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The well being dangers of an excessive amount of sugar have been made clear, however the billion-dollar international market to produce it’s thriving. Gross sales of candy treats stay sturdy, and waistlines hold increasing. May 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 spread of different situations, from diabetes to habit. 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 a success after Walmart chief government John Furner reported that prospects on these medicine have been shopping for fewer groceries. Hershey has additionally acknowledged experiencing a “delicate influence” on gross sales, attributed to the rising use of GLP-1 drugs.
Sugar merchants, for now, are dismissing issues 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 international consumption, which has quadrupled previously 60 years, in accordance with 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 driving excessive on climate woes and rising manufacturing prices.
There are different causes for merchants’ nonchalance. Up to now, Ozempic and different medicine are dear and solely obtainable to a small phase of rich customers in developed international locations. Even when these appetite-suppressing medicine do begin decreasing demand, the considering goes, it’ll be a gradual 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 much 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 levels of it, partly as a result of these medicine are nonetheless fairly costly,” he advised me. “So that they’re not widespread — but.”
That “but” looms giant. 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 will not be restricted to wealthy western nations. In India, the world’s largest sugar client, 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 would possibly discover exhausting to disregard.
Geldart highlights one other phenomenon that ought to give sugar market individuals pause: heavy consumers of merchandise with excessive sugar ranges reminiscent of ice cream, cookies and chocolate account for a disproportionate quantity of gross sales. If such customers reduce, there may very well be a huge impact.
Monitoring sugar consumption is notoriously tough, although. There’s an actual danger, subsequently, that these developments might develop underneath the radar earlier than the trade wakes as much as what’s taking place.
Nonetheless, a quiet drop in demand may very well be magnified by rising provide. Excessive costs over the previous yr have spurred a wave of sugarcane investments, significantly 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 lowered 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 — would possibly present a cushion, particularly as demand for low-carbon fuels and renewable supplies grows. But this transition received’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 chance to get a slice of the Ozempic pie?
