Summary
Public health concerns are leading to a gradual but sustained reduction in EU sugar sector consumption. With the EU sugar sector finding a new post-quota equilibrium this is likely to reduce market opportunities in the EU for ACP sugar exporters. This will require improved marketing of sugar in the EU and the identification and exploitation of markets beyond the EU. This will also need to include at the national level in ACP sugar exporting countries structured dialogues with the international sugar companies involved in local sugar production on a common strategy for market and revenue diversification which protects and promotes the economic well-being of local sugar farmers and sugar sector workers.
In September 2019 Public Health England (PHE) revealed significant changes in consumer behaviour and manufacturing practices have been stimulated by the Soft Drinks Sugar Levy. It was reported that in products covered ‘there has been a 28.8% sugar reduction per 100ml in retailer own brand and manufacturer branded products and a 27.2% reduction per 100ml for drinks consumed out of home’ (1).
However PHE reported ‘a disappointing lack of progress with the voluntary sugar reduction programme’, with voluntary schemes looking way off track in hitting the 20% sugar reduction target by 2020 (1). It is reported that to date sugar contained in high sugar foods has been reduced by only 2% overall compared to the interim target of 5%. There were particularly small reductions in confectionery (only 1%) compared to a ‘5-6% reduction in sugar content in yoghurt and breakfast cereals’ (3).
An article in the British Medical Journal (BJM) in September 2019 (4) which reviewed a modelling exercise on the impact of sugar content taxes concluded ‘the concept of a snack tax in the UK is worthy of further research as part of the UK’s efforts to tackle obesity’ (3). The report suggested taxing high sugar snacks ‘may be more effective at reducing obesity than taxing sugary drinks’. Modelling suggests ‘a snack tax on food – which increases prices by 20% – would be twice as effective as the same price rise on sugary drinks’ in terms of reducing obesity. The report highlights how biscuits, cakes and confectionery combined account for ‘12% of energy and 26% of free sugar intake’(3).
The conclusions of the BMJ article were confirmed by findings from Mexico where the introduction of a sugar tax of 8% on non-essential foods reduce purchases of the affected products by 5-6%, ‘with greater effects (reduction by 12.3%) among those who purchases more no-essential foods to start with’ (3). These findings have relevance in other EU countries and beyond where efforts to combat obesity are underway.
PHE reports that overall ‘the total tonnes of sugar sold in foods included in the reformulation programme from the in-home sector has increased by 2.6% between 2015 and 2018 (excluding cakes and morning goods), whereas the sugar sold in soft drinks subject to the soft drinks industry levy has decreased by 21.6%’ (1).
This reflects a wider trend in certain products, with analysis from Queens University London revealing that between 1992 and 2017 the sugar content in chocolate bars surveyed (from Mars, Nestle and Mondelez International) has increased 23% from 46.6 g per 100 g to 54.7g per 100 (2). It was suggested that while taste was in part a factor in this increase in sugar content, economic considerations were also an important consideration since sugar is ‘a cheaper ingredient than cocoa or other types of fat’. It was argued ‘a change in sugar content by just 1–2% has large cost implications, which is why manufacturers may be reluctant to reformulate’ (2).
The Campaign Director of Action on Sugar described as ‘shameful’ the lack of progress in food products beyond the sugary yoghurts and cereals segment. It was argued evidence from the soft drinks sector ‘demonstrated that when properly motivated, the food industry can give us healthier options’ (1).
In terms of out-of-home consumption, Action on Sugar is calling for ‘UK regulators to enforce mandatory colour coded nutrition and calorie labelling on menus’, including online to encourage the restaurant and food service providers to play their part in sugar reduction strategies in a context where offerings contain ‘alarming levels of sugar, salt and calories’. Samples tested from the out of home sector compared unfavourably to the same products sold in supermarkets which ‘contained far less calories, sugar and salt in comparison (5).
For example ‘even the highest waffle sold in a supermarket had less than a quarter of the calories of the highest waffle sold out of the home’. What is more it was argued ‘the leadership position taken by supermarket operators has also encouraged their suppliers to adopt measures like front of pack labelling’ (5).
However it was pointed out that the market position of ‘progressive businesses’ could be undermined by the absence of a regulatory framework which established a level playing field
This has seen calls made in the UK to extent the Soft Drinks Industry Levy to snacks.
This needs to be seen in a context where representatives of the Food and Drink Federation have expressed their opposition to mandatory sugar reduction targets, suggesting the voluntary targets set to date were too ambitious for the timeframe allowed. It was argued the food and drink industry is actively looking at ‘reformulation and portion size’, but that this will require time to achieve (1). This position was supported by researchers at the neoliberal free market think tank the Institute of Economic Affairs who argued ‘cutting sugar from inherently sugary products was an impossible task’, since it was ‘impossible to produce a palatable substitute’ (1).
This industry position appears to be gaining adherents at the highest level in government with Prime Minister Johnson reportedly even considering revoking the Soft Drinks Levy.
Reflecting these trends towards reduced sugar consumption the EC’s autumn agricultural outlook reported that over the 2018/19 season EU sugar consumption is expected to be down 2.1% while in 2019/20 the fall is expected to be some 4% (6).
Meanwhile a study by the EC’s Joint Research Centre has found ‘between half and two-thirds of packaged food products contain too much fat, sugar and salt to market to children’. This was based on an analysis of ‘breakfast cereals, ready meals, processed meat, processed seafood, and yoghurts on sale in 20 EU countries’. It revealed ‘48% of products included in the sample were found to miss the nutritional standards needed to market to children’. It was concluded ‘marketing of high fat, sugar and salt (HFSS) products ‘counters’ efforts from Member States promote healthy eating’ (7).
The JRC reports concluded ‘balanced measures’ are needed to achieve ‘gains for public health’. It argued ‘product innovation and reformulation of foods are key strategies to improve the nutrient balance of the food supply’.”
| Comment and Analysis
ACP sugar exporters serving the EU market are facing a situation of declining consumer demand for sugar in processed food products, with manufacturers adjusting their formulas to reflect consumer trends and the demands of multiple retailers. It is increasingly apparent that mandatory measures which provide financial incentives to reformulate products to reduce sugar content (i.e. sugar content taxes) are far more effective than voluntary codes in bringing about the required reductions in sugar content of processed food and drink. As a result more and EU member states governments are considering the use of sugar taxes on public health grounds. In this context the contraction of the market for ACP sugars is only likely to accelerate in the coming years. This being noted, short term factors as diverse as weather events and the final outcome of the Brexit process, will mean price trends in individual EU member states sugar markets will be increasingly diverse. This needs to be seen in a context where in the last year sugar prices across EU member states have varied by between 8.8 and 25.3% (see companion epamonitoring.net article ‘EU Sugar Production Adjusting After Quota Abolition and In Face of Low Prices, with Renewed Growth in Imports and Reduced Exports’, 28 November 2019). This means ACP sugar exporters who continue to serve the EU market will need to significantly enhance their marketing efforts to progressively identify those market components where short term prices and longer term market prospects are most attractive. Some ACP sugar exporters however will need to increasingly look to other non-EU markets, whether in Africa, Asia or intra-regionally within the Caribbean. In terms of African markets this could be helped by the reduction in EU sugar exports which has occurred as the EU sugar sector has found a new equilibrium in the post-quota abolition period. For some ACP sugar exporting countries their options for market diversification will be driven not by national sugar sector priorities and decision making, but by how sugar production and marketing in their countries is integrated into the global marketing strategies of the international sugar corporations which dominate their sugar sectors. Particularly in countries where smallholder farmers play an important role in sugar production this suggests the need for a structured dialogue with the international sugar companies concerned on their long term vision for the local sugar sector. This will need to include discussions on the markets to be served by national sugar production in the medium to long term and the strategy to be adopted in regard to revenue diversification in the sugar sector. Of greatest importance to smallholder sugar farmers will be the issue of how non-sugar revenues from the processing of sugar cane are to be shared with smallholder farmers. |
Sources:
(1) Foodnavigator.com, ‘Sugar content in soft drinks cut by nearly a third as voluntary efforts fall way off target’ 20 September 2019
https://www.foodnavigator.com/Article/2019/09/20/Sugar-content-in-soft-drinks-cut-by-nearly-a-third-as-voluntary-efforts-fall-way-off-target
(2) Foodnavigator.com, ‘Sugar levels in chocolate have soared 23% since 1992’, 21st August 2019
https://www.foodnavigator.com/Article/2019/08/21/Sugar-levels-in-chocolate-have-soared-23-since-1992-study
(3) beveragedaily.com, ‘Snack tax may be more effective than soda tax in obesity fight: BMJ study’
https://www.beveragedaily.com/Article/2019/09/09/Snack-tax-may-be-more-effective-than-soda-tax-in-obesity-fight-BMJ-study
(4) BMJ, ‘Obesity: raising price of sugary snacks may be more effective than soft drink tax’, 5 September 2019
https://doi.org/10.1136/bmj.l5436
(5) Foodnavigator.com, ‘A mandatory approach may be necessary: campaigners slam out of home operators as supermarkets make more progress on reformulation and labelling’, 12 September 2019
https://www.foodnavigator.com/Article/2019/09/12/Campaigners-slam-out-of-home-operators-as-supermarkets-make-more-progress-on-reformulation-and-labelling
(6) EC, ‘Short –term outlook for EU Agricultural Markets in 2019 and 2020’, Autumn 2019
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/short-term-outlook-autumn-2019_en.pdf
(7) Foodnavigator.com’ (Up to two thirds of packaged foods too high in fat, sugar and salt JRC, 1 November 2019
https://www.foodnavigator.com/Article/2019/10/29/Up-to-two-thirds-of-packaged-foods-too-high-in-fat-sugar-and-salt-JRC