High-Priced Sugar Spurs Product Shuffling

Buckinghamshire, UK—Elevated prices among commodities such as sugar are forcing food manufacturers to reformulate products with alternative sweeteners. Despite the general trend away from high-fructose corn syrup (HCFS), some companies are opting to use this sweetener in an effort to avoid the soaring price of sugar. Others are looking to up-and-coming sweeteners such as agave and stevia to sidestep the inflation.

High prices for other commodities such as cocoa are also driving reformulation, with suppliers offering new, alternative ingredients at lower price points and manufacturers rethinking their product specifications. Sugar prices, in particular, have been affected by over-speculation and reports about poor harvests in key areas like Brazil, according to global commodities intelligence firm Mintec. The situation is furthering an established trend, wherein special ingredients, such as emulsifiers and sweetness enhancers, are created by suppliers and sought by manufacturers to replace high-priced commodities. For example, one UK-based ingredient supplier is offering ‘Maltichoc’ in response to the cocoa spike, a unique blend which they claim will reduce the need for cocoa powder by 50 percent, without loss of product quality.

Another potential effect of current commodity prices is shuffling within the industry, in terms of manufacturers’ partnerships with suppliers. Budget-minded manufacturers may look elsewhere if their current suppliers can’t provide affordable commodity prices. Sugar prices may normalize sooner rather than later, though, according to Nick Peska of Mintec. “India has had a surplus crop for the first time in more than two years, with sugar production expected to reach 25.5m tonnes up from 18.8m tonnes last season. This should help ease global supply concerns as the country is likely to return as an exporter,” Peska says, noting that there has been a very recent downturn in sugar prices, though they still remain high.

Published in WholeFoods Magazine, January 2011 (published ahead of print on 11/19/2010)