COVID-19 could impact the sugar sector in food and beverage industry

COVID-19 IMPACT ON SUGAR IN THE FOOD AND BEVERAGE INDUSTRY

COVID-19 IMPACT ON SUGAR IN THE FOOD AND BEVERAGE INDUSTRY Throughout the course of its journey, the sugar industry plays an significant part throughout sustaining the country's economy as well faces many challenges. The danger faced by the novel coronavirus (COVID-19) has recently impacted badly on stakeholders in the sugar industry. Because of this, integrated industries around the world also face multiple challenges such as manufacturing , transportation, among others.

The pandemic has adversely affected the entire value chain in the sugar sector from sugar cane, sugar, molasses, ethanol, and their subsequent marketing and export.

The industry is also facing reduced off-take from associated industries such as beverage and other FMCG companies due to the lockdown. The industries are shut to control the spread of coronavirus, due to which the demand for the sugar declined, and hence sugar sector is declining in generating revenue.

Mainly two of the country that manufactures sugar worldwide and dominates and also supports the nation's socio-economic growth are now facing bigger challenges in this sector. These are Brazil and India, where India accounts for about 15.0 to 25 per cent of the worldwide production of sugar and sugar cane. Now, with the pandemic and lockdown, consumption has dropped as people are made to stay at home, as well as shutdowns in food services sectors such as bakeries, hotels , restaurants, and cafes that reduce sugar demand. and sugae cane importance @ https://www.databridgemarketresearch.com/covid-19resources/covid-19-impact-on-sugar-in-the-food-and-beverage-industry Sugar

For example, according to an article published by Sugar Asia magazine, sugar consumption is projected to drop to 25 million tonnes, compared to 26 million tons which were expected previously.

They have also said that it was found that in the first six months of sugar season from October 2019–March 2020 sugar production has decreased by 22.0% from the last year.

The operations for the sugar production were running up to the 3rd month of 2020. Further, it has been noticed that the production started getting affected so far in April on account of labor shortages due to COVID-19 breakout. Due to lack in value and supply chain, some other inputs which are need in sugar products such as Sulphur, lime, bags & other packing material were also not available or were less available due to disruptions in transportation.

Besides manufacturing, the demand from the associated industries also fell. The associated businesses include among others a bakery, confectionery, and drinks. For example, the supplies of sugar to soda producers are significantly diminished when they turn off operations at bottling plants during the summer when demand for these drinks is high.

Along with these, the food sector such as retail, hotel, and catering which are also larger consumers of sugar has reduced the demand of sugar by national lockdown as all hotels, restaurants, bars, sweetmeat shops, and other miscellaneous food establishments have been closed.

The international sugar prices have fallen by approximately 23.0% between January and April in the year 2020 as large supplier-nations such as Brazil, are switching from ethanol to sugar due to slack global oil demand and low crude oil prices.

Thus, exports from India are likely to remain flattish compared with a 25-30% growth expected earlier. For instance, the drop in the export price of white sugar from USD 425 per tonne in February 2020 to USD 355/tonne at present time has resulted in declination in the market value of the sugar industry.

FAO has also given its estimates that global sugar prices fallen by 19.1% in March 2020 from February 2020 due to lower demand in the coronavirus outbreak.

In the crisis, sugar industry is facing multiple challenges from the production to trade due to which market value of industry is getting impacted in recent time. But in future, once the vaccine or medicine is made available in market against coronavirus and the spread of COVID-19 is under control, sugar industry will takes its position as of previous years. Again the demand will increase from food industries and food service sector and there will be increase in the value of the sugar market in future.

SUGAR MANUFACTURERS: PERSPECTIVE & INITIATIVES COVID-19 outbreak has brought world to a halt where it has an impact on each and every industry. The epidemic has escalated to an unprecedented situation that everybody 's living through. Everybody is struggling to get over it with such unscrupulous circumstance. Overall, one of the cannabis-related drug markets that dropped terribly in early 2020 due to Covid-19. Yet growing investment from various businesses as well as policymakers is helping the industry regain its business share again.

The halt in the production of the sugar have led various food and beverages manufacturers to reduce and halt their production due to the shortage of sugar. For instance,

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"Will temporarily cease operations due to a lack of raw materials." Production of sugar-based beverages has halted but nonsugar drinks like Diet Coke would continue.�

- Company. Coca-Cola “Sugar companies in Brazil may face losses if prices continue to trade at 10 cents to 11 cents a pound.”

- Joamir Alves, CEO Grupo Virgolino de Oliveira SA The government has taken initiatives to reduce the sugar consumption as it their consumption in soft drinks is one of the major causes of obesity, for instance, “The Soft Drinks Industry Levy has been successful in reducing sugar intakes sugar via reformulation, and in raising much needed revenue for children’s services,” it said. “The current sugar levy sugar thresholds should be reduced, the rates increased, and it should be immediately applied to a calorie threshold in sugar sweetened milk and milk-alternative drinks.”

- Katharine Jenner - campaign director of Action on Sugar and Action "The food industry is feeding us heavily discounted and promoted processed food and drink, full of salt, fat and sugar, givin g us little feeling of satiation, which greatly increases our calorie intake. Millions of families face poverty sugar and food insecurity and are unable to access a nutritionally adequate diet.”

- Graham MacGregor from Queen Mary University on Sugar and Action High demand of the ethanol due to their utilization in sanitizer production and high demand of the sanitizers have led government to push up the production of sugar.

For instance, “The situation at present is such that even a mandatory 5 per cent blending of ethanol with petrol, as committed by the government to protect the environment three years ago, would be difficult to meet as a result of a short supply of sugarcane.

With an expected fall in the cane output, the 20 per cent ethanol blending, which the government is planning to make mandatory, is unlikely to be practical,” - Deepak Desai, the chief consultant of ethanolindia.net “India should implement a more “ambitious” biofuel program that will help its sugar mills to increase production of ethanol and “balance the world sugar market” - Brazilian Sugarcane Industry Association/ UNICA. “Retailers are seeing a surge in demand while foodservice customers and themselves with more product than they need,” he said. “We are doing everything possible to connect customers together to move the extra product to where it’s needed most, while adapting our manufacturing plants to create a more agile supply system.”

- Mike Wagner, managing director of Cargill North America “China represents more than 70% of the stevia leaves grown globally and is, therefore, a key supply base for stevia sweeteners, “Sweet Green Fields was among the rest factories approved by the Chinese government to re-open postCOVID-19 and is currently producing and supplying customers.”

- Shasha Yu, marketing director, Sweet Green Fields “People tend to consider aspartame as a commodity but [we] turned it into a new ingredient that traveled by plane,” The air shipments are extreme – it was really at the very start of the crisis when people woke up and found out they would be out of

product – but it shows you how crucial the role of aspartame in food is. I turned it into a joke, saying that our aspartame is traveling VIP.” - Youssef Hamayet Elmili, global sales director at HSWT

CONCLUSION The threat posed by the growing pandemic novel coronavirus (COVID-19) was the latest one and is affecting stakeholders in the sugar industry and its integrated industries worldwide. Brazil and India are the world's largest sugar producers, supplying about 25 per cent and 15 per cent respectively of global sugar and sugar cane. In the near term the introduction of COVID19 would have a significant impact on the sugar industry's growth and use.

The ongoing COVID-19 pandemic has been putting pressure on the sugar consumption patterns, complemented with a reduced off-take from beverage and other FMCG companies amid the lockdown across multiple countries. As the beverage and sweetener sector is the bulk consumer of sugar, it is likely to adversely affect the consumption owing to the precautionary measures of avoiding social gatherings.

These developments and a drop in crude oil prices have caused a ripple effect on international sugar prices. The globe has witnessed a sharp drop in sugar price, wherein in March 2020, the global prices fell steeply by 22%.

Brazil has intended to increase its sugar production because of the energy crisis, in part to counter the fall in sugar cane consumption from the ethanol industry. This is expected to further impact sugar prices on the world market. In fact, the millers were witnessing intermittent delays in the supply chain due to COVID-19.

There have been significant changes in consumer habits as a result of the pandemic, including a increasing knowledge of a healthier lifestyle. Consumers have begun to replace conventional foods with safer alternatives. It will have an impact on the sugar industry too. With “no-added-sugar” and “high protein, low carbs” diet trend among consumers, the demand for sugar was already offset in the past, while this trend is expected to be boosted in the coming years. Hence the future of the sugar industry is expected to witness steady demand, majorly from the beverage industry in the coming years, even after the COVID-19 phase.