Key Insights: International Sweetener Colloquium 2022

The International Sweetener Colloquium, the industry’s premier gathering for leaders of the global sweetener industry, reconvened last week in Arizona.

After a year of pandemic disruption, if the attendees were expecting to get back to “normal”, that was an unrealized hope. The geo-political events going on simultaneously made the event more relevant as all attendees sought answers to how these events might impact supply chain issues; perhaps even more dramatically than what we experienced the past two years.

As usual, sugar buyers sought to find some clarity around future pricing. And suppliers took the opportunity to hear from current customers and to gather perspective on future business.

For every identified challenge, the Sugaright team was there with solutions.

Rapid Cost Increases

Higher labor costs, rising commodity costs and now soaring freight costs mean buyers are looking for value and risk mitigation.

Sugar buyers who become too focused on just the bottom number often put their companies at risk of supply issues and unexpected price changes. Forward thinking buyers are considering multi-year deals to even out impacts that no one can predict.

These same customers are often also more willing to explore cost advantageous moves, which don’t alter consumer preferences and have no current or future label claim issues. The pursuit of dark colored sucrose by light color users has seldom been greater. Converting from dry to liquid is also on the table due to increased labor costs and labor availability.

Service Issues Related to Supply Chain Disruptions

Consumer products companies are experiencing an unprecedented onslaught of production issues related to supply-chain disruptions including carrier performance. The risk of losing shelf space due to no inventory is on every buyer’s mind.

Proximity and reliability of supply are no longer nuances, they are necessities. Price will always be important, but service and surety of supply has gained in importance in the overall purchasing decision.

Our regional micro-refineries certainly help reduce some of the risk by shortening the supply chain. Closer is better.

Price inflation is not fleeting.

Our message to buyers is clear: book as early as possible and know your appetite for risk vs. cost. With no indication the US government is going to help lower sugar prices and with inflation evident in almost all commodities, it appears prices will be going up. (GSCI Commodity Index above)

Additionally, with prices of other commodities reaching decade highs, there is also a risk that farmers will switch to other more profitable crops.

There is ‘stickiness of cane demand’

Buyers may be looking for optionality in supplier and source, but consumer preference (especially millennials) for Project Non-GMO cane sugar and other sustainability assurances continues to grow. And in the case of buyer vs consumer, staying focused on the consumer is always the wisest choice.

Demand remains strong across our customer’s portfolios.

Sugaright has increased capacity to meet this demand which shows no signs of abating. The flight to brands that buyers trust continues and there is general concern that rising input costs may be too much to bare for start-up food & beverage companies.

Reputation Risks Demand a High Level of Assurance

We heard a lot about sustainability and corporate reputation. The speed with which the media can now take stories directly to the consumers can damage brands quicker than ever. We all saw how fast almost all of the major brands pulled out of Russia this week.

A poor purchasing choice in supplier can lead to more than optics, it can lead to cancellation. Sugaright’s engagement with Bonsucro, Fair Trade International and SEDEX offers the necessary assurance to these billion dollar brands.