Tropicana Brands Group may have introduced the concept of packaged, mass-produced orange juice back in 1947, but based on news reports, the company is facing financial difficulties due to environmental disasters in Florida, declining revenue and income, and shifting consumer demand. The bad news for consumers, according to a new report from CNN, is that the challenges may translate to even higher prices at the grocery store, and the potential for a bankruptcy filing by the company. Considering grocery prices in general have increased 30 percent since 2019, additional increases on any one product, like eggs, makes consumers take notice.
According to CNN, Tropicana Brands Group has been facing decreasing profits and dropping sales for a few years now, but an ongoing bacterial infection and a record-breaking hurricane cycle have created its own perfect storm threatening the health of the company. Last quarter, income dropped 10 percent year-over-year, while revenue dipped 4 percent, contributing to an ongoing decline in numbers. In addition to the Tropicana branded orange juice, the company owns Naked, KeVita, and other beverages.
Tropicana recently received a $30 million emergency loan from its own majority shareholder PAI Partners. And PepsiCo, which once owned the brand and still has a minority share, devalued its investment by $135 million last quarter. Last December, a group of first lien lenders secured the services of legal group Gibson Dunn to advise them ahead of the next round of financial forecasts. Neither Tropicana nor PAI Partners representatives spoke with CNN for the story.
It’s not a great time to be in the orange juice business
Rather than reflecting a poorly run company, the source of Tropicana’s current woes seems largely to be out of its hands, according to the CNN report. Citrus crops in Florida have been impacted by a bacteria causing an infectious disease called Huanglongbing (HLB) or citrus greening since 2005. The end result is increasingly bitter and visually unattractive oranges. While a cure may be on the horizon, citrus production in Florida has dropped by 75 percent in the past decade, with some farms pulling out of citrus altogether. The bitterness of Tropicana orange juice in particular, was one reason we rated it one of the six worst orange juice brands on the market today.
2024 also saw an above-average number of recorded hurricanes hit Florida, including the category 5 hurricanes Beryl and Helene. Helene caused an estimated $78.7 billion in damage in Florida alone, and hit right at the start of citrus season. Current predictions for 2025 call for a less-intensive storm season.
The final challenge is ongoing declining consumer demand. Americans are drinking less juice than any time since 1970, preferring alternative beverages like sparkling water, energy drinks, and prebiotic sodas, which have seen a significant rise in popularity in the past three years. Despite clever campaigns from Tropicana, like deliberately misspelling its own name at the 2024 Consumer Electronics Show, it may be that we’re seeing the last days for mass-produced, packaged orange juice.
