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 Consumption may grow at its slowest pace in seven years in 2017/18,
according to analyst group Platts Kingsman. It forecasts a rise of
1.04 percent, nearly half the average growth of about 2 percent per
year over the last decade.
"Consumption is generally stagnating in developed countries," Tom
McNeill, director at commodity analyst group Green Pool, told
Reuters.
Falling consumption in more health-conscious markets has been
exacerbated by higher prices and the use of alternatives like
high-fructose corn syrup in developing countries that might
otherwise have made up the shortfall.
(For graphic on sugar withdrawal, click http://fingfx.thomsonreuters.com/gfx/rngs/SUGAR-CONSUMPTION/0100416C2K6/SUGAR-CONSUMPTION-01.jpg)
Combined with weaker demand from food and beverage makers globally,
this could represent a "step-change lower" - or a fundamental shift
- in global consumption, according to Tropical Research Services.
"So, it may be that the real long-term 'trend' rate of global sugar
demand growth has changed and is now lower," the group said in a May
7 report.
At least 17 countries and a number of U.S. cities have added an
extra tax on sweetened beverages. Another 11 nations are
implementing or considering similar levies.
Many are going further: France has coupled a tax with measures like
banning vending machines in schools. Chile last year introduced
black stop-sign warning labels on foods high in sugar, salt and fat.
Mexico is another example. With one in three adults in the country
affected by obesity, the country slapped a levy on sweetened soft
drinks in 2014.
Although the impact on health will take years to assess, early data
shows consumption of soft drinks in Mexico has fallen by 12 percent
since the tax was introduced.
"There is an increasing understanding for the need to control intake
of free sugars, in public policy and in culture in general," said
Francesco Branca, director of nutrition for health and development
at the World Health Organization.
"With obesity and diabetes very quickly spreading, they are trying
to do something about it early on."
The slowing pace of growth globally is adding to worries the world
sugar market is headed for a surplus in 2017/18, after two
consecutive deficits. [nL5N1H03Y2]
It could also curtail ambitious plans by the European Union to
sharply boost output in 2017/18 in an effort to again become a net
exporter, after it ends subsidies and caps on exports in October.
[nL5N1H03Y2]
INDIA, CHINA AND BRAZIL
High-income countries like Norway and Canada are already seeing a
decline in sugar consumption, Euromonitor figures shows. Now the
appetites of developing markets, whose rapid population growth was
expected to drive future growth, also appear to be waning.
Sugar sales in India, the world's biggest consumer, are set to fall
by roughly 1 million tonnes this season, the Indian Sugar Mills
Association (ISMA) estimates, due to higher domestic prices and a
cash crunch that followed last year's demonetisation of high-value
bank notes.
The government's decision earlier this year to abolish a sugar
subsidy for poor families also dented consumption.
ISMA expects consumption to rebound next year as production in the
country normalizes and domestic prices come down, but analysts say
long-term growth remains uncertain as the government mulls higher
taxes and stricter labeling on sugary foods.
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"If India also jumps on the bandwagon with such a levy, as the
world's biggest sugar consumer, this could be felt in global
growth," said Stefan Uhlenbrock, senior analyst at F.O. Licht.
Sugar demand also seems to be stagnating in China, the second
biggest consuming country, as cheaper sweeteners like high-fructose
corn syrup (HFCS) grow in popularity.
Chinese beet and cane farmers rely on state support to offset steep
production costs. Imports, meanwhile, are subject to hefty duties
meant to protect the industry, with an additional tariff introduced
just this week.
As a result, domestic sugar prices are around double those on the
world market. This, coupled with an abundance of cheap corn, has
made HFCS highly competitive.
The USDA last month highlighted the decline in Chinese sugar demand
when it slashed its estimates for consumption in that country for
2015/16 and 2016/17 by roughly 10 percent and signaled more modest
growth than previously expected.
"People in China are still eating ice cream and drinking soft
drinks," said John Stansfield, analyst at commodity trader Group
Sopex.
"It's just the fact that these products are now increasingly made
from corn syrup rather than sugar."
Brazil, the world's third largest consuming nation, has also seen
demand growth slow over the last three years as an enduring
recession slashed the incomes of many Brazilians. Consumption was
growing at roughly 2-3 percent over the previous decade.
SODA AND CONFECTIONARY
Manufacturers seem to think the anti-sugar movement is here to stay,
and many food and beverage companies are pre-emptively reformulating
their products as a result.
Coca-Cola has committed to reducing sugar in its drinks, with
more than 200 reformulation initiatives underway.
PepsiCo also said that by 2025 at least two-thirds of its drinks
globally will have 100 calories or fewer from added sugar per 12-oz
serving.
Nestle said in 2016 it is developing technology to reduce sugar in
some confectionary products by up to 40 percent without affecting
the taste.
"Globally, sugar is in the spotlight," said Sara Petersson,
nutrition analyst at Euromonitor. "The regulations are increasing
with time. And if they're being smart, they're going to tackle this
in advance."
(Editing by Nigel Hunt, Veronica Brown and Sonya Hepinstall)
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