European starch industry ready to take on sugar in bloody fight for market share

Published: 10/31/2017, 8:28:01 AM

While the European sugar industry was busy preparing for its reintroduction to the world market following the end of production quotas on October 1, the European starch industry has also been busy getting ready for unrestricted market access, and it says it’s ready to fight sugar head on, reports Sugaronline.

“We see the end of quotas as a potentially significant and historic moment for the starch industry,” Starch Europe’s Managing Director Jamie Fortescue told the 2nd European Starch Conference held this week in Budapest, Hungary. “It’s not just about taking some market share from sugar, it’s better than that. It’s about introducing more flexibility and competitiveness into the sector as a whole.”

Starch Europe has long held that the European starch industry could expand production to between 2 million and 3 million metric tonnes over time, in line with estimates by the European Commission, Rabobank, International Sugar Organisation and LMC. Achieving those levels would mean eventually reaching a market share of between 12% and 18% of European sweetener demand, based on 2015/16 consumption, compared to the 4% fixed by quotas.

“The important bit is ‘over time,’” he said. “Whether it is achieved will depend on beet versus cereals price, competiveness and consumer acceptance.”

A senior sugar and starch executive who is not authorised to speak with the press told Sugaronline that consumer demand is more nuanced.

“It is not always either sugar or isoglucose, but also an in between, to use both products in the recipe, as well as to reduce volatility that could be a good opportunity for producers,” he said.

With some soft drinks manufacturers already updating their labels to show “sugar and/or isoglucose” with a reference to look at the cap to identify an A for sugar or a B for isoglucose, or for both depending on the production run, they have updated their recipes to be flexible depending on requirements that day, he told Sugaronline on the sidelines of the conference.

Flavours and aromas can be used to adjust the taste to compensate for the use of one sweetener or another while protecting product consistency. Carbohydrate will always be needed for those people who want to drink a refreshing beverage with energy, and not just water, he said.

Fortescue says the decision to choose sugar or isoglucose is not just about a price, though over the past decade isoglucose has typically been cheaper than sugar. Not unlike the flexibility seen in Brazilian sugar mills that can produce sugar or ethanol as the market dictates, starch plants are similar.

“We have the flexibility to optimize revenues among polyols, glucose, fructose syrups and isoglucose, dextrose, hydrolysates and maltodextrins. Since October 1, we can convert into glucose syrups if the price is going up. There is an entire range of ingredients that now becomes flexible to what the market needs and not what the regulator dictates. And that’s a major opportunity for the starch industry going forward,” he said.

The senior executive said producers will also be looking at other costs besides just the price of isoglucose versus sugar. The energy costs associated with melting sugar, for example, compared to using a liquid product that’s ready for use immediately will also come into play moving forward.