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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 robust, and waistlines maintain increasing. Might weight-loss medication 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 medication as Wegovy, Mounjaro and Ozempic curb customers’ appetites and are being hailed as recreation changers for tackling weight problems and probably a spread of different situations, from diabetes to habit. They may 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 successful after Walmart chief govt John Furner reported that prospects on these medication have been shopping for fewer groceries. Hershey has additionally acknowledged experiencing a “delicate affect” on gross sales, attributed to the rising use of GLP-1 medicines.
Sugar merchants, for now, are dismissing considerations about weight-loss medication’ potential to dent demand. Maybe they’re battle-hardened — a long time of sugar-is-bad campaigns haven’t made a dent in international consumption, which has quadrupled prior to now 60 years, based on 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 medication are dear and solely out there to a small section of rich shoppers in developed nations. Even when these appetite-suppressing medication do begin decreasing demand, the considering goes, it’ll be a sluggish burn, giving markets and sugar producers loads of time to regulate.
However might this confidence be misplaced? Weight-loss medication 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 medication 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 medication are nonetheless fairly costly,” he instructed me. “In order 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 creating markets. The weight problems epidemic and slew of well being situations that include it usually are not restricted to wealthy western nations. In India, the world’s largest sugar shopper, 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 may discover exhausting to disregard.
Geldart highlights one other phenomenon that ought to give sugar market contributors pause: heavy patrons of merchandise with excessive sugar ranges equivalent to ice cream, cookies and chocolate account for a disproportionate quantity of gross sales. If such customers in the reduction of, there might be a big effect.
Monitoring sugar consumption is notoriously tough, although. There’s an actual threat, subsequently, that these tendencies might develop below the radar earlier than the business wakes as much as what’s taking place.
Nevertheless, a quiet drop in demand might be magnified by rising provide. Excessive costs over the previous 12 months 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 diminished 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 gasoline or bioplastics — may present a cushion, particularly as demand for low-carbon fuels and renewable supplies grows. But this transition gained’t occur in a single day.
Till now, the sugar market has not attracted a lot speculative curiosity. However how lengthy earlier than brief sellers seize a chance to get a slice of the Ozempic pie?
