A new pulp culture: How about some morning zest this year?
Orange is the new black. No, I’m not talking about the popular Netflix comedy-drama. I am referring to a new trend – it’s no joke, and it might bring dramatic change to breakfast tables across China.
Having your daily cuppa might soon take on a very different meaning in the country, with orange juice poised to be the new coffee. It is a phenomenon that will be of great interest to investors who will be keen to ride a new wave of pulp culture.
Here’s a juicy, lip-licking stat: The orange juice market in China is poised to hit US$1 billion in revenue by 2026 with over 5 per cent compound annual growth rate (CAGR) from 2020. Underestimate the trend at your own peril. After all, there was vast scepticism over whether coffee could really become a daily staple like tea in China when the first Starbucks opened at Beijing’s World Trade Centre in 1999.
Since then, the coffee market has seen about 30 to 40 per cent in CAGR from 2010. Astonishing progress, and this is barely the froth atop a rich aromatic reserve. Local coffee companies like Manner, Mellower and the since disgraced Luckin have experienced tremendous leaps.
Amazingly, China’s per capita coffee consumption is still only at five cups yearly. The United States is at 400 cups, while European countries like Norway and Sweden are above a thousand cups. Just think about the vast opportunity, and now consider orange juice – a more nutritious alternative with a deeper barrel of potential.
A burst of citrus on the scene
Of course, oranges have been intertwined with Chinese history for millennia, with the earliest mention of the fruit in the civilisation’s literature in 314BC. It is a bright, unmistakable part of the country’s traditions too, with the mandarin orange symbolising fortune during the Lunar New Year.
But while it is often eaten, only about 10 per cent of oranges grown locally are juiced. The ratio is reversed in the Americas. The Chinese already like the taste and tang of the orange, so it wouldn’t be hard to imagine them embracing orange juice in their routines.
However, there’s a common misconception in China that inferior oranges are juiced. This is simply untrue. Half the orange juice in the country is imported, with Brazilian companies like Citrosuco contributing one-thirds of it. And they send over only high-end produce. After being picked, oranges are squeezed within 12 to 24 hours, then sealed for unrivalled freshness and transported. The juice is fresher than that of local oranges stored in warehouses for days, or even weeks!
It is not just about the quality of the juice but the health benefits, especially as we live in a pandemic-stricken era. A cup of juice gives three oranges’ worth of Vitamin C, which is crucial to one’s immune system. As sweet, fizzy drinks take hold of the diets of young Chinese, the government is also encouraging its people to turn to non-carbonated drinks – like orange juice. It’s showing in policies: Last year, tariffs for imported refrigerated orange juice were reduced by half, from 30 to 15 per cent. This peels away the shackles on the inexorable orange crusade.
The upcoming generation is also looking westwards for inspiration in fashion, fitness and food choices. Orange juice is huge in the West. Yearly consumption per capita in the US and Europe are 12 and 15 litres respectively – the citrus boost simply has to be served at continental breakfasts. Youths in China are also becoming more health-conscious, and juice nestles perfectly into a fit and fab lifestyle. The average Chinese now gulps down less than 500ml of orange juice annually. This will only rise.
Ripe for the picking
It is time to concentrate on the juicing potential of the Chinese orange juice market. Since 2015, the Not-From-Concentrate (NFC) orange juice market has grown 41 per cent on a compounded basis. Nongfu Spring, one of the country’s largest beverage companies, has seen its NFC sales grow 256 per cent in the past year. Little wonder the firm, also China’s leading bottled water producer, reached a market capitalisation of US$53 billion when it listed on the Hong Kong bourse. Its founder Zhong Shanshan is now the richest man in China.
All these signal that the phenomenon is not likely to turn sour anytime soon. In fact, orange juice is likely to put the squeeze on coffee as the de facto morning beverage, or even a supplementary one. Remember that as you give out your oranges this Lunar New Year: They might just symbolise a fortune (when juiced especially).