Costly equipment stymies juice-concentrate plan
Published:Wednesday | July 6, 2011 | 12:00 AM
Avia Collinder, Business Writer
Dr Derrick Deslandes, marketing consultant with the agriculture ministry, says the push to develop a local juice-concentrate market to replace imports has been stymied by the cost of machinery needed to process fresh juice into its preserved form.
The acquisition of an evaporator and other equipment for aseptic packaging could significantly improve earnings from the production of concentrate from fresh juices and reduce the need to import the product, said Deslandes.
Concentrates represent a more than J$1 billion import bill, according to STATIN data.
"Imported concentrate allows for storage at ambient temperatures, requiring no electricity. What we produce here are purées which have a high energy cost for storage," said the marketing consultant.
"To move forward, purée makers would need an evaporator to produce the concentrate."
Concentrate imports in 2009, the last year for which data has been compiled, totalled US$15.72 million (J$1.3 billion) down from US$28.88 billion (J$1.8 billion) in 2008.
Jamaica buys concentrate products in frozen and non-frozen orange juice, pineapple, grapefruit, lime, tomato, grape, passion fruit, vegetable, apple and coconut water.
It imports the products from the United States, Canada, India, China, Mexico, The Bahamas, Puerto Rico, Thailand, Trinidad and Tobago, the United Kingdom and South Africa.
"We need to convince industry players that the investment will be worthwhile," Deslandes said.
The potential for earnings is greatest for tomato, pineapple and mango concentrate, he said, but there is also demand for June plum, soursop and cherries.
Peter McConnell, CEO of Tradewinds Limited, a chilled-juice manufacturer, said evaporators were already in use locally for oranges, as crop lasts for only six months and is used as concentrate for the other half.
But he said the capital costs for the aseptic fillers and a pasteurising machine, which would permit storage without use of electricity, were high - in the region of US$250,000 - and would not cut energy costs by more than 10 per cent.
"The entire blending, storage and bottling process is energy intensive. The pasteuriser itself will add to energy costs," McConnell said,.
The orange juice market requires a frozen purée, as distinct from other products, he said.
As part of its import substitution and food-security policy, the Ministry of Agriculture has set itself the goal of supporting local fruit producers.
The ministry's Fruit Tree Crop project has been in operation for a nearly a decade to increase the quantity and quality of flavours and fruits available to the local and export markets.
Support programmes include non-traditional orchard crops such as soursop and naseberry.
A total of 1,043 hectares of these orchard crops has been established under the project.
RADA assistance
With a budget of J$10 million, RADA provides assistance to farmers in the establishment and maintenance of the orchards.
Tradewinds, owners of the Tru-Juice brand, has been pushing sales of fresh juices, but the company produces a concentrated form of juice which is stored frozen.
This year, said McConnell, the company is focusing more on pushing exports as this segment has grown consistently by 20 per annually over the last two years and it is expected to maintain a similar pace in 2011.
Local sales, he said, were flat - affected principally by price increases arising from higher energy costs.
"Our margins are much less," said the Tradewinds CEO.
In March, Tradewinds increased prices by eight per cent to offset energy costs that have increased by 30 per cent, he said, since the start of the year.
Other brands distributed by the company include Fresh, Wakefield, Tru-Tea and Calico Jack, a rum-based chilled drink, which has been having slow take-up locally, because wholesalers prefer alcohol drinks with longer shelf life and which do not require refrigeration, said McConnell.
Tradewinds has installed a purée plant for mango, sorrel and soursop, but has no current plans to concentrate these fruits.
"It's more expensive and the quality is poorer," McConnell said.
Capital investments in aseptic lining and the pasteuriser he said, has been discouraged by high interest rates and a stagnant economy with as much as 70 per cent of revenue from sales dependent on the local market.
McConnell said Tradewinds was in the middle of an energy audit, with the aim of finding ways to cut energy usage across the board.