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The well being dangers of an excessive amount of sugar have been made clear, however the billion-dollar world market to provide it’s thriving. Gross sales of candy treats stay sturdy, and waistlines preserve increasing. Might weight-loss medicine now succeed the place governments, scientists and docs have failed: crushing demand for sugar?
So-called glucagon-like peptide-1 receptor agonists (GLP-1s) contained in such medicine as Wegovy, Mounjaro and Ozempic curb customers’ appetites and are being hailed as sport changers for tackling weight problems and doubtlessly a variety of different situations, from diabetes to dependancy. They might additionally result in an upheaval in sugar markets.
Fears that Individuals on GLP-1s will cease shopping for treats have already spooked companies and traders. Mondelez and PepsiCo shares took successful after Walmart chief government John Furner reported that prospects on these medicine have been shopping for fewer groceries. Hershey has additionally acknowledged experiencing a “gentle influence” on gross sales, attributed to the rising use of GLP-1 medicines.
Sugar merchants, for now, are dismissing considerations about weight-loss medicine’ potential to dent demand. Maybe they’re battle-hardened — many years of sugar-is-bad campaigns haven’t made a dent in world consumption, which has quadrupled prior to now 60 years, in response to Professor Paul Behrens of the British Academy. Candy treats nonetheless fly off the cabinets in most markets, and till just lately sugar costs have been using excessive on climate woes and rising manufacturing prices.
There are different causes for merchants’ nonchalance. Thus far, Ozempic and different medicine are expensive and solely accessible to a small section of rich customers in developed nations. Even when these appetite-suppressing medicine do begin lowering demand, the pondering goes, it’ll be a sluggish burn, giving markets and sugar producers loads of time to regulate.
However might this confidence be misplaced? Weight-loss medicine do work in curbing appetites. That makes them way more prone to reshape sugar consumption — and with it, the sugar market.
Stephen Geldart of London-based sugar service provider Czarnikow believes the GLP-1 medicine are already on monitor to disrupt demand, beginning with rich nations. “I feel we’re simply within the early phases of it, partly as a result of these medicine are nonetheless fairly costly,” he informed me. “So that they’re not widespread — but.”
That “but” looms massive. Within the UK, for instance, the federal government plans to roll out Mounjaro on the NHS. Costs are prone to drop elsewhere too, particularly as pharmaceutical corporations race to sell compounded variations of medicine, circumventing patents.
If costs fall and entry broadens, the ripple results might attain middle-income and even growing markets. The weight problems epidemic and slew of well being situations that include it should not restricted to wealthy western nations. In India, the world’s largest sugar shopper, charges of diabetes and weight problems are hovering. Indians devour a staggering 29mn tonnes of sugar yearly — 15 per cent of worldwide demand. Even a modest uptake of GLP-1s there might shake the market in ways in which merchants may discover arduous to disregard.
Geldart highlights one other phenomenon that ought to give sugar market members pause: heavy patrons of merchandise with excessive sugar ranges resembling ice cream, cookies and chocolate account for a disproportionate quantity of gross sales. If such customers reduce, there might be a huge impact.
Monitoring sugar consumption is notoriously difficult, although. There’s an actual danger, subsequently, that these developments might develop underneath the radar earlier than the business wakes as much as what’s occurring.
Nevertheless, a quiet drop in demand might be magnified by rising provide. Excessive costs over the previous 12 months have spurred a wave of sugarcane investments, notably in Brazil. If manufacturing ramps up whereas consumption falters, the market might face a provide glut that drags costs decrease and forces a painful adjustment. Already, costs have fallen again just lately on decreased manufacturing worries. Uncooked sugar futures in New York have dropped from their November 2023 peak of 28 cents a pound, plunging this month to lower than 19.50 cents.
Sugar’s adaptability — it may be repurposed into ethanol for gas or bioplastics — may present a cushion, particularly as demand for low-carbon fuels and renewable supplies grows. But this transition gained’t occur in a single day.
Till now, the sugar market has not attracted a lot speculative curiosity. However how lengthy earlier than quick sellers seize a possibility to get a slice of the Ozempic pie?
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