Indian Sugar Demand Seen Hurt by Economic Slowdown, Health Worry

(Bloomberg) -- Sugar demand in India is starting to stagnate as economic growth in the top user slows and food manufacturers opt for alternatives, according to Meir Commodities India Pvt and Golden Agri-Resources Ltd..The nation will consume 25 million tons to 25.2 million tons in 2019-20, little changed from the previous season, said Rahil Shaikh, managing director of Meir, a Mumbai-based trader. Demand is being hit as the food sector changes formulas away from sugar amid health concerns, according to Callum Walker, a trader at Golden Agri-Resources..India’s economic growth is expected to slow to a six-year low in 2020, potentially threatening domestic sugar demand and leaving more supplies for exports. Consumers around the world are also becoming more concerned about health risks, prompting food producers to seek alternatives, and governments have levied taxes on sugary drinks..“Consumption has plateaued out in India due to the way the economy is,” Shaikh said at a Marex Spectron sugar symposium in London on Monday..India’s economy is forecast to expand 6% this year, according to estimates compiled by Bloomberg. When growth was at 8%, the country’s sugar demand increased 2% a year, said Shaikh, a former managing director at ED&F Man Commodities India..Related coverageIndia Could Be a Long-Term Structural Sugar Exporter: MeirWar on Sugar Gains Strength With Singapore Joining as Latest FoeSugar Glut Keeps Growing as India Exports Spark Bearish Bets.Global sugar consumption is expected to climb 1.3% in the 2019-20 season, slightly below the five-year average, the International Sugar Organization said in a report on Tuesday. There’s a “clear global trend” toward slower or negative growth in a number of key markets, it said, citing health concerns..The sugar industry isn’t paying enough attention to manufacturers changing their formulas away from sugar, Golden Agri-Resources’s Walker said..“We have multinational brands which are based in India who have a huge growth potential and they are also reformulating their products at the same pace as the rest of the world,” he said. “The rate at which they are reformulating is very rapid and the demand for sugar that they are taking out from their products is very high.”.The industry should make more effort to promote sugar as a better and natural alternative to high-fructose corn syrup and artificial sweeteners, said John Stansfield, an analyst at Group Sopex. There are places in the market that still offer growth, he said, pointing to Africa as an example..“Cheap sugar does promote consumption,” he said. “It’s not all doom and gloom. We have a great industry and if we promote it a bit harder we’ll grow.”.--With assistance from Atul Prakash and Pratik Parija..To contact the reporters on this story: Manisha Jha in London at mjha13@bloomberg.net;Agnieszka de Sousa in London at atroszkiewic@bloomberg.net.To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin, Dylan Griffiths.©2019 Bloomberg L.P.

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Indian Sugar Demand Seen Hurt by Economic Slowdown, Health Worry

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