Bakery manufacturers will have to adjust their sugar buying as the UK’s deficit of sugar supply continues to keep prices high going into the next contract season.
Andrew Brown, marketing and planning director of major sugar supplier Napier Brown, told the Real Good Food Company AGM in London this morning: “It is now not about price, it is about security of supply that customers want.
“The whole outlook for the sugar market has radically changed over the last six-to-nine months. The UK in particular is now a deficit market. The UK, in order to meet consumption, requires 300,000 tonnes of imports. Therefore customers need new supply sources.”
While two years ago the firm was buying 90% of its sugar from the UK, this has “reduced significantly” during 2010 -2011, as the firm is forced to look further afield and diversify its sourcing.
“We’ve secured the sugar [for the autumn contract season]” he said. “We are bringing new sources of supply to a deficit market. We already have six major suppliers from this autumn, as well as speciality sugars from all over the world.”
Following changes in the European sugar regime, the EU is now an under-supplied market. The changes have made the EU a net importer of sugar. It needs three million tonnes of sugar to be imported to meet consumption of 16 million tonnes.
High world prices, as well as currency changes, have made the EU an unattractive destination for world sugar. A one million tonne shortfall saw a dramatic spike in prices last autumn, exacerbated by the failure of the UK beet crop due to extreme weather conditions in January this year.
“The manufacturing world has gone into shock because they thought they would never run out of sugar, and some big companies have been hit,” said Real Good Food Company’s executive chairman Pieter Totté. “Now it’s about making sure you have sufficient sugar for your year.”
Napier Brown also revealed plans to relaunch its Whitworths brand this autumn, with a new range of specialist sugars.
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