Orange Costs Tough To Swallow

A growing squeeze on citrus supplies nationwide is driving up prices on everything from fresh oranges to orange juice to smoothies.

Grocers in Colorado say prices for oranges and orange juice are steadily rising, while many juice and smoothie retailers have implemented surcharges ranging from 25 to 65 cents on some items to offset the rising cost of oranges. U.S. consumers are expected to consume 1.25 billion gallons of orange juice in the 2006-07 citrus season, down 7 percent from the previous season because of tightening supplies. "We are having a short crop this year," said Andrew Meadows, a spokesman for the Florida Department of Citrus. "Hurricanes in '04 and '05 hit the citrus belt and significantly impacted the size of our crop." The U.S. Department of Agriculture is predicting that 140 million boxes of oranges will be harvested this year, much lower than the five-year average of 220 million boxes, according to Meadows. A January freeze in California destroyed $1 billion of the state's citrus crop, resulting in a one-two punch for consumers. Florida growers primarily produce juice oranges, while California oranges are often sold to grocers and other fresh-fruit consumers. Safeway spokeswoman Kris Staaf confirmed that the grocery chain had seen an increase in orange-juice prices, although she declined to say how much. "We continue to remain competitive," she said. Krista Coleman, a spokeswoman for Boulder-based Wild Oats Markets Inc., said the chain has kept pace with demand for fresh oranges by offering multiple varieties from several specialty suppliers. Nationally, the price of orange juice is up more than 20 percent from a year ago. For the four-week period ending Jan. 20 - the most recent period for which data is available - the average price of a gallon of orange juice was $5.51, according to the Florida Department of Citrus and ACNielsen. A year ago, orange juice averaged $4.58. Sticking to fresh Juice and smoothie retailers who depend on a constant supply of oranges or fresh-squeezed orange juice say they have struggled to adjust to rising costs and dwindling supplies. Executives with Squeeze International Inc., which has five Squeeze Fresh Smoothies shops in metro Denver, opted to implement a 65-cent surcharge for its products. "To maintain the integrity of our products, we have decided to continue to use fresh juice rather than replacing it with a substandard concentrate," said BoJames Gascoigne, director of marketing and brand development for the Greenwood Village-based company. The menu at the Squeeze Fresh Smoothies store in Lowry Town Center reflects the 65-cent citrus surcharge. (Post / Cyrus McCrimmon)25-cent increase they are charging for some smoothies a "brrr-charge." The company, which has 23 Colorado outlets, will allow customers to substitute another kind of juice to avoid the surcharge. Other juice and smoothie companies said they are trying to avoid passing the price increases on to customers. Fort Collins-based Inta Juice switched from California oranges to Florida oranges in an attempt to avoid the price hikes, said chief operating office Heath Pickett. Temporary fix But the move served only as a temporary fix as demand for Florida oranges spiked. In response, Inta Juice began allowing its franchisees to substitute fresh-squeezed orange juice with Naked brand juice, which hasn't had an effect yet because of the company's long-term pricing contracts. "We tried to come up with a solution that would not affect customers and would not affect franchisees from a cost standpoint," Pickett said. Even with those alternatives, he said, the company can't stop its franchisees from increasing their prices if they decide it's necessary. So far, more than 90 percent of the company's franchisees have held the line on prices, Pickett said. While the price hikes have been most visible with oranges and other citrus, companies that purchase California avocados said they are bracing for similar price hikes. Denver-based Chipotle Mexican Grill is getting its avocados from Mexico but is about to make the seasonal shift to California avocados. Chipotle spokesman Chris Arnold said the company is concerned that it will encounter higher prices and possibly diminished quality as a result of the freeze. While it's too soon to tell, Arnold said the company would consider raising the prices of guacamole or not serving it if the situation warrants.

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