EU sugar deficit will not grow, says Euromonitor

The EU’s sugar quota fell three million metric tons short of demand in 2012 leading to an 11% price hike, but the deficit is not expected to increase due to stagnant demand for sugar-based foods and health concerns, according to market analysts Euromonitor International.

Francisco Redruello, senior food analyst for Euromonitor, said in a recent blog post that EU sugar consumption was estimated by the industry at 16-16.5 million tonnes in 2012 – a figure “significantly higher than the quota”.

The EU currently has a 13m ton cap on sugar production that looks set to run until 2020, unless a deal is struck to end the system earlier.

“This imbalance explains why EU27 sugar market prices continued to grow in 2012, despite falling international prices,” said Redruello.

Euromonitor International’s Economic Observer found that international sugar prices declined 19% in 2012, while EU prices rose 11%.

Deficit will not rise

However, Euromonitor does not expect the EU’s 3m metric ton deficit to grow in the short-term. Redruello told “This is because consumption of sugar in Western Europe is barely growing due to maturing consumer demand and health/obesity concerns regarding sugar-based food products,” said Redruello.

Nonetheless prices will still remain high and “the consensus among analysts – and the view held by the EU Commission – is that the abolition of the quota by end of 2014/15 marketing year would put downward pressure on EU sugar prices.”

“This would be positive for sugar confectionery manufacturers as they can use part of the savings in stepping up investment on innovation.“

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