Supply Chain

Südzucker Expects To Raise Its Sugar Prices Again Next Year

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Europe's largest sugar producer, Südzucker, is set to bump up sugar prices again next year as energy costs remain high and input costs for items like sugar beet are also elevated.

The news of further price rises for a widely-used food staple like sugar comes as European policymakers scramble to try control inflation and curb a cost of living crisis.

Margin Pressures

"In some areas, increased costs are still putting pressure on margins. We will therefore have to implement further price increases next year,” chief executive Niels Pörksen told Reuters on the sidelines of an International Sugar Organisation seminar in London, referring to sugar prices and also to processed foods like pizza and 'functional' or health food ingredients like isomalt.

EU sugar prices on the spot market are already at record high levels - nearly three times those seen a year ago - following extreme weather and a surge in energy costs, forcing confectioners to consider production cuts.

Sugar production is among the most energy-intensive industries and is especially reliant in the European Union on gas, prices of which have soared this year as key producer Russia has sharply restricted supply.

Profit Expectations

Earlier this month, Südzucker, which has a range of non-food interests including biofuels, said it expected profits for the year to end-February 2023 would be nearly twice as high as a year ago as higher sugar prices would compensate for rising energy and raw materials costs.

Pörksen said sugar consumption had recovered to pre-COVID levels despite efforts to reduce use of the sweetener in foods on health grounds. He added there are many other uses for sugar, like ethanol.

In terms of supply, Pörksen doesn't expect higher prices for sugar-beet to result in much higher plantings next year because farmers are limited by crop rotation constraints.

The sugar beet area for this winter's crop is down by about 4% on the year, according to Südzucker.

News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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