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The campaign against sugar has picked up pace since the start of this year and shows no sign of slowing. The Sunday Times dedicated the cover of their weekly magazine to sugar, while the Arte television channel in Europe rebroadcast the 2016 Canadian documentary “Sugar: the sweet lie”. Meanwhile Netflix is working on a programme to be broadcast later this year on corruption in the Florida cane sector.

The sugar sector continues to be taken aback by the success of the anti-sugar lobbyists. Sugar professionals have long known that per capita sugar consumption in developed countries has been falling since the 1960s, and they find it both unfair and illogical that sugar be blamed for the surge in obesity that began in the 1970s.

After all, according to the “Sweet lies” documentary (above), world sugar consumption increased 40 percent the 30 years up to 2016. However, in the same period, world population increased by 50 percent, from 5 billion in 1986 to 7.5 billion in 2016. As such, per capita consumption fell during the period.

What many in the sugar business had expected to be a short-term fad has accelerated the long-term down trend in consumption. Sugar has been demonised, and the fall in per capita consumption has reached the point where, in the UK at least, total consumption is now falling. This is the new reality facing sugar producers.

But as always, change, no matter how negative, always throws up new opportunities. It is the way that companies react to change that defines them. Negative can be transformed into positive.

Here are five ways in which some producers are already responding to change (and others should.)

1: Never give up

Companies must continue their work in trying to correct the widely held belief that sugar consumption is the cause of the global obesity epidemic. There are some signs that that tide may be turning, as in this recent BBC podcast, but for the moment the sugar sector is still swimming against the tide. No matter how tiring it may be, it needs to keep swimming! 

2: Consolidate, but responsibly

The sugar sector has responded to falling profits by cutting costs. Economies of scale are significant in sugar:  producers have tended to build large mills or refineries and maximise output to reduce unit costs. There is a tendency for cost cutting to result in increased supply—and increased supply usually results in lower prices that negate the costs saved.

When demand is stagnant the only way around this is close the smaller, less efficient mills and concentrate production in the bigger ones. This is already happening in Europe, but the social cost of mill closures can be high. Unfortunately, the social cost of a milling group going bankrupt can be even more horrendous.

3: Innovate, and innovate again

The sugar industry has a history of innovation, but to be more effective, innovation should be in the form of new products and processes, rather than simple cost cutting. Blockchain can reduce costs, but (see above) if it lowers costs across the whole sector it may just result in lower prices for the consumer. That’s a good thing, but a better thing would be a new product that the consumer may be willing to pay more for. That could be a sugar-stevia mix, or anything that comes under the SOFT (Sustainable, Organic, Fair Trade) category. There are opportunities here to turn a commodity into an ingredient.

4: Add even more value via by-products

Sugar cane and beet are wonder crops with multiple by-products. Ethanol can be used to drive cars or make bio-plastics (and fertilizer from the vinase). Bagasse can be burned for electricity generation or used as building material. Beet pulp can be fed to animals, or be used as an environmentally friendly alternative to salt on winter roads. There is a huge opportunity for the sector to add even more value to their by-products

5: Diversify across supply chains

As the Executive Director of the ISO recently pointed out, some of the most successful companies in the sugar sector currently are the most diversified, whether into pizzas or fruit concentrates. It can be tricky for a company to shift focus from its core competence, but it can be worth the effort. Trade houses are already moving that way, turning themselves into food companies, and sugar companies are slowly following.

So, in conclusion, the world is changing and the sugar sector is changing with it. Of course it could do more–and will do more–but the first steps are promising.

© Commodity Conversations ®

At the end of every year since 2006, Rabobank asks their contacts in the food supply chain (“ranging from start-up founders to CEOs of zillion-dollar companies, and everyone in between”) the following question: “In the world of food, what surprised you the most over the last twelve months?” This year they received over 200 responses, some surprising, some less so.

Overall, respondents were “surprised” by the way the food supply chain is managing to respond quickly to constant changes in consumers’ demands. As one client wrote: “From delivering new products, changing business models, adjusting to consumer shifts, investing in innovation in various forms, and facing tough realities, the world of food is markedly different.” Heads are no longer being buried in the sand, as “it seems that everyone suddenly woke up.”

However there was still some criticism of “”Big Food,” with one respondent writing that he was surprised that “that big-food-brands companies are still struggling to grow despite most of them revising strategies and replacing CEOs.” Another was surprised that “the troubles faced by the Big CPGs, with brands my mom and grandparents used to buy, seemed to get worse over the past year despite so much renovation and reconfiguration of operations and marketing approaches.”

Some respondents talked about the way Big Food is trying to achieve top-line growth “via overpriced acquisitions that are shareholder wealth destructive”. Another remarked “companies continue to chase the unicorns by overpaying because they have few ideas of their own and get desperate.”

Many respondents expressed surprise at the rapidity with which consumers are embracing plant-based foods and/or a “flexitarian” diet. One client replied that he was surprised by “the acceleration of plant-based foods – and the growing acceptance of the products by non-vegan, non-vegetarian consumers regardless if their motivation is for health, animal welfare, or environment.”

Respondents were almost unanimous in their view that this is an enduring trend rather than a “fad”, but many stressed that the diet was not for everyone. One wrote, “Despite all the money flowing into replacement meat products, I don’t see the evidence of consumer desires for these products.” Another mentioned the “mismatch between what the media is writing about and reality.”

One “surprise” that was cited was the different ways in which consumers respond to technology in their food supply. Some clients detected a thawing in relations between food and science: although “consumers have been rejecting science more and more over the past decade” (such as the non-GMO movement), there is growing appreciation of the role of technology in many aspects of food and agricultural production”.

However, one respondent wrote he was frustrated by “the rising tendency for people to selectively believe science only when it aligns with their beliefs.” Others were surprised by the lack of pushback by food companies against the anti-science bias in food. One criticised “the willingness of some food companies to ignore science and chase consumer fads.” Examples included the proliferation of free-from claims on “products that never have, nor will have, certain ingredients.”

Some respondents expressed surprise “by how quickly capital and ideas are flowing to the nascent and undefined world of CBD, (cannabidiol – a non-intoxicating cannabinoid found in cannabis and hemp) both in food and beverages.” One expressed surprise that food companies and retailers are “embracing CBD given regulatory uncertainty, not to mention uncertainty around its effectiveness, proper dosage, etc.”

However, with the passing of the latest Farm Bill taking industrial hemp off the list of Schedule 1 narcotics (as defined by the Controlled Substance Act), one respondent wrote, “I almost see this as a space that can be as deep and wide as alcoholic beverages, and large strategics are having to act quickly to determine whether or not they want to take the risk of playing in this space (or not).”

Among other surprises cited in the survey was “the velocity and breadth at which #MeToo rippled through the restaurant industry, resulting in rapid response and swift changes.” Regarding the environment, one client wrote, “This year we did not see coming the food industry disruption associated with use of plastic straws.” And for trade, one mentioned “The rapidity with which the trade war with China escalated, the resultant tariffs, and their impacts on fruit and nut producers in the U.S.”

Finally, the last word is left to the respondent who wrote that he was “surprised by the ferocity of the arguments about whether low-fat or low-carbohydrate diets are better for weight status. Really, both work, provided people adhere to them, and calories really do matter.”

When I was researching my book « The Sugar Casino », one of the questions that puzzled me was why we are consuming more calories than in the past. Referring to USDA data, I wrote,

« According to the loss-adjusted food availability data, Americans are consuming more calories per day than they did 40 years ago. In 1970, Americans consumed an estimated 2,109 calories per person per day; in 2010 they consumed an estimated 2,568 calories….

The average American is eating 459 calories more each day today than he, or his parents, were eating in 1970. »

I have now, rather surprisingly, found part of the answer to that question in « Why We Sleep: The New Science of Sleep and Dreams » by Matthew Walker, a British scientist and professor of neuroscience and psychology at the University of California, Berkeley. He was previously a professor of psychiatry at Harvard Medical School. (An article in last week’s Guardian newspaper summarised some of the main themes of the book.)

Regarding the effect that sleep has on health, particularly on obesity, Mr Walker explains that two hormones in your brain control your appetite: leptin and ghrelin. Leptin signals a sense of feeling full, while ghrelin triggers a strong sense of hunger.  He writes that clinical tests have shown that « inadequate sleep decreased concentrations of the satiety-signalling hormone leptin and increased levels of hunger-instigating hormone ghrelin. »

Looking to see what this might mean in practice, one clinical test found that individuals who slept between four and six hours per night consumed 300 calories per day more than individuals who slept eight and a half hours per night. He writes, « Scale that up to a working year, and assuming one month of vacation in which sleep becomes abundant, and you will have consumed more than 70,000 extra calories. Based on calorific estimates, that would cause 10 to 15 pounds of weight gain a year. »

But it is not just a question of how much you eat, but also what you eat. Sleep loss increases the levels of endocannabinoids which, like marijuana, can give you the « munchies ».

In one test, participants were given access to an unlimited lunchtime buffet. « Despite eating almost 2,000 calories during the buffet lunch, sleep-deprived individuals dove into the snack bar. They consumed an additional 330 calories of snack foods after the full meal, compared to when they were getting plenty of sleep each night. »

Tests also found that sleep deprived individuals were 30 to 40 percent more likely to have cravings for sweets, carbohydrate-rich foods, and salty snacks compared to protein-rich foods such as meat or fish.

And Mr Walker counters the argument that your body needs more calories the less it sleeps. He writes, « Sleep, it turns out, is an intensely metabolic active state for body and brain alike. » What’s more, the less you sleep, he argues, the less active you will be during the day. He writes, « inadequate sleep is the perfect recipe for obesity: greater calorie intake, lower calorie consumption. » He continues,

« Of course, the obesity epidemic that has engulfed large portions of the world is not caused by lack of sleep alone. The rise in consumption of processed foods, an increase in serving sizes, and the more sedentary nature of human beings are all triggers. However, these changes are insufficient to explain the dramatic escalation of obesity. »

To emphasise the point, Mr Walker plots the reduction in sleep time (dotted line) over the past 50 years in the US on the same graph as the rise in obesity rates (below).

He summarises the current state of scientific research as follows: « Short sleep (of the type than many adults in first-world countries commonly and routinely report) will increase hunger and appetite, compromise impulse control within the brain, increase food consumption (especially of high-calorie foods), decrease feelings of food satisfaction after eating, and prevent effective weight loss when dieting. »

And as a warning for future generations, he argues, “We are now observing these effects very early in life. Three-year-olds sleeping just ten and a half hours or less per night have a 45 percent increased risk of being obese by age seven than those who get twelve hours sleep a night. To set our children on a pathway of ill health this early in life by way of sleep neglect is a travesty”

Going back to my original question, it is possible that changing sleeping habits explain 300 of the more than 450 extra calories that we consume each day compared to our parents. The rest, I imagine, can be explained by the greater availability of calorie-rich processed foods and larger portion sizes.

So if after a long night entertaining customers you are now reading this blog on your telephone while trying to stay awake at the back of a conference hall, let yourself drift off. It may mean you eat less at the conference lunch buffet!