the quantitative aspects presented at the end of the case. I repeatedly encouraged them to look at the quantitative facts along with qualitative aspects while suggesting the pricing and other strategies.”

Enthralled students

Veena commented: “Before the case discussion, students viewed economic concepts and principles as abstract terms and could not relate to them. But, by the end of the case discussion, they could associate all the concepts and principles learned in the previous sessions with the case facts.

“They were thrilled to use the concept of own-price elasticity for the pricing of orange juice and the concept of expenditure elasticity for segmentation decisions. Some of them even indicated their intentions to apply the case learnings in other domains, such as the impact of climate change on consumer behaviour and production.

“Overall the students found the case interesting, as it enforced critical thinking.”

Case writing tips

Veena concluded: “To write a good case, the case writer should have clarity on the teaching/learning objectives behind the case. Simultaneous work on the teaching note and the case development brings synchronisation between the two. It enables pruning down the irrelevant material and incorporating the relevant facts in the case. Better synchronization between the two expedites the process of achieving the desired objectives.

“A good case also requires an in-depth understanding of the functioning of the company, and the industry and the market in which the company is operating. As the company provides a lot of information to the case writers in field-based cases, it becomes comparatively easy compared to the published source-based cases. While writing the published source-based cases, extensive research on various aspects from secondary sources improves the understanding of the case writers and enriches the quality of the case.”

THE CASE 

Read the case

Educators can login to view a free educator preview copy of this case and its accompanying teaching note.

CASE - Reference no. 222-0026-1
TEACHING NOTE - Reference no. 222-0026-8
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