Private equity-owned drinks company Tropicana, which produces fruit juices such as Tropicana, has warned that a citrus blight has caused the destruction of crops and is likely to lead to a rise in prices for consumers. Naked Juice (which owns Tropicana) told lenders in this month it expected to make an underlying profit of $322,000,000 (£241,000,000) this year. This is a significant increase from the $375,000,000 it previously predicted.
S&P Global Ratings warned Naked Juice that it was in danger of breaching its covenants on its $350,000,000 revolving facility. This is effectively an overdraft for the company. In 2021, French private-equity firm PAI Partners purchased a majority stake from PepsiCo for $3.3 billion. This created a joint enterprise between the two companies that had $2.3 billion in debt.
Naked Juice has seen its production costs rise as it struggles to find healthy oranges. The spread of Citrus Greening Disease has led to a more than doubling of orange prices in the last year.
According to Circana, the average price of oranges juice at the supermarkets rose 10.8% in the past year. Prices are likely to rise further due to ongoing problems with the supply chain.
According to S&P analyst Gerald Phelan, Naked used to buy oranges mostly from Florida. However, the spread and severity of citrus greening has forced the company to purchase more in Brazil where farmers have made better use technology to control the disease.
To achieve the desired taste, the company uses a mixture of 25% Floridian and 75% Brazilian oranges.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.