The sugar industry is determined to put on a brave face despite rising consumer concerns over obesity and the proposed liberalisation of the European sugar market. Major sugar producers such as Tate & Lyle and Silver Spoon-owner British Sugar may claim that life is sweet, but they have had to adapt their strategies in order to cope with the changing market.
Although the sugar market in the UK is worth an estimated £319m and sales by value increased by 12 per cent between 1999 and 2004 (Mintel), boosted by rising sugar prices, volume sales have fallen by ten per cent over the same period.
Tate & Lyle and British Sugar, which together account for nearly 80 per cent of the UK sugar market (Leatherhead Food International), have launched low-calorie sugar lines in a bid to tackle the decline in volume sales, which has been attributed to fears over obesity and related health issues such as heart disease and diabetes.
Lower calories, bigger profits
Last year, Tate & Lyle ploughed £3.5m into the launch of Tate & Lyle Light, a product that has 33 per cent fewer calories than sugar (MW October 28, 2004). The company has already made inroads into the low-calorie sugar and sweetener market with sucralose-based product Splenda, which it distributes in a joint venture with McNeil Nutritionals. The brand has a six per cent share of the UK artificial sweeteners market (Mintel).
British Sugar also produces a range of low-calorie premium sugars and sweeteners. The company launched a “lite” variant, Silver Spoon Light, last year. It has 25 per cent fewer calories than regular sugar. It also produces Sucron, which contains 75 per cent fewer calories than its regular counterpart, and Silver Spoon Low Calorie, a sweetener available as a granular product at two calories per spoonful, or as a tablet containing 0.2 calories.
As well as fighting falling demand, the industry is dealing with the reform of the EU Sugar Regime, scheduled to take place on July 1, 2006. The European Commission’s proposals will open up and liberalise the EU sugar market by cutting the continent’s prices year on year until they become 39 per cent lower than current levels from 2009 onwards. This will level the global playing which have suffered for decades from a protectionist system of high fixed prices, tariffs on imports and subsidies on exports.
Tate & Lyle says the price cuts could slash its operating profits by £85m a year from 2009 onwards because of reduced margins. Again, the company is hoping to offset this by investing in its newer products and has plans to more than triple sucralose production capacity.
The company is working to innovate across its entire range of products. Last week, it launched a spreadable breakfast version of Golden Syrup called Lyle’s Golden Spread (MW, last week). Tate & Lyle says: “We’ve worked hard to continually innovate and introduce new brand extensions to the market. But we see our traditional products as having a continuing market.”
The light-hearted options
Developments in new low-calorie lines are also set to increase across the industry. A 2003 World Health Organisation (WHO) report concluded that high consumption of sugar-laden soft drinks and the heavy marketing of sugary products are among “probable causes” of the huge worldwide increase in obesity. The study recommended that added sugar should make up no more than ten per cent of dietary energy intake.
But the sugar industry does not share the view that sugar is a cause of obesity. Dr Richard Cottrell, director of the Sugar Bureau – the industry association that is funded almost entirely by Tate & Lyle and British Sugar – claims that there is no scientific evidence to support the ten per cent claim. He says: “Sugar has no particular or special role in obesity; overeating any food will lead to weight gain. To advise any level of sugar in the diet of a whole nation of different people is pointless.”
Professor Aubrey Sheiham, from the University College London department of epidemiology and public health, who has sat on World Health Organisation committees dealing with sugar intake, does not share this view. He suggests that the sugar industry will go the same way as the tobacco industry.
He says: “The WHO has repeatedly proved sugar to be a cause of obesity and heart disease, despite our evidence being disputed by the industry. The [maximum] ten per cent recommended added sugar in a healthy diet is not an arbitrary figure. We wanted it to be lower, but we decided the sugar and food industries couldn’t cope with reformulating their products so much.”
Sheiham describes obesity as a “genuine killer”, a sentiment echoed by Jeanette Longfield, a coordinator of Sustain, an alliance of more than 100 organisations that lobbies for better food and farming. Longfield is sceptical of the “low-sugar sugars and sweeteners” on the market, but says they are a “perfectly understandable business response to the health fears of consumers”. However, she adds that such products have not led to a reduced sugar intake in the US, where they have been available for longer.
She says: “I think that if sugar manufacturers properly examined general trends in eating habits, they would get out of sugar production and diversify into other areas.”
Others, however, say healthier sugars and sweeteners still have room to grow in the UK market. Mintel research shows that almost three quarters of men and 71 per cent of women have never used sweeteners and suggests that as these consumers begin to adopt a more health conscious and convenience-based approach to life, companies involved in this side of the market are expected to cash in.
Lynn Porteous, regional vice-president for Merisant International, which makes market leading artificial sweetener Canderel, says that as health concerns grow, consumers will increasingly become interested in a range of low-calorie and sugar-free alternatives.
She says: “The future will see the increased development of premium sugars because retailers and manufacturers know there isn’t a lot more profit in the production of all-purpose white sugar in the UK, so we’ll see more specialised coffee sugars, dark sugars and ‘sugar lites’ introduced to the market.”