Drinks giant Tropicana has warned its lenders that profit will come in below its forecasts this year, according to reports.
Tropicana told lenders this month that it expected to achieve an underlying profit of £241m in 2024, flat year on year and below the £280m it had previously forecast, according to The Sunday Times.
The rising production costs have forced companies such as Tropicana to raise their prices for orange juice, hurting demand. The average price of a bottle of juice in UK supermarkets rose by 10.8 per cent in the year to May, according to researcher Circana.
Global orange juice production has been affected by crop diseases – in particular, ‘greening’, a nasty bacterial infection of citrus plants – and climate-related issues like hurricanes, droughts and heavy rain.
Greening, one of the most serious citrus diseases in the world, changes the colour of the fruit and gives it an acrid taste before killing the orange tree altogether. There is currently no cure for the disease.
Two orange-farming hubs, Brazil and Florida, have both been severely impacted by greening over the past few years, leading to historic price rises for the fruit.
Production in southern Europe, particularly in countries such as Spain, is also under threat due to prolonged heat and droughts which have affected crops.
Prices reached record highs at the end of 2023 of over £3 per pound. The price has since softened but is expected to rise further due to the supply issues.
Brazil’s main orange-producing areas, Sao Paulo and Minas Gerais, are set to harvest around 9,465kg of oranges in 2024, down 24 per cent year on year, according to research centre Fundecitrus. This would mark the country’s lowest yield since 1989.
In 2021, private equity firm PAI bought Tropicana and Naked Juice from PepsiCo for £2.7bn.
Pepsico retained a 39 per cent non-controlling interest in the joint venture while PAI became the majority shareholder of the transferred business.
PAI declined to comment.