Tropicana owner warns of profit squeeze as orange prices soar

The private equity-owned drinks giant behind Tropicana fruit juice has warned of a squeeze on profits because of a citrus blight that has destroyed crops and will lead to price rises for consumers.
Naked Juice, which owns the Tropicana brand, told lenders this month that it expects to make underlying profits of $322 million (£241 million) this year, compared to the $375 million it had previously forecast.
S&P Global Ratings, a ratings agency, warned that Naked Juice was at risk of breaching the covenant on its $350 million revolving credit facility, effectively a corporate overdraft.
In 2021, French private equity firm PAI Partners bought a majority stake in Naked Juice from PepsiCo in a $3.3 billion deal that created a joint venture between the two companies with $2.3 billion of debt.
Naked Juice’s production costs have increased as the company struggles to source healthy oranges. In the past year, the spread of citrus greening disease, which changes the colour of the fruit and gives it an acrid taste, has caused orange prices to more than double to $6,500 (£4,800) per tonne at their peak.
The average price of orange juice in the shops rose by an average of 10.8 per cent in the year to May, according to researcher Circana. Ongoing problems in the supply chain mean prices look set to increase further.
Naked has historically tended to source oranges mainly from Florida, but the spread of citrus greening disease has forced it to source more from Brazil, where farmers had made better use of technology to curb the spread of the disease, according to S&P analyst Gerald Phelan. The company now uses a blend of 25 per cent Floridian oranges and 75 per cent Brazilian oranges to achieve its desired taste.