Professor Tillotson is a highly respected scholar who writes about the global juice business, not just cranberries. His article is thought provoking and must reading for those interested in what will happen to the food and agribusiness sector into the next two or three decades. He raises questions that must be understood, addressed, and responded to in the marketplace by any company that wants to remain competitive in the future.

As we start the next century, the global juice industry is entering a new period of rapid change, driven by changing consumer tastes and uses for commercial beverages. To be successful in increasingly competitive markets in the new century, juice producers will need to monitor these changing consumer needs and be prepared to modify their business operations rapidly to satisfy the lifestyles of 21^st century consumers.

This paper takes a futuristic view of the changing fruit and vegetable juice market, attempting to predict changing consumer taste and usage patterns, and what strategies the industry will pursue to answer future consumer expectations on the time frame of the next few decades.

This paper is based on information obtained from three sources:

• One-on-one interviews with recognized experts in the juice industry, both in North

America and Europe;

• Review of futuristic articles concerning the global food industries, concentrating

on the commercial beverages industries.

• Consumer trend and strategic analyses done by the author in predicting the future of

the global beverage, food and agribusiness.

Naturally, such a comprehensive survey would yield far too many and diverse trends, some 200 in all, than could be successfully accommodated in a short article. Therefore, the scope of this article concentrates on the most dominant as well as the most commonly reported future industrial trends.

The overarching impression gleaned during this survey was that the global juice industries is entering a new period of rapid change, unlike previous eras, and driven by changing consumer usage of juices, leading to major changes in industry structure and operating modes. While changing consumers will present the industry with new opportunities, they will also offer great challenges to the industry in the coming decades. As always with industrial change, there will be winners and losers.

What will be future consumer demographic trends?

• In the 21^st century, there will be many more potential consumers of juice beverages. Today we have some 6 billion people living on the earth. UN population projections are that by 2020 there will be 8 billion; by 2050 more than 10 billion people living on the globe. The industry can look forward to many more thirsty people in the future!

• These future beverage consumers will grow in numbers at markedly different rates in various global regions, resulting in two distinctly different age distributions on earth: In the industrial countries, total population will grow very slowly, if at all, and consumers will be on the average older. By the year 2030, current OECD projections are that one in four persons in the developed world will be age 65 or older, up from one in seven today. This has been called, " the Floridization of the developed world."

• In the developing countries, we will have the opposite condition: fast growing populations, with 25 to 40 percent 25 years of age and under. These population trends suggest significantly different future end-markets for beverages around the globe.

• By the year 2020 the population of the developing countries will be five times larger than that of the industrial countries, many with ample incomes to afford the simple pleasure of a commercial beverage. This will create vast new commercial beverage markets. These markets are projected to grow in stages similar to those experienced by the industrial countries during the last fifty years.

• In spite of the unfortunate stark disparity of incomes that will continue to exist throughout the developing world, long-term economic improvement is projected to create vast new markets for commercial juice beverages. Many of the new global inhabitants will be excellent customers for commercial beverages.

• Due to the current severe financial crises in Asia, South America and other developing countries, yesterday’s bright promise of immediate new economic development will be delayed by up to a decade. However, in the long term these markets will rekindle, generating billions of potential juice consumers. The question still to be answered is whether the development of these regions’ commercial juice industries will be led by their own domestic companies, global beverage companies, or the fast-growing, global supermarket chains or a combination of all three.

• In the beverage markets of developed countries, which for the next decade will be the main focus of the current industry, the juice industries will face a different set of market conditions: slow population growth; older and more sophisticated consumer purchasers, with changing lifestyles, living in fast-maturing commercial beverage markets.

• Competing commercial beverages will increasingly contest consumer beverage markets. Developed countries’ consumers will present significant new challenges to our industry in the 21^st century.

What will be the defining characteristics of future consumers?

• Much has been written about the future of global industries and the new era of the knowledge economy; however this is not an asymmetrical process, consumers will also be influenced by this new era. The new information era will have a similar influence on consumers as on business. Our 21^st century consumer living in industrial countries will be a more educated and a better-informed shopper.

• Modern, efficient and cheaper communications – TV, Telecom networks, the Internet, cellular phones – will result in smarter, more experienced, ever more demanding juice shoppers. Increasing price/value transparency coupled with growing consumer interest in "more-value-for-the-money" will heighten the industry’s cost and structure rationalization.

• 21^st century consumers, often older, will be more concerned with their health. New scientific information relating their diet to their health and wellness will have increasing influence on their beverage-buying decisions. This trend will be enhanced by government public health policies.

• For fruit and vegetable juices, which have always been marketed as "good-for-you" beverages, this health and wellness trend presents a significant competitive advantage over other commercial beverages in the future.

• Increasingly during the 21^st century, the visiting by consumers at traditional food stores to buy of foods and beverages will decline in the industrial countries. Already one of two dollars spent by consumers in the United States for food and beverages are for "eating-&-drinking-ready", consumed either at "away-from-home" eating establishments and/or in the home without further preparation. Similar trends are developing in the EU and among the other industrial countries.

• More and more in the 21^st century, busier, richer, time-pressed consumers will delegate to others the procurement, preparation, delivery and serving of beverages. Industry delivery-systems – all point distribution systems- will become increasingly fundamental to business success.

• People will shop more and more at convenience outlets for beverages, or drink their beverages at restaurants and/or at institutional feeding spots. In the United States the average shopper is presently making only a bit more than two visits per week to the supermarket, with 50 percent of shoppers purchasing ten or fewer items per visit. Other industrial countries are experiencing a similar trend.

• This beverage consumption trend toward ever more "ready-prepared" nourishment, available everywhere, is the result of a multiplicity of factors in industrial countries: greater affluence, time pressures due to a larger percentage of population working outside the home, and the availability of always-improving, fresh, "eating-and-drinking-ready" food and beverages.

• The traditional major outlets for commercial juice beverages – supermarkets or retail stores – are projected during the 21^st century to be of decreasing importance for the purchase of juice beverages. Future success in the commercial juice industry will depend increasingly on access to new beverage distribution channels.

What will future consumers want in beverage purchases?

• Increasingly, tastes in beverages are becoming more universal among consumers throughout the world. Strong national A-brands juice beverages will become strong global A-brands.

• Consumers, especially in the industrial countries, will want their juice beverages to have an increasing number of positive product-attributes beyond simple refreshment: Successful juice beverages will satisfy an ever-widening number of consumer needs, wants and lifestyles. As a result consumers will want increasing beverage innovation from the industry.

• Consumers are projected to purchase an increased mixture of traditional juices and juice drinks as well a greater number of innovative, non-traditional beverages.

• In the 21^st century, the juice industry will go far beyond supplying only the traditional juice for breakfast. Juice beverages will become increasingly all-day, different occasion, multi-purpose beverages.

• Markets for juice beverages will become increasingly segmented; juice products developed for specific age groups and usage patterns will be increasingly promoted to specific market niches. Since innovation with 100% juices and blends is more difficult; most innovation will, therefore, come from juice drinks.

• To satisfy the diverse taste of 21^st century consumers the industry will increasingly attempt "mass customization" of its juice beverage offerings to different, smaller consumer segments.

• Some of the important projected market segments will be:

• Juice beverages that contribute to consumers’ health, beverages that help them live longer, disease-free lives will continue to grow in popularity.

• Juice beverages will be increasingly advertised and sold to consumers on the promise of specifically-defined health benefits and disease-risk-reduction (e.g., "help reduce your risk of cancer, heart disease or birth defects"). Some juices will benefit from this trend; others will suffer in the market place due to their inherently limited nutritional quality.

• Juice beverages with added vitamins, minerals and other functional "health promoting" ingredients will be part of this trend. Today, in the United States calcium fortified orange juice continues to set new monthly records in consumption.

• The growing obesity epidemic among the world’s population will create a growing demand for sugar-free, non-nutritive-sweetened juice beverages.

• Other new beverages will appear with the proven ability to enhance consumers’ physical and mental performance.

• And still other new beverages will appear that better satisfy consumers’ everyday thirst.

• Vegetable juices, with their high content of health promoting phytochemicals, will become a strong area of product development and consumer interest in the future. The recent growth in market demand for carrot juice in Asian markets is the forerunner of this new vegetable beverage trend.

• The differentiation by consumers between pure juices versus juice drinks or nectars will become increasingly less important. New generations of consumers will be more interested in the purpose and function of the juice beverage than in their absolute composition. The fast market growth of Sunny Delight with young European consumers is the forerunner of this trend of the future.

• However, one attribute will always remain the same: juices and juice drinks will always have to taste good, if consumers are to purchase them. Other product attributes, while becoming increasingly important in the future to consumers, will always rank second to the basic organoleptic quality of juice beverages.

Consumers will increasingly purchase beverages that fit better into their changing lifestyles.

• Juice beverages will be in demand that make consumers’ lives easier, more efficient and more pleasant.

• New delivery systems for juice beverages will be developed which will fit the 21^st century consumer’s on-the-run lifestyle more closely. This could include in some markets the delivery of juice beverages to the home, possibly ordered over the Internet.

• Juice beverages will become more widely available to consumers: present everywhere and consumed everywhere for tomorrow’s highly-mobile consumers.

• Increasingly these beverages will be ready-chilled, in single-serving containers and be tastier and of better quality.

Page two