Orange juice exporters turn to the Brazil

American Joanna Escandón, now 32 years old, grew up listening to her grandmother repeat a recommendation: "don't forget to drink the food for the brain." It was orange juice, of those who buy ready at the grocery store, the family drank in every meal. Three years ago, following a trend in his country, took the juice menu ready. Since 2010, about 200 thousand liters of industrialized orange juice are no longer consumed in the USA, one of the main markets of Brazil.
The less juice there means more Orange here. Of every five cups consumed in the world, three come out of Brazil and, mainly, of the three largest industries in the world, which are installed in the interior of São Paulo: Cutrale, Louis Dreyfus Commodities and the new company that includes Citrosuco and Citrovita. In the past six years, the Brazil left to export the equivalent of 220 million oranges as juice-volume equivalent to almost one and a half crop of Florida (USA), another region that is a reference in world production of Orange.
To circumvent the losses created by the change of habit abroad, local producers are organized to create a company that will take you to the supermarket shelves in Brazil the juice export type. "This company has no land with orange groves or industries with production lines," says Ibiapaba Netto, Executive Director of CitrusBR, an organization that participates in the industry's business model. "It will be a consortium bringing together the industries and the producers and their task is to disseminate the brand, not yet defined, and manage service providers hired to pack and transport the juice produced by the partners." The business should go into operation in the same year and the forecast is that consume R $ 9.7 billion in investments until 2020.
Consecitrus. One of the alternatives contemplated by the sector is to create the Council of producers and exporters of Orange juice (Consecitrus), for which he assume these functions. The Consecitrus meet the CitrusBrasil, representing the industries of the sector, and, on the side of the producers, the Brazilian Rural society, the Alicitros, which brings together producers of Orange of Limeira in the State of São Paulo, and the cooperative Cocamar, Paraná, which has orange producers in the North and northeast of the State. The creation of Consecitrus is under review in the Administrative Council of economic Defense (Cade), an agency that assesses the merger and creation of companies in Brazil to avoid market concentration.
There are three reasons for business to focus on sales of juice export type. The first is to relieve the excess production that are forming because of the stagnation of global consumption and create a market for an alternative sector, today very dependent on exports. In December 2012, the stock of juice in Brazil almost hit 1.2 million litres-the equivalent of one year of production. "More than release stocks, the strategy will reduce the dependency that has strong foreign markets", says Marcos Fava Neves, researcher and professor of the school of economy, administration and accounting, University of São Paulo at Ribeirão Preto. "About 90% of the industry's revenues come from the export of Orange-no sector in Brazil so vulnerable to international market fluctuations."
The second reason: the juice for export is done with 100% Orange, a product almost unknown by Brazilians. The vast majority of juice sold in Brazil are NECTARS: diluted juices. Some brands are 70% water. Of the 778 million litres of juices sold in Brazil last year only 55 million were natural and the majority of uva radiation. To explore a niche, manufacturers will not enter into direct competition with its customers, the beverage industries, which have the main brands of fruit drinks in the country.
Finally, the decision to operate in a niche market also reduces the risk of Cade veto the creation of new business, As the trio controls the production, whether to create a company to compete for space with the NECTARS hardly would get the green light to operate.
Tax exemption. To make the creation of the new company, awaits only a pending: can the Government give tax exemption to the 100% orange juice. With the exemption, the product could cost about r $ 4, nearly half the current price. "The Government has no revenue loss, because the sale of this type of juice practically does not exist," says João de Almeida Sampaio Filho, agribusiness consultant and former Secretary of Agriculture of the State of São Paulo in Brazil. "On the other hand, a larger number of consumers will have access to a natural product." The industry presented the project to the Ministry of Finance of the Government of the State of São Paulo and to the Ministry of finance. The bodies have not yet spoken.