The industrial sugar market is rapidly expanding, with beet sugar being a major crop used in food processing and in the production of ethanol and biogas. The market is expected to reach USD 59.1 billion by 2028 from USD 46.4 billion by 2023, at a CAGR of 5.0% during the forecast period in terms of value. The growth of the industrial sugar market is attributed to the increasing demand for processed and convenience food and beverages worldwide. This article will explore the drivers, restraints, opportunities, and challenges in the global industrial sugar market, along with key players in the market.
Drivers: Growing Demand for Industrial Beet Sugar Market
The global industrial beet sugar market is growing rapidly, and it is expected to continue growing at a fast pace in the forecast period. The beverages segment is expected to be the most attractive market for industrial beet sugar, based on consumption in the industry. Furthermore, the entry of new international players and the introduction of a new class of customers are expected to strengthen the growth of the industrial beet sugar industry globally. The production and consumption of industrial beet sugar have been on the rise historically, and this trend is expected to continue in the future.
Restraints: Increased Demand for Alternate Sweeteners as Sugar Substitutes
The increasing demand for alternate sweeteners as sugar substitutes is a major restraint in the industrial sugar market. Sweeteners are classified into major categories and types, and the ability of different sweeteners to replace industrial sugar in various foods is difficult to predict due to their varying properties. Additionally, high-intensity sweeteners (HIS) are not perfect substitutes for sugar in all products, limiting their usage. Although some non-diet foodstuffs use a blend of sugar and HIS, the major alternative sugar substitute is high fructose corn syrup (HFCS), which is often compared to industrial granulated sugar.
Opportunities: Access to New Markets due to the Increasing Cooperative Sector
The cooperative sector, comprising millions of farmers and thousands of operational mills, is the largest component of the sugar industry. It has played a crucial role in the development of the industrial sugar market and has been particularly significant in key developing countries such as India. A strong relationship between farmers and millers will be essential for improving productivity. Given the scattered landholding structure, productivity improvements can only materialize in the presence of a strong farmer-miller relationship. This will enable the mill to drive the adoption of better seed varieties, improve farming practices, and incentivize mills to invest in extension services. A long-term farmer-miller relationship will also enable risk mitigation for both. The mill will address the off-take risk for farmers through assured cane off-take, while the mills will be assured of cane supplies. The relationship will enable farmers to access credit from banks based on off-take guarantees provided by mills. The availability of crop insurance to protect against crop failure risk would also be encouraged by mills and may be partially funded.
Challenges: Rising Production Costs for Sugar
The cost of producing sugar has been increasing faster than the price of sugar, putting pressure on sugar producers’ profitability. The increase in the cost of sugar production can be attributed to various factors such as rising labor costs, energy costs, raw material costs, environmental regulations, and climate change. With a decline in opportunities for low-cost production due to wage inflation, growth in costs associated with infrastructure investment, and a decrease in cultivable land, the marginal cost of production has increased, resulting in decreased profit margins.
Key Players in the Industrial Sugar Market
The key players in this include Südzucker AG (Germany), Cargill, Inc. (US), Associated British Foods plc (UK), Raízen (Brazil), Lantic Inc. (Germany), Mitr Phol Group (Thailand), AMERICAN CRYSTAL SUGAR (US), Louis Dreyfus Company (Netherlands), Tereos (France), and Michigan Sugar Company (US).
