Are Fruit Juice Categories Separable?

Supermarket shelves are saturated with numerous varieties and brands of juice beverages. This high level of assortment has dramatically changed beverage consumption patterns and trends throughout the United States. In fact, during 2004-2005, energy and sport drinks experienced significant increases in sales, 65.9% and 20.6 %, respectively. During the same period of time, refrigerated juice sales increased a mere 2.2%, shelved non-fruit drinks decreased 0.9%, bottled juices and cocktails both decreased 1.5 % and frozen juice decreased by 12.8% (Food Industry Review 2006). The beverage industry has undergone many transformations, but consumer theory states that a shift in demand for one good has to be compensated by a shift in the opposite directions in the demand for the other good. Thus, with more brands competing for consumers’ dollars, it is important for brand managers, retailers, and other industry officials to understand demand interrelationships among various beverages. This study examines the competitiveness and structure of the beverage industry. Existing research suggests the demand for fruit beverages is independent from other food and non-food groups (Heien 1982; Lee 1984); therefore, information pertaining to other goods can be omitted without compromising the validity of the study. Our study will allow us to better understand how consumers make decisions concerning purchases patterns of beverage expenditures.