HAINES CITY – Donald Duck is back.
Not that the Disney cartoon character ever went away, but the orange juice brand carrying his name has long been a minor part of business at Lake Wales-based Citrus World Inc., the parent company of the Florida’s Natural Growers brand.
“This is an important change because it creates opportunities we’ve been ignoring,” CEO Bob Behr told about 250 people at the company’s annual meeting and luncheon Monday at the Lake Eva Center in Haines City. “We have to recognize our business model has to change.”
Behr and other Florida’s Natural officials outlined several organizational changes, new products and renewed emphasis on existing products, like Donald Duck juices, outside its signature Florida’s Natural brand juice line.
The new products include a line of five flavored iced teas made under license with and carrying the logo of the AriZona Beverage Co. coming out in March, said Dennis Broadaway, president and chairman of the board of directors. It will include sweetened and unsweetened teas and an Arnold Palmer tea, half of which is lemonade.
The company will get tea supplies and pay a royalty to AriZona, Behr said, but after that production, packaging, sales and profits will go entirely to Citrus World.
The parent company also will create several new subsidiaries for those other parts of its business aside from the Florida’s Natural line of not-from-concentrate orange and grapefruit juices and lemonade, he said.
“By creating stand-alone subsidiaries, we are creating a profit-oriented focus on managing our business,” Behr said. “I’ve challenged our team to be more entrepreneurial and find those revenue opportunities that add to the bottom line.”
Citrus World is a juice-processing cooperative owned by 14 growers and grower organizations that supply the company with most of its oranges and grapefruit. Florida’s Natural is the third biggest OJ brand sold at U.S. retail outlets.
The changes reflect the diminishing production of Florida oranges under the effects of the fatal bacterial disease citrus greening for the past decade and more recently by Hurricane Irma on Sept. 10 and 11.
Greening, which weakens a tree before killing it, has led to a decline of more than 70 percent of orange production in Florida since the 2003-04 season. Annually, about 95 percent of the state’s orange crop goes to juice.
Florida citrus officials had expected a small rebound in the 2017-18 orange crop until Irma’s wind and rain destroyed at least 50 percent of this season’s crop, according to industry estimates.
“Irma’s path could not have been more lethal in the state of Florida,” said Mike Sparks, CEO of Bartow-based Florida Citrus Mutual, the growers’ trade group, who also spoke at the meeting.
Behr, Broadaway and Sparks agreed with the citrus-industry consensus that crop losses tied to the hurricane will continue beyond the current season because of tree damage that will take years to repair.
“The lagging effects of Irma and the ongoing fight against greening will limit Florida citrus production well into the next decade,” Behr said.
The cooperative has already experienced the impact of Florida’s ongoing citrus-production declines.
In its 2016-17 fiscal year, which ended Sept. 30, the Lake Wales plant processed just 8.2 million boxes of oranges, down 2.1 million boxes from 2015-16 and the lowest amount in 49 years, Behr said. Including grapefruit and other citrus varieties, the plant processed almost 10.8 million boxes, down 19.5 percent from nearly 13.4 million boxes the previous year.
Less fruit to squeeze meant less juice to sell, which was reflected in the company’s annual retail sales of just $415.3 million in 2016-17, a 6 percent decline from $441.4 million in sales in 2015-16.
Moreover, any growth in sales came outside of the traditional Florida’s Natural brand of not-from-concentrate orange and grapefruit juices, said Christopher Groom, vice president of sales and marketing.
Sales by volume of orange juice were flat in 2016-17 while grapefruit juice sales declined 1.1 percent, he said. But sales of lemonade grew 2 percent, although that volume was much smaller compared with OJ.
Sales of Florida’s Natural not-from-concentrate orange and grapefruit juices will continue to be limited because the company markets those products as made completely from Florida oranges, Behr said. Its current ad campaign chides its bigger competitors, Tropicana and Minute Maid, for using imported OJ.
Not-from-concentrate is a chilled, ready-to-pour juice that did not start out as frozen concentrated OJ. Other chilled, ready-to-pour OJ products started as frozen concentrate and were reconstituted in the factory.
But Donald Duck and other Citrus World OJ products, including Growers’ Pride and Bluebird, are also reconstituted from concentrate. Supplies of frozen concentrated OJ will be less constrained for the immediate future as suppliers from Mexico and Brazil escaped damages from Irma.
Citrus World will have to rely on imported OJ to make those products, Behr said. The Florida’s Natural brand will continue to be all-Florida orange and grapefruit juices.
That’s doesn’t represent a change as Citrus World has imported OJ since the 1980s for its other brands, he said.
Behr acknowledged Citrus World will have to rely more on imported OJ and products outside the Florida’s Natural brand than it has in the past.
“Our brand is limited by fruit supply. If we’re limited in fruit supply, we’ll have to find other business,” he told Direct Gates during a break in the meeting. “Over a longer period of time, as Florida fruit production comes back, the brand will strengthen.”
Florida’s Natural brand products will continue to constitute a majority of the company’s sales by volume, Behr added. That will remain true even if it doubles sales in other products.
In addition to the AriZona products, Citrus World will continue to package products for two other juice brands, Welch’s and good2grow, an Atlanta-based company marketing juice products to children.
Chief Financial Officer Chip Hendry had good news for Florida’s Natural grower-members: The cooperative paid out record high returns for the oranges and grapefruit they provided in 2016-17.
Growers got an average of $2.31 per pound solids for their oranges, up from $2.11 a year ago and $1.75 in 2012-13, he said. Grapefruit growers got an average $2.35 per pound solids, up from $2.09 a year ago and $1.60 in 2012-13.
Pound solids is a standard industry measure of the amount of juice squeezed from fruit. A gallon of orange juice has about 1 pound solid.
Kevin Bouffard can be reached at email@example.com or at 863-401-6980.