Global war on sugar haunts industry

LONDON — It’s not this year’s price crash that haunts the $150-billion sugar industry. It’s the fear of worse to come. Raw sugar’s 16% drop ranks it bottom of the 22 raw materials on the Bloomberg Commodity Index.

Shocks to demand in top consumer India and prospects of more European supply are helping shift the market to a surplus, hurting prices.

Yet, beyond such market dampeners hang darker clouds.

HEADED FOR A TIPPING POINT

After decades of stable demand growth — almost doubling per person since 1960 — the world is heading for a tipping point as shoppers turn against the cola and candy blamed for an obesity epidemic in the rich world.

At the same time, sugar has to compete with cheap syrups increasingly used in processed food.

Demand is rising by some estimates at the slowest since at least the global financial crisis as companies like Coca- Cola Co., consuming about 14% of all sugar traded, and Nestle SA, the world’s

biggest food company, react to such trends.

Group Sopex and Green Pool Commodity Specialists see growth in 201718 below the average two percent a year of the past decade or so.

The US Department of Agriculture (USDA) sees the first drop in demand in a quarter century.

“Growth is not what it’s been,” Tom McNeill, managing director of Green Pool, said in an interview “There is undoubtedly a move by global bottlers and by a lot of global food manufacturers to reduce the sugar content in their products.”

Consumption may sink below one percent for a second year in the 2016- 2017 season, less than half the average pace in the previous decade, Sopex figures show. — Bloomberg