LAKELAND, Fla. -- A shelf space audit of 2,700 supermarkets has indicated that out-of-stocks may be a problem in the refrigerated orange juice category, despite expanded shelf space in newer stores.
Proliferation of value-added brands and significant promotional activity to combat slumping sales are probable culprits, said Rick Pensa, president of Insight, Information & Consulting Services, Kennesaw, Ga., which conducted the study for the Florida Department of Citrus.
In an effort to steer the category away from its commodity-based roots, orange juice makers have tailored brands for every palate and need -- from pulp or no pulp, to calcium-added, low-acid and sugar reduced.
This proliferation, coupled with a trend toward construction of larger supermarkets with larger refrigerated sections, has led to an increase of the average linear feet of shelf space devoted to refrigerated orange juice, from 39.1 feet in 2001 to 52 feet in 2004.
Yet during this time, the low-carb diet craze sapped momentum from the category. Retail volume sales of refrigerated orange juice for the 52 weeks ended in February were down 3.8% vs. a year earlier, according to ACNielsen, Schaumburg, Ill.
To shore up sales, suppliers have resorted to aggressive price promotions, and Pensa said that as a result, consumers have become conditioned to expect bargains in the category, and may be passing up a purchase altogether if a promoted brand is out of stock.
"Through this past year, there have been very aggressive promotional strategies from the major players in this category," said Pensa.
"My contention is that when prices are lowered significantly for a brand, the existing shelf space doesn't support the spike in volume that's going to occur as a result," he said.
Category managers may be reluctant to cede more space to a category that is currently flat or down, but Pensa said that the space-to-dollar sales ratio of orange juice was still more favorable than several other products.
Orange juice occupies an average of 10.3% of refrigerated shelf space, according to the audit, and it accounts for 8% of refrigerated dollar sales. By contrast, Pensa said, pudding, refrigerated dough and fruit drinks collectively occupy 17.9% of refrigerated shelf space, but account for only 6.7% of dollar sales from the area.
"In this audit, there were several items that were overspaced with respect to their dollar sales contribution," said Pensa.
The study cited a Northeastern retailer in a major orange juice market. Orange juice occupied 9.6% of shelf space, while accounting for 11.2% of sales in the refrigerated department.
Based on the company's regional market share, Pensa estimated the company could grow sales $12 million per year by allocating more space to the category and keeping additional days of product supply available.