Freeze reduces Florida crop size 19 percent, USDA says

NEW YORK (AP) -- Pepsico Inc. is raising prices on its popular Tropicana orange juice because of the deep freeze that hurt much of Florida's citrus crop.

The company said last week it is shrinking its most popular size by about 8 percent -- while maintaining its price -- and raising the price on another size starting in May.

The 64-ounce container of orange juice will drop to 59 ounces. The suggested retail price remains $3.59.

The price of Tropicana's gallon container of pure premium orange juice will rise between 5 percent and 8 percent. Right now it costs $6.49.

Citrus growers in Florida -- the nation's top orange producer -- are hurting because of deep freezes this winter. This year's orange crop is expected to be 19 percent smaller than last year's, according to a release from the U.S. Department of Agriculture. Tropicana spokeswoman Jamie Stein said the company spent a while looking at the impact of the winter freeze and wanted to make changes without affecting people's grocery bills too much.

That is why the company, based in Purchase, N.Y., chose to shrink its 64-ounce container rather than raise the price outright, although it's a per-ounce price hike.

"We're doing this so that we don't have to take the price up on our core product," she said.

Food and beverage makers react to changing ingredient costs by raising prices, changing products sizes or both. It's a way to protect their profit margins, and in the case of shrinking packages, offer less to shoppers so they can still buy products without having to pay more money at once.

Florida had eight straight days of below-freezing temperatures in January. Growers said it was an unseasonably long freeze, though the damage was less than expected. Some oranges that did survive are expected to be smaller than normal. Most of the oranges Florida produces are used to make juice.

Tropicana sizes, prices

The hikes: Starting in May, Pepsico Inc. is shrinking its popular Tropicana orange juice 64-ounce product to 59 ounces, while keeping the price the same, and raising the price of its gallon container of orange juice.

The cause: A deep winter freeze and other factors are making this year's orange crop in Florida 19 percent smaller than last year's.

The shoppers: People are focused on how much they spend on each grocery trip, so shrinking products to keep prices the same is an inviting option for product makers that need to charge more but don't want to lose sales.