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Australian fruit juice industry report

Australian fruit juice industry report

Assessment Description
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Introduction
 
This report is based on an Australian Industry that produces and sells a variety of still beverages that includes Fruit juices, fruit drink, cordials, iced tea and flavored water. An analysis of this industry in terms of its markets, strategies, sales, target market and main competitors has been made that will help you to understand the basic challenges and factors that affects an industry and helps it to formulate different policies to meet the basic needs. This report will also help you to understand that how a report is created at an industry level.
 
Industry Overview
 
This is an Australian based industry that manufactures fruit juice drinks. The subsidiaries or the firms involved in this industry manufactures a variety of still beverages such as fruit juice, fruit drink, cordials, iced tea and flavored water. The primary activities of this industry include production of:
  • Fruit juice
  • Fruit drink
  • Cordial
  • Flavored water
  • Iced tea
  • Bottling
 
The competitors for this industry that produces and sells similar products.
 
Competitors
 
C2185 Soft Drink Manufacturing in Australia
Firms in this industry produce soft drinks and cordials that seem to be a tough competition for any juice manufacturer in Australia. Some juice producers also manufacture soft drinks and cordials.
 
C2186 Bottled Water Manufacturing in Australia
This industry involves manufacturing of purified and spring bottled water that may prove to be a competition for the industry that we are going to evaluate in this industry.
 
G5125a Fast Food in Australia
This industry sells ready to eat/serve foods and beverages that include fresh juices and other bottled material.
 
H5731b Cafes & Coffee Shops in Australia
 
This industry provides the similar services as provided by G5125a Fast Food in Australia
 
Market Sales: as per the synopsis of the statistics of industry of Fruit Juice Drink Manufacturing, for the year 2012-2013, the industry managed to achieve revenue of $2.0 bn that made them to book a profit of $ 106.2 Millions. During 2008-13 the industry managed an annual growth of 1.1 % and it is expected that during the period of 2013-2018 they would optimize their growth by 2.9 % with total firms of 56.
 
Before the coming of financial crisis the industries manufacturing beverages such as fruit juices and other bottled stuff were enjoying a significant growth in the market. The reason behind this was the nature of human beings moving towards the consciousness and desire to stay fit and fine. The fruit juices being enriched with natural ingredients providing a lot of good nutrients helped the industry to grow insignificantly. The increase demand of humans for natural and quality products are expected to grow that will help the manufacturing industry of fruit juices to improve over the next five years, buoyed by a stronger economy, product innovation and ongoing demand for healthy, convenient beverages.
 
Environmental analysis
 
Factors that can influence the industry of Fruit Juice manufacturing production have been categorized under internal and external factors.
 
External factors:
 
Demand for super markets and grocery stores: since every customer wants to get everything conveniently with ease, he always prefers to use stores where he could procure everything that they need. Moreover being having a large shelf space the super market can purchase material directly from firms that too in bulk which helps in increasing the revenue of the firms.
Increase in Disposable income of the consumers: as mentioned above with the increase urge of consumers towards a healthy environment they try to intake the chilled fruit juices instead of soft drinks, the increase in their disposable income would definitely increase the use of Fruit juices at home which will result in increased sales.
 
Domestic price of fruit: in the production of fruit juices, fruits are the key ingredient, thus any fluctuation in the prices of fruits may result in the fluctuations of profits as well.
 
Soft drink consumption: the intake of soft drinks has increased over a period and is considered as the most preferred drink in the choice of packaged drinking liquids. If anyhow there is any reduction in the prices of the soft drinks then it is possible that the soft drinks could become a tough competitor for the sales of Fruit Juice.
 
Health conscious customers: The growth in the consciousness of the growing heath among the community over a period of 5 years, this led towards a cut in the intake of the carbonated soft drinks. The reason behind this could be the reduction in the intake of calorie content and reduced low nutritional value. Thus the customers are moving towards an increased use of Fruit juices that prevents them from certain health issues and no doubt is full of nutrients and such healthy stuff.
 
Internal Factors:
 
Profit Margins: this is obvious that if a company would try to increase their profit margins on the products they want to sell then it is possible that they will not be able to achieve a target of increased sales. Moreover orange juice is imported from other countries. If anyhow there is an increase in the trade barriers or import policy, the sales could deteriorate.
 
Competition: There are many competitors in the market who are selling similar products that could affect the sales of the industry. This is why the company invests large amounts to make their brands prevalent and to increase the brand loyalty of the customers towards their brands. If in competition the other industry cuts off a little amount in prices, this could affect the sales of the industry significantly.
 
Product Trends: The tastes and preferences of the consumers keep on changing regularly. Thus it is necessary for the industry to cope up with the current market trends. The increase in Health awareness among the consumers made it necessary for the industry to use eco-friendly products and ingredients so that they could preserve their brand loyalty and could offer the consumers something which is cheap and best for them.
 
Marketing strategy analysis:
Here we have selected two companies namely Nudie and Ocean Spray and we are going to discuss their marketing strategies and marketing mix components that were involved to fetch the best possible results.
 
Nudie’s new squeeze: they were new operators in the fruit Juice market who brought small bottles of Fruit juices that were very expensive because of having a premium quality of fruit juices. The new entrants Emma and Tom founded Nudie in October 2004 which emerged as a seller of a premium bottled fruit juice segment.  They were indeed selling their products at a higher price but the Australians were very conscious regarding their health thus they did not take apart from purchasing such expensive stuff. They expected a turnover of $3 million in its first year and $9 million the year after. But being having a high competitive market structure they found it a bit harder to achieve their Goals of turnover.
 
How did they achieve their goals?
 
Marketing: Thus to achieve their goals they took help of some cheeky advertising campaigns which were observed by Tom Griffith during a visit in London. Both the business partners were a family who was determined to start a business. They got influenced with the astonishing success of the Juice bars and bottled fresh Juice.
 
Quality: They began experimenting on the ingredients and used the premium quality ingredients in the manufacturing of their bottled juice.
 
Branding: They wanted to create a brand loyalty among the people thus instead of using a fake name, they gave their product their own name.
 
Logo: Moreover they wanted to create a differentiated product in such a way that a consumer just by taking a look can identify that it belongs to us. They spent a long time to formulate their own logo which could help the customer to identify their product among variety of products.
 
Packaging: they also observed that the packaging of the product also influences the buyer to purchase their product. Thus they designed the bottle of the drink in such a way that could be handled with ease. Packaging also helps in easy identification. They designed bottles in such a way that a consumer can clearly see what is inside and there is a certain sentiment attached with the fact that super premium fruit juice comes in square bottles and long-lasting fruit juice comes in round bottles.
 
Distribution: while observing other competitors in the market, they found that others our using extensive marketing strategies. Moreover the product is not confined only to a particular area. They are distributing their product worldwide. Thus Nudies also used the method of distribution to increase their sales.
 
After using the above methods, it was estimated that Nudies has a share of 70% of the market segment of fruit Juices. They were able to generate high profits that helped him to expand their horizons. The major methods they used were:
  • If you want to be successful with your product then it is necessary to insist for a quality product than for quantity. The suppliers you are dealing with should provide quality material.
  • You need to ensure that the products you are selling in the market is unique and is a value for money.
  • Make your product identical among other products.
  • Treat each customer as a new customer and provide them the best
  • Develop strong relationships with your customers.
 
Ocean Spray:
Ocean Spray was a cranberry juice that was launched in Australia in the year 1995. Despite being entering into a highly competitive market, this juice was proven successful. At the time of its introduction in the market the market was cluttered, hyper-competitive market, dominated by established brands and big, aggressive companies. Not only had this Ocean Spray had to face a lot of hurdles, including its name, taste, country of origin, price and distribution. Ocean Spray Cranberries Inc was a company based in United States who released its products under its flagship in Australia. No one ever expected this that being a new comer in this market segment, Ocean Spray would be able to attain its goals in Australia. Ocean Spray’s figure masks a more impressive result: in the cranberry juice category, Ocean Spray has snatched a 90% share of sales and beaten the previous category leader, Sunraysia, into submission.
 
Here is how they managed to attain their goals:
 
Brand Awareness: Brand awareness is a must in each case of products. When Ocean Spray was introduced in the market it was totally unknown to the consumers. The big brands of the fruit juice/drink category – Berri and Golden Circle – have been on the market for more than 45 years and all consumers know their names. But now they rank third in the market of cranberry juices. This is because of creating awareness of their brand among the consumers or the target market.
 
Bottling: The Ocean Sprays conducted a research and observed the target market. Then they hired Bailey Food Brokers to distribute its juices, Grey Advertising to promote them and Master Foods to bottle them.
 
Distribution: from the beginning they wanted to o limit distribution and marketing costs by selling its juices through supermarkets only. Being a new brand it was very risky because new juices and soft drinks usually gain consumer acceptance and trial sales in the route trade (that is, non-supermarket outlets).
 
Pricing: the ingredients for the juice was imported from US thus it was necessary to price their product at a premium amount that could generate some profit. However if they would have charged high then they could not attain their target. Even most of the juice manufacturers now use discounting as their only marketing tool. Margins have been further squeezed by rising raw-material and packaging costs. Thus the retail distribution via super markets helped them a lot.
 
Marketing Plan: Planning is pre-requisite for every business. If you have a pre-defined plans and set of rules that needs to be followed, you can easily attain your goals. With right marketing planning, Ocean Sprays were able to distribute their product in 85% of the super markets. It was also claimed that Ocean Spray bought space in stores with a big trade-promotion budget.
Advertising: the manufacturers used the advertising tool to increase their product demand. The consumer became aware of it and started purchasing it from the market.
 
Quality: they never found the quality deprived products. They wanted their taste to be uniform and the never used any artificial product while making the juice. This helped them a lot and made people brand loyal.
 
With these marketing strategies, it was analyzed that the total market share of fruit juice was 2.1% out of which Sunraysia’s share was 1.3% that slipped to 1.2%. It was indicated in the AGB BrandScan research that out of the total population, 59% of the people who were using another brand of cranberry juice shifted to the Ocean Sprays. 39% used their existing brand but started purchasing Ocean Spray as well, and 2% were newcomers to the category. This proves that there was a significant growth attained by Ocean Sprays.
 
Recommendations
Private Labeling:
Every producer wants his product to be differentiable from other products. Labeling provides the consumer with a lot of information regarding the products. Supermarkets or the retail counter these days have started filling their shelves with Private labeled products. The reason behind this is that the private labeled products are sold at a discounted price whereas a consumer cannot bargain for a branded product. Moreover not only the discounting is the main criteria in actual the private labeled products offers huge margins to supermarkets also which makes them to sell more and more quantity. The beverages have been lagged behind because of customer loyalty. Adding a private label may prove beneficial for the producers. There are also reports that ensures that soon share of private labeled fruit juice will increase in the market insignificantly.
Going Green and Healthy
 
In this report we have discussed this many times that consumers these days have become conscious for his health. He always tries to purchase that product which will not harm his health but is hygienic. Since aborting Plastic or PET bottles has become a cause, it is expected that within a span of 5 years there will be a demand for change in packaging of material. Using eco friendly products would help the producers to improve their profits. For instance carton packaging has become an essential in packaging. Moreover the producer can use recyclable material for packaging. Also no adulteration should be there and the producer should use high quality ingredients for loyal customers. Other producers are also going to follow the trend of branding and marketing activities for their products.
 
International Trade
It has been observed that the value of imports is on hike and will increase on large basis. It is also expected that within a span of 5 years, 4.9% of the total domestic demand will be met by the imported products. Though the increase in imports may cause due to their price competitiveness, it is expected that the demand for fresh, chilled and premium quality fruit juice will also curb the extent of import competition. During previous years it was observed that the number of fruits approved for import into Australia has been increased insignificantly. Thus it is possible that the availability of fresh fruit and vegetables in the local market will become increasingly constrained. On the other hand the exports of products will increase minutely thus it is important to keep a balance on international trade.
 
Conclusion
Fruit Juice industry is an effective industry that can be optimized by adding a new level of marketing mix into it. Though the industry if working well but the aim of every organization is to earn profits and that could be done only by increasing your sales and reducing the effective cost of the products. The main activities of this industry includes Fruit juice, Fruit drink, Cordial, Flavored water, Iced tea, Bottling thus economize the cost to manufacture these products is required. The Fruit Juice manufacturing industry does not have a differentiated product and nor it is a monopoly based economy. There is a large group of competitors selling the identical product and that too at much lower prices, then why would a consumer choose your product. This is what the industry needs to understand. The industry has to persuade the consumers to adopt its product which is much better than the one sold by another competitor. It is better in terms of quality, quantity, price, usability etc.
The industry also needs to introduce much advertising programs so that the consumer will get aware of their products and will start consuming it. The industry also has to locate the share of the market and the ultimate consumers consuming the product.
 
The industry also has to ensure the following factors:
 
  • Supply contracts in place for key inputs: instead of purchasing each and every key input again and again, the industry can go for a supply contract that would help in minimization of cost.
  • Economies of scope: when an industry produces a variety of products, there could be per unit cost saving in terms of marketing and distribution. This could help in attaining the economies of Scope.
  • Marketing of differentiated products: If anyhow the product that an industry produces differs from that of the other producer then it helps in improving the quality of the product in the minds of the consumer.
  • Maintenance of excellent customer relations: It is important to treat every customer as its first customer. No matter if he is repeated customer but treats them as your first customer and provide them quality services to them.
All these points above will definitely help in improving the industrial profits and will help in its growth.

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