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Both EU sugar supply and demand developments likely to pose challenges for ACP exporters

12 January 2014

At the 98th session of the ACP Council of Ministers in December 2013, ACP ministers noted the scheduled abolition of EU sugar production quotas and the EC’s projections of a reduction in both prices and import demand following the abolition of production quotas, with the EU becoming a “net exporter from time to time”.

The ministers noted that the benefits of ACP sugar sector preferences will be eroded not only by the process of CAP reform but also by significant tariff reductions on sugar imports from non-ACP/LDC suppliers.

Concern was expressed over EU country-of-origin labelling (COOL) requirements, which they considered “could be a major non-technical barrier to ACP sugar trade”.

The ACP ministers called on the EU to:

  • “review in 2018 the impact of the new sugar regime and new FTAs on the ACP sugar supplying states and to take corrective measures if necessary”;
  • “rescind the sugar-specific safeguard provisions applicable post September 2015”;
  • “display flexibility in implementing the AMSP [accompanying measures sugar programme] to allow full utilisation of allocated resources”;
  • “consider renewing the AMSP in view of the new challenges which the ACP sugar supplying states are likely to face with the end of the EU quotas in 2017”;
  •  “exercise great care in its sugar market access concessions in its FTA negotiations and to ensure that ACP preferences are maintained to the maximum extent possible in the WTO negotiations”;
  • “exercise flexibility in the ongoing EPA negotiations in order to avoid the loss of market access to the EU” if EPAs are not in place by September 2014;
  • “provide adequate funding for a second ACP sugar research programme in 2014/15”.

Supply-side developments are not the only factors affecting the prospects for ACP sugar exports to the EU: serious challenges are also likely to be faced on the demand side. According to press reports, at the global level “the major stevia suppliers are now focusing on cutting sugar by half in mainstream soft drinks.” Cargill, the manufacturer of Truvia – a stevia-based sweetener – is targeting the low-calorie soft drinks market, with new sweeteners potentially generating 20% cost savings on sweetener procurement costs. Other suppliers are also looking to generate a 30% reduction in sugar use in products such as yoghurt and ice cream.

The main target group for stevia suppliers is “consumers who prefer natural products but are also seeking sugar reduction”. This category of consumers has risen from a fifth to a quarter of European consumers in 4 years. Research published by Canadean, an established market research company in the beverage industry, suggests that of the new sweeteners entering the market – stevia, sucralose and aspartame – stevia is the preferred sweetener. The research analysed online articles, blog posts and social media discussions. The findings of the EFSA that aspartame is safe is seen as unlikely to have an impact on consumer rankings of their preferences.

Since 2011, when stevia was approved as a sweetener in Europe, 1,200 products containing stevia have been placed on the market, 700 of these launched in 2013. Beverages containing stevia account for 28% of new product launches. Stevia also accounts for around “a third of all sales of table-top sweeteners in Europe”. 

Editorial comment

Sweeteners such as stevia, where technical innovations are increasing its attractiveness to food product manufacturers, are likely to further impact on EU demand for imports of ACP raw cane sugar. Existing EU beet/raw cane sugar co-refiners, which have made the commercial position of traditional raw cane sugar suppliers very difficult, are only likely to retain an interest in continued co-refining if clear markets for ACP raw sugars can be identified.

Careful marketing of ACP sugar exports to the EU is therefore likely to be needed in the coming years. Specifically, there needs to be clearer identification of market components that are less likely to be affected by competition from alternative sweeteners (including isoglucose – see Agritrade article ‘ What scope for increased isoglucose use in the EU after production quota...’, 9 December 2013) and the development of closer commercial relationships with European sugar companies to better serve these end user markets. Specific market components also need to be developed that do not directly compete with the own production of beet refiners engaged in co-refining. An obvious example in this regard relates to the production and packaging/marketing of fair-trade sugars, with new partnerships being developed that more clearly tell the story of fair-trade sugar to end consumers (for the importance of this aspect, see Agritrade article ‘ The psychology of eco-labelling subject to academic analysis’, 20 January 2014). This, however, requires continued growth in demand from manufacturers for fair-trade sugar as an ingredient in other products (see Agritrade article ‘ Fair-trade certification for multiple-ingredient products to be modified’, 20 January 2014).


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