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EU Sweetener Demand Set to Triple as Quotas-End Damps Sugar Use

Consumption of isoglucose, a sweetener made from cereals, will more than triple in the European Union in a decade as the end of quotas that cap production damps sugar demand, the bloc’s regulatory arm said.

Isoglucose usage will rise to 2.2 million metric tons by 2023 from about 600,000 tons this year, the European Commission estimated in a report on its website today. Production of the starch-based sweetener will gain especially after quotas that limit both sugar and isoglucose output and sales end in 2017, the commission said, forecasting isoglucose production at 2.4 million tons in 2023 from 700,000 tons this year.

“With the expiry of the quota scheme in 2017, isoglucose will start to compete on the domestic sweetener market, especially in regions with a high grain surplus,” the commission said. “Isoglucose is expected to increasingly replace sugar in selected food consumption uses.”

EU sugar consumption will drop 3.9 percent by 2023 to 17.1 million tons from 17.8 million tons this year, according to the report. While isoglucose usage will gain, its consumption share of the sweeteners market will remain below the 40 percent in the U.S. and the 25 percent in Canada and Mexico, the 28-member-nation bloc forecasts.

The EU, currently a net importer of sugar, will probably produce enough for its consumption after quotas end and may be a net exporter occasionally, according to the commission. Sugar production will rise to 17.1 million tons by 2023 from 15.6 million tons this year, pushing prices down to 405 euros ($554) a ton by 2023 from 584 euros a ton in 2014.

Import Needs

“It is expected that sugar imports will decline from current levels,” the bloc said. “However, being a net exporter does not mean that imports will completely disappear. Due to the relatively short production period of sugar in the autumn and its regional concentration in North Western Europe, there will be ample need for imports in certain periods and certain regions. The most competitive origins that have free access to the EU market will therefore continue exporting to the EU.”

A group of least-developed nations and some countries in the African, Caribbean and Pacific group of states can ship their sugar to the EU free of duty. A set amount of sweetener can also be imported from countries including Australia and Brazil at a reduced duty, known as CXL.

Sugar beet production in the bloc will climb to 119.3 million tons by 2023 from 110.7 million tons this year, according to the report. Most of the additional crop will be used to make sugar instead of ethanol, the commission said.

“Sugar beet is expected to become less competitive as feedstock for ethanol once the quota arrangements cease to apply,” the commission said.

France is the EU’s biggest sugar producer followed by Germany.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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