Isoglucose adoption to gather steam as consumer awareness improves

Abstract

The European sugar industry wason the verge of being liberalized with the expiry of the existing quota regime in September 2017. Themove was expected to unleash capacity expansions and increase plant utilization in the starch sweeteners market, particularly in the sugar and isoglucose industry. The new regime is likely to ease sugar production limits,relax regional trade restrictions and may prompt substitution, by buyers of sugar with isoglucose. Up to this point, isoglucose, a starch sweetener primarily produced from maize, has accounted for fewer than 5percentof the European starch sweeteners market due to quota-based production. This is far lower than >30percent penetration inother major consumption centers such as the U.S. and China.

Liberalization of starch sweetener market along with

I.Increase in maizesupply

II.Scope for price differenceof 50-100EUR/MT between isoglucose and sugarprices in the coming years based on raw material price

III.Scope for awareness amongconsumersIV.Expansion plans, mainly inHungary

Raw materials supply is the key:

European sugar production is likely to be impacted by several changes post liberalization of the sector. In particular:

• European sugar prices are expected to track global trends resulting in higher supply volatility
• Fluctuating margins may persuade European farmers to switch from beet to more profitable crops, resulting in a drop in supply.
• This may in turn impact sugar supply and pricesFalling beet supply and higher price volatility may push sugar buyers to focus on cost-effective alternatives such as isoglucose, particularly in the beverage and snack industries