The UK will likely hit the sugar industry hard with a proposed tax targeting high-sugar drinks like Coca-Cola and Red Bull in an effort to end obesity, and other countries like Hungary and France have already imposed so-called sugar taxes.
Meanwhile, nutritionists and even celebrity chefs like Jamie Oliver have repeatedly attacked sugar as empty calories that cause grave health problems.
Despite the negative press, demand for sugar around the world has actually increased over the past 35 years, as the middle classes in Africa and Asia have grown significantly during this period, according to a new report from HSBC.
“We do not expect sugar taxes and activism to move the needle in global demand,” the report stated.
The sugar industry is without a doubt a sector driven by the emerging markets like Brazil, India and Thailand — these three countries actually account for 43% of global production and 65% of sugar exports. In 1960, North and South Americas and Europe accounted for 80% of global sugar consumption; today it’s merely 40%.
Here’s why emerging markets are driving sugar growth: As a country gets richer, its citizens also tend to consume more guilty pleasures, including sugar and alcohol, according to HSBC. Per-capita consumption of sugars and sweeteners peaks among these developing countries when per-capita GDP reaches $10,000 and rises rapidly in the development preceding this point.
Brazil produces and exports more sugar than any other country in the world, and this upcoming year the Brazilian harvest could be the highest ever recorded, the report predicted. Given Brazil’s dominance in world trade, sugar will continue to be Brazilian real-denominated.
The failed war against sugar?
If lawmakers are fighting a war against sugar, they have formidable opponents. Although sugar only accounts for a miniscule fraction of US farm output, lobbyists have a strong presence in Washington. Growers donated $18.5 million to congressional campaigns between 2007 and 2014 — more than any other commodity producer — according to a Center for Responsive Politics report cited by Bloomberg.
Despite the growing movement against sugary products, the growth rate of sugar consumption in North America is still 0.3%, according to HSBC. North America represents 10% of global sugar consumption, and the average American consumes more than 125 grams of sugar per day (more than twice the average intake of 54 countries observed by Euromonitor, according to The Washington Post). That high rate of consumption shows demand for sugar isn’t going to go away anytime soon — even in the US.