likely impact of a possible reduction in the price of eu...

Report prepared by: Leatherhead Food International The United Kingdom

September 2004

LIKELY IMPACT OF A POSSIBLE REDUCTION IN THE PRICE OF EU SUGAR

Leatherhead Food International, Randalls Road, Surrey, T: +44(0)1372 376761, www.leatherheadfood.com

Likely impact of a possible reduction in the price of EU sugar

Corneel den Ridder, BSc, MSC

Report Prepared for The Department for Environment, Food and Rural Affairs (DEFRA)

The United Kingdom

Leatherhead, September 2004

N0 00365

Consumer & Sensory Science

Wellbeing, Nutrition & Functional Foods

Leatherhead Food International © 2004 00365

Contents

Text Background ......................................................................................................................... 2

Key objectives.................................................................................................................... 2 Abbreviations..................................................................................................................... 2

Executive summary............................................................................................................. 3 Methodology Overview ....................................................................................................... 4

Sample .............................................................................................................................. 4 Evaluation Method ............................................................................................................. 4 Questionnaire .................................................................................................................... 4

Results and Discussion ...................................................................................................... 5 Description of the Sample.................................................................................................. 5 Industry Findings ............................................................................................................... 7

Sweetener usage............................................................................................................................. 7 Effect of EU sugar reform.............................................................................................................. 11 Effect of greater availability of isoglucose/HFCS .......................................................................... 14 Reform scenarios .......................................................................................................................... 16

Additional Information .......................................................................................................18 Final Conclusions ..............................................................................................................19 About Leatherhead Food International.............................................................................20

Tables Table I: Description of the sample population in absolute numbers ....................................................... 5

Figures Figure 1: Company size in relation to category leader............................................................................ 6 Figure 2: Volume of sugar used per year (Tonnes per year) .................................................................. 8 Figure 3: Factors affecting level of sugar used split according to sugar volume usage ......................... 9 Figure 4: Reasons for looking at sugar reduction ................................................................................. 10 Figure 5: Effect of liberalisation of sugar price on products .................................................................. 11 Figure 6: Effects of fall in sugar prices split according to annual sugar usage ..................................... 12 Figure 7: Replacement of other ingredients with sugar......................................................................... 13 Figure 8: Effect of lifting isoglucose/HFCS quotas on products ............................................................ 14 Figure 9: Replacing other ingredients with isoglucose/HFCS............................................................... 15 Figure 10: Likely increase in sugar usage as a result of changes in the EU sugar regime .................. 16 Figure 11: Likely increase in isoglucose usage as a result of changes in the EU sugar regime .......... 17

Leatherhead Food International © 2004 00365 2

Background

EU Ministers are currently debating possible changes to the EU sugar and sweetener regime

which may lead to some degree of liberalisation of this regime, resulting in reduction in the

cost of sugar in the EU from 2006.

A decrease in sugar price may lead to an increase in sugar levels in processed foods. The

Department for Environment, Food and Rural Affairs (DEFRA) identified a lack of primary

research information concerning indicators of any major shifts in sugar usage as a result of

liberalisation. DEFRA therefore wished to gather data to gather primary research results on

the industry’s awareness of the EU sugar regime and to assess if there was any indication of

serious changes in sugar usage due to liberalisation of this regime.

To this end, DEFRA approached Leatherhead Food International to undertake a survey of

the UK food industry in order to get a better understanding of how the industry was likely to

respond to a fall in sugar prices and a greater availability of isoglucose.

Key objectives •To assess the UK food industry’s response to lower sugar prices

•To assess the UK food industry’s response to a greater availability of isoglucose

Abbreviations The following abbreviations are used;

BCCCA The Biscuit, Cake, Chocolate and Confectionery Association

BSDA British Soft Drinks Association

DEFRA Department for Environment, Food and Rural Affairs

EU European Union

LFI Leatherhead Food International

NPD New Product Development

UKISUG UK Industrial Sugar Users Group


Executive summary

The food industry’s response to a possible reduction in the price of sugar and a greater

availability of isoglucose was investigated on the basis of responses to a survey

questionnaire. Approximately 882 companies were approached and a total of 67 companies

adequately completed and returned the questionnaire. The combined sugar usage of these

67 companies was approximately 700,000 tonnes per year which accounts for almost 44% of

all sugar used in UK processed foods. Based upon the sample description, it can be

assumed that the conclusions in this report are based upon a representative sample of the

UK food industry using sugar.

Sugar is regarded as an essential ingredient in the manufacture of food. Current sugar levels

are primarily determined by product recipe. The product recipe is to a very large extent

based on consumer preference. When consumer preference is satisfied, secondary factors

are more relevant in determining sugar levels used. The most important secondary

considerations were technical reasons and the price of sugar. Respondents were divided

over the importance of these two secondary factors. Small volume sugar users regarded

technical reasons as being more important, where as large volume sugar users regarded

price as being more important.

Respondents confirmed that the EU sugar reform will have a considerable impact on the

industry. However, due to the complex nature of the issue, it was difficult for respondents to

predict the exact nature of their response to the changes. Around 70% of respondents said

that the price of products would fall should sugar become cheaper. In terms of sugar usage,

however, only 17% of the respondents thought that the amount of sugar in their products

would increase if the price of sugar fell.

The effect of liberalisation of isoglucose/HFCS quotas is expected to have a smaller effect on

companies than the EU sugar reform. The changing quotas of isoglucose/HFCS was unlikely

to have a major impact on sweeteners used. Depending on the exact nature of the reform it

appeared more likely that sugar might replace isoglucose/HFCS, rather than the other way

around.


Methodology Overview

Sample The target group consisted of food and drink companies that use sugar/isoglucose in their

products. Companies were targeted from the confectionery, soft drinks, and bakery sectors, in

particular. Recruitment was restricted to UK based companies only. Respondents were recruited

using the Leatherhead Food International contact data base.

Evaluation Method Recruiting was performed using electronic mail. A personalised e-mail was sent to a representative

of each of the selected companies. The e-mail briefly outlined the topic and requested respondents

to fill in the questionnaire attached to the e-mail or alternatively, by using the internet following the

provided link. When electronic mailing was not possible, a paper based questionnaire was sent out

(including a stamped return envelope) to the selected respondent.

All respondents were requested to reply within a two week period. One week after the initial mailing

a reminder letter or e-mail was sent to all selected companies. This reminder stressed the

importance of the survey and requested the respondents to fill in the questionnaire if they had not

already done so. An additional week was added to the response time. Together with the reminder

e-mail/letter, a number of follow-up phone calls were also made in order to increase the response

rate.

Questionnaire A questionnaire was designed in cooperation with DEFRA covering the following areas;

General data (industry sector, size), Sweeteners usage (types of sweeteners used, volume of

sugar used), Factors determining sugar level in products, Effect of sugar reform, Effect of greater

availability of isoglucose, Interaction effects between sugar reform and greater availability of

isoglucose (Reform scenarios).

Because participation was voluntary and unincentivised the length of the questionnaire was

restricted with a completion time of approximately 15 minutes.


Results and Discussion

The results are split into two sections. The first section, titled Description of Sample provides

general details on the participating companies. The second section, titled Industry Findings

provides the results of the questionnaire survey.

Description of the Sample Approximately 882 companies were approached and a total of 67 companies adequately

completed and returned the questionnaire (See Table I) (8% response rate). A copy of the

questionnaire was also sent to the BCCCA (The Biscuit, Cake, Chocolate and Confectionery

Association) and the BSDA (British Soft Drinks Association).

Table I: Description of the sample population in absolute numbers

Companies approached2 Companies responded

e-Mail Post Phone Total Internet Post Fax Total %3

Total 405 337 140 882 31 30 6 67 8 Biscuits 15 16 3 34 5 6 1 12 35 Confectionery 108 67 59 234 11 4 0 15 6 Breakfast Foods 10 6 5 21 4 1 0 5 24 Fruit Juice 13 16 6 35 2 0 0 2 6 Desserts1 12 16 5 33 0 2 0 2 6 Canned Food 13 11 13 37 1 1 2 4 11 Bakery Ingredients 137 124 24 285 1 5 0 6 2 Spreads/fillings 7 9 5 21 0 0 0 0 0 Cakes 0 0 0 0 2 3 0 5 - Soft Drinks 90 72 20 182 4 5 2 11 6 Other 0 0 0 0 1 3 1 5 - 1 This category includes manufacturers of ice cream, desserts and yoghurt. 2 A number of companies have been contacted directly by the BCCA and the BSDA. 3 Response rate.

Due to the small number of responses and low level of sugar usage in the ‘ice

cream/dessert/yoghurt’ category, responses from this category have been grouped together under

‘other’.

When predicting the industry’s response to changes in the EU sugar regime, responses from

category leaders are regarded as being more influential. The majority (81%) of the respondents

classified themselves as being smaller or much smaller than the category leader (See Figure 1A).

When looking at the different food and drink categories, responses were obtained from a category

leader for most products (See Figure 1B).


Based upon the sample description, it can be assumed that the conclusions in this report are

based upon a representative sample of the UK sugar using industry. Although the sample size is

small, there is a broad spread representing different food industry sectors and company sizes.

Question: How does the size of your company compare to the category leader(s)? (4-point Scale)

A Representation of the company size for the whole group of respondents.

B Representation of company size split by industry sector.

Figure 1: Company size in relation to category leader

Num

ber o

f com

pani

es in

cat

egor

y

5

11

15

5

5

9

60%

27%

87%

20%

50%

33%

66%

20%

22%

20%

36%

13%

40%

33%

34%

60%

66%

9%

20%

20%

27%

40%

50%

34%

12%

0% 100%

Other

B isuits

Confectionery

Breakfast foods

Fruit juice

Canned foods

Bakery ingredients

Cakes

Soft drinks

Much smaller Smaller The same size We are the category leader

6

3

2

4 4 % 3 7 % 5 % 1 4 %

0 % 2 0 % 4 0 % 6 0 % 8 0 % 1 0 0 %

M u c h s m a l le r S m a l le r T h e s a m e s iz e W e a r e t h e c a t e g o r y l e a d e r

81% 19%


Industry Findings The questionnaire consisted of four different sections. The responses to the questionnaire will be

reported according to these four different sections;

1. Sweetener usage

2. Effect of sugar reform

3. Effect of greater availability of isoglucose/HFCS

4. Scenarios

Due to the low response rate in certain industry categories, results by industry category should be treated as a guide to possible trends only.

Sweetener usage

A total of 94% of the respondents stated that sweeteners were important to their product. The main

type of sweetener used by the respondents was sugar (93%). Companies that regard glucose

syrup and artificial sweeteners as their main sweeteners were generally representatives of the soft

drinks industry. Although 26% of the respondents indicated that they used isoglucose/HFCS, none

indicated that was it was the main type of sweetener used.

The annual sugar usage of companies included in this survey ranged from as little as 3 tonnes up

to large volumes such a 125,000 tonnes (See Figure 2A). Total annual usage of isoglucose/HFCS

was considerably lower than sugar (See Figure 2A). The majority of the isoglucose/HFCS users

were from the soft drinks sector. There was some indication that the biscuits and soft drinks

industry used the largest volumes of sugar per company. The combined sugar usage was

approximately 700,000 tonnes per year. This accounts for almost 44% of all sugar used in UK

processed foods.

In order to look at differences in responses between large volume sugar users and small volume

sugar users, respondents were grouped according to their annual usage. Large volume sugar

users were defined as companies using more than 901 tonnes of sugar per annum. Small volume

sugar users were defined as companies using less than 145 tonnes of sugar per annum. Both

groups had 18 respondents in them and made up 33% of the total sample population.

Product recipe was the single most important factor in determining the level of sugar in existing

products (See Figure 3). Product recipe was generally based upon consumer acceptability.

Extrapolating from this, we can say that the sugar level in products was generally claimed to be

determined by consumer acceptability. Technical reasons, the price of sugar, and health concerns

received a medium importance rating. Legislation and availability of sugar were generally seen as

less important in terms of determining level of sugar used in products.


Question: How much sugar/isoglucose do you use on a yearly basis? (Tonnes per year) A Annual sugar usage.

B Representation of annual sugar usage split according to industry sector.

C Representation of annual sugar usage split according number of employees.

Figure 2: Volume of sugar used per year (Tonnes per year)

34%

14%

50%

75%

20%

22%

22%

14%

50%

22%

22%

22%

14%

40%

11%

11%

30%

25%

22%

30%

40%

33%

22%

45%

50%

50%

12%

0% 100%

Other

B isuits

C onfectionery

Breakfast foods

C anned foods

Bakery ingredients

C akes

Soft drinks

<26 27-150 151-550 551-900 901-3000 3000+

Num

ber o

f com

pani

es in

cat

egor

y8

10

14

2

5

9

4

2

8

10

14

2

5

9

4

2

35%

14%

41%

5%

11%

18%

19%

22%

6%

14%

44%

38%

11%

9%

11%

100%

0% 100%

1 to 50

51 to 200

201 to 1000

>1000

<26 27-150 151-550 551-900 901-3000 3000+

18

21

6

9

Num

ber o

f com

pani

es in

cat

egor

y

18

21

6

9

Num

ber o

f com

pani

es in

cat

egor

y

0 %1 %2 %3 %4 %5 %6 %7 %8 %9 %

1 0 %

< 1 5

1 6 -26

2 7 -60

6 1 -13 0

1 3 1 -20 0

2 0 1 -40 0

4 0 1 -67 0

6 7 1 -85 0

8 5 1 -12 0 0

1 2 0 1 -18 0 0

1 8 0 1 -10 5 0 0

1 0 5 0 1 -22 5 0 0

2 2 5 0 1 +

T o n n e s p e r y e a r

S u g a r

Is o g lu c o s e

Perc

enta

ge o

f com

pani

es

0 %1 %2 %3 %4 %5 %6 %7 %8 %9 %

1 0 %

< 1 5

1 6 -26

2 7 -60

6 1 -13 0

1 3 1 -20 0

2 0 1 -40 0

4 0 1 -67 0

6 7 1 -85 0

8 5 1 -12 0 0

1 2 0 1 -18 0 0

1 8 0 1 -10 5 0 0

1 0 5 0 1 -22 5 0 0

2 2 5 0 1 +

T o n n e s p e r y e a r

S u g a r

Is o g lu c o s e

Perc

enta

ge o

f com

pani

es


Question: The level of sugar in our products is determined by…

901> = Using more than 901 tonnes of sugar per year (N=18)

<145 = Using less than 145 tonnes of sugar per year (N=18)

Figure 3: Factors affecting level of sugar used split according to sugar volume usage

7%

37%

22%

18%

16%

2%

12%

22%

10%

10%

13%

20%

13%

13%

21%

10%

2%

8%

5%

22%

25%

13%

11%

8%

5%

12%

15%

26%

79%

15%

17%

22%

12%

21%

38%

0% 100%

Product recipe

Availability of sugar

Legislation

Price of sugar

Health concerns

Technical reasons

1 2 3 4 5 6

Mean

5.47

2.85

2.67

3.57

3.43

3.84

5.47

2.85

2.67

3.57

3.43

3.84

Not important Very important

B The availability of sugar

11% 6%

6%

11%

94%

72%

0% 100%

A The product recipe

901>

<145

35%

28%

6%

22%

24%

22%

12%

6%

12%

11%

12%

11%

0% 100%

B The availability of sugar

11% 6%

6%

11%

94%

72%

0% 100%

A The product recipe

901>

<145

35%

28%

6%

22%

24%

22%

12%

6%

12%

11%

12%

11%

0% 100%

D Technical reasons

6%

11%

6%

11%

29%

17%

41%

28%

12%

17%

6%

17%

0% 100%

C Health concerns

901>

<145

6%

11% 33%

12%

6%

24%

11%

29%

33%

29%

6%

0% 100%

D Technical reasons

6%

11%

6%

11%

29%

17%

41%

28%

12%

17%

6%

17%

0% 100%

C Health concerns

901>

<145

6%

11% 33%

12%

6%

24%

11%

29%

33%

29%

6%

0% 100%

F The price of sugarE Legislation

47%

28%

24%

28%

12%

11%

6% 6%

6%

6%

28%

0% 100%

901>

<145 18%

11%

18%

11%

6%

6%

29%

22%

18%

11%

12%

39%

0% 100%

F The price of sugarE Legislation

47%

28%

24%

28%

12%

11%

6% 6%

6%

6%

28%

0% 100%

901>

<145 18%

11%

18%

11%

6%

6%

29%

22%

18%

11%

12%

39%

0% 100%

Mean 5.77 Mean 2.83

Mean 2.99 Mean 5.94

Mean 3.40

Mean 4.57

Mean 3.84

Mean 3.50 Mean 2.21

Mean 3.15

Mean 3.83

Mean 3.65


When comparing large volume sugar users (more than 901 tonnes per year), with small volume

sugar users (less than 145 tonnes per year), it can be observed that small volume sugar users

were more influenced by the product recipe (See Figure 3A), and technical reasons (See Figure 3D) than large volume sugar users. Large volume sugar users were more influenced by legislation

(See Figure 3E), and the price of sugar (See Figure 3F) than small volume sugar users.

Fifty five percent (55%) of all companies surveyed said they were not looking at sugar reduction in

their product ranges (See Figure 4). The companies that were looking at sugar reduction (45%),

were doing so for reasons of consumer preference, health concerns and the price of sugar.

Question: Why are you looking at reducing sugar levels? (main reason only)

Figure 4: Reasons for looking at sugar reduction

Sweetener usage Summary Sugar was by far the most important sweetener used across all the industry sectors. Other

sweeteners, such as glucose syrup and artificial sweeteners were mainly used by the soft drinks

industry. Based upon the sugar usage levels reported in this survey, the largest volume of sugar

was used by the biscuits and soft drinks industry.

The amount of sugar in products was almost entirely determined by the product recipe. The price

of sugar had some effect on the level of sugar used, with large volume sugar users seemingly

more affected by this than smaller volume sugar users. The large volume users were also more

likely to be looking at sugar reduction. This was being fuelled by consumer demand for low sugar

products, health issues and price.

5 5%

17 %

1 4%

20 %

2%

N ot looking at sugar reduction

H ealth concer ns

P rice of sugar

C onsumer p r eference

A vailab ility o f sugar


Effect of EU sugar reform

A small majority (54%) of respondents rated their awareness of the EU sugar regime as fair-very

good. The respondents that had a very good knowledge of the EU sugar regime were generally

respondents belonging to large companies and had the specific responsibility of procurement.

Forty six percent (46%) of the respondents rated their knowledge of the EU sugar regime as poor

or very poor.

After being made aware of the EU sugar regime, a large majority of the respondents suspected

that they would be affected by a liberalisation of the EU sugar prices (See Figure 5). Although

most companies readily agreed that they would be affected by a price cut, they were less willing to

disclose the details of the likely impact on their business.

Question: To what extent will this liberalisation affect your product? (4-Point Scale)

Figure 5: Effect of liberalisation of sugar price on products

Overall, companies seemed to disagree with the fact that the total amount of sugar in their product

would increase when the price of sugar falls (83%) (See Figure 6). A large number of companies

(69%) agreed with the statement that their products might become cheaper. The industry seemed

to disagree (69%) with the fact that they will replace existing ingredients with sugar when the price

of sugar drops. The industry seemed to be divided regarding the influence of proposed changes on

their future product development efforts.

If the price of sugar fell, small volume sugar users were more clear in stating that the overall

amount of sugar used would not increase and that their products would become cheaper (See

Figure 6A & 6B). Large volume sugar users were more likely to change future product

development efforts (See Figure 6D).

7 % 2 7 % 3 1 % 3 6 %

0 % 2 0 % 4 0 % 6 0 % 8 0 % 1 0 0 %

N o t a t a l l M o d e r a t e l y V e r y m u c h E x t r e m e ly


Question: If the price of sugar falls…

Figure 6: Effects of fall in sugar prices split according to annual sugar usage

The majority of respondents (63%) did not plan to replace any of the existing ingredients with sugar

(See Figure 7). If ingredients were to be replaced, it would most likely be with other sweeteners

e.g. artificial sweeteners. Nine percent (9%) of the respondents said that they would replace

isoglucose with sugar, if sugar prices fell.

6%

17% 17%

17%

17%

11%

11%

67%

39%

0% 100%

B Our product will become cheaper

83%

39%

11%

28% 28% 6%

6%

0% 100%

A The overall amount of sugar in our product will increase

>901

<145

6%

17% 17%

17%

17%

11%

11%

67%

39%

0% 100%

B Our product will become cheaper

83%

39%

11%

28% 28% 6%

6%

0% 100%

A The overall amount of sugar in our product will increase

>901

<145

44%

28%

28%

22%

11%

11%

6%

28%

11%

11%

0% 100%

D Future product development efforts will be affected

67%

39%

22%

22% 28%

6%

6%

6%

6%

0% 100%

C We will look into replacing ingredients with sugar

>901

<145

44%

28%

28%

22%

11%

11%

6%

28%

11%

11%

0% 100%

D Future product development efforts will be affected

67%

39%

22%

22% 28%

6%

6%

6%

6%

0% 100%

C We will look into replacing ingredients with sugar

>901

<145

Mean 2.03

Mean 1.35

Mean 2.21

Mean 1.65

Mean 2.72

Mean 2.12

Mean 3.41

Mean 4.36

59%

7%

31%

24%

10%

20%

22%

10%

15%

17%

14%

2%

17%

10%

22%

5%

52%

3%

12%

49%

0% 100%

The overall amount of sugar inour products will increase

Our products will becomecheaper

W e will look into replacingother ingredients with sugar

Our future product developmentefforts will be affec ted

Disagree (1) Inclined to disagree (2) Unsure (3)Inclined to agree (4) Agree (5)


Question: If you were to replace any ingredient with sugar, what ingredient will you try to replace? A All respondents

•

I* includes other natural sweeteners

B Respondents interested in replacing ingredients with sugar

Figure 7: Replacement of other ingredients with sugar

Effect of EU sugar reform Summary Around half of respondents had a fair-good knowledge of the EU sugar regime. After being made

aware of the EU plans for reform to the sugar regime, almost all surveyed said their company

would be affected by any changes to the price of sugar. Specifically they thought their products

would become cheaper should the price of sucrose fall. The majority of respondents disagreed that

their usage of sugar would increase with falls in sugar price. In the eventuality that sugar prices did

come down, about 40% of those surveyed said that they may use sugar to replace other

ingredients in some of their formulations. In these cases, it was most likely to replace another

sweetness source (artificial sweeteners, isoglucose or bulk sweeteners).

6 3%9 %

7 %

1 5%

3 % 3 %

N ot replacing anything

Isoglucose

B ulk sw eeteners

Art ificial sw eeteners

Fat

O ther*

22%

6%

11%

6%

17%

38%

BiscuitsConfectioneryCanned foodsBakery ingredientsCakesSoft drinks

8%

15%

23%

23%

31% <1 0010 0 to 55055 0 to 120012 01 to 180022 500+

22%

6%

11%

6%

17%

38%

BiscuitsConfectioneryCanned foodsBakery ingredientsCakesSoft drinks

8%

15%

23%

23%

31% <1 0010 0 to 55055 0 to 120012 01 to 180022 500+

Industry sector (N=18) Volume of sugar used on yearly basis (tonnes) (N=13)


Effect of greater availability of isoglucose/HFCS

The following section deals with questions relating to the effect of a possible lifting of the

isoglucose/HFCS quotas

A large percentage (73%) of the respondents rated their knowledge of the EU isoglucose/HFCS

quotas as being poor or very poor. None of the respondents rated their knowledge of the EU

isoglucose/HFCS as being very good.

Respondents’ knowledge concerning isoglucose/HFCS quotas was much lower compared to

respondents’ knowledge concerning the EU sugar regime. This may be due to the fact that the

majority of these respondents did not currently use isoglucose/HFCS in their production (74%).

The majority of companies that did use isoglucose/HFCS in their production were operational in the

soft drinks industry and still rated their knowledge of isoglucose quotas as poor, or very poor

(63%).

Most of the seventeen companies that used isoglucose in their production said that they would be

moderately-extremely affected by changes in the isoglucose quotas (85%). There was a very large

group (69%) of respondents indicating that they would be moderately affected. This might be an

indication that they were not sure how the changes were going to affect their company.

Question: If quotas on isoglucose/HFCS were to be liberalised…

Figure 8: Effect of lifting isoglucose/HFCS quotas on products

46%

8%

17%

8%

33%

25%

23%

46%

8%

25%

23%

23%

25%

25%

23%

8%

33%

0% 100%

The overall amount ofisoglucose/HFCS in ourproduc ts will inc rease

Our produc ts will becomecheaper

W e will look into replac ingother ingredients with

isoglucose/HFCS

Our future product developmentefforts will be affected

Disagree (1) Inclined to disagree (2) Unsure (3)Inclined to agree (4) Agree (5)


If isoglucose quotas are liberalised, products might become cheaper but most companies were not

sure about this and gave it middle ratings (See Figure 8). This survey suggested that isoglucose

was probably not going to be widely used to replace other ingredients and the overall amount of

isoglucose used was probably not going to increase significantly.

Question: If you were to replace any ingredient by isoglucose/HFCS, what ingredient will you try to replace?

Figure 9: Replacing other ingredients with isoglucose/HFCS

Isoglucose was most likely not going to be used to replace any ingredients but if it was used to

replace other sweeteners it would most likely be sugar and bulk sweeteners (See Figure 9).

Greater availability of Isoglucose/HFCS Summary Roughly a third of the isoglucose/HFCS users said they had a fair-good knowledge of the EU

isoglucose/HFCS quotas. A large majority of those surveyed said their company would be

moderately affected by any changes to the quotas. This might indicate that they are not sure how it

was going to affect their operation.

In the eventuality that isoglucose/HFCS quotas were lifted, about 36% of those surveyed said they

may use isoglucose/HFCS to replace other ingredients in some of their formulations, in these case

it was most likely to replace another sweetness source (sugar or bulk sweeteners).

6 4%

1 8%

1 2%

6 %

N ot replacing anything

Sugar

B ulk sw eeteners

Fat


Reform scenarios

Respondents were presented with 5 possible outcomes of forthcoming negotiations concerning EU

sugar reform and changes to the isoglucose/HFCS quotas and for each outcome, asked to

estimate likely increases in sugar usage.

Regardless of the various reforms illustrated in the 5 scenarios, around 80% of those surveyed in

industry claimed this would have no effect on the amount of sugar used in their company (See

Figure 10). Not until there was a reduction in sucrose price of 50% and an abolishment of

isoglucose quotas, did there appear to be any trend to indicate an increase in industry sugar

usage. Relaxing of isoglucose quotas was unlikely to effect usage as much as reduction in sugar

costs was likely to affect sugar usage.

Figure 10: Likely increase in sugar usage as a result of changes in the EU sugar regime

When looking at the companies that indicated a likely increase in sugar usage as a result of

changes in the EU sugar regime, a trend was observed, indicating that smaller companies were

more sensitive to price changes in sugar. Although sugar price was more important to large volume

sugar users they were less inclined to respond to small changes in sugar price. Changing

established production methods and recipes required a considerable reduction in sugar price for it

to become profitable for larger companies. Smaller companies were more flexible and therefore

more likely to respond to smaller falls in sugar price.

Based on a sample size of n=17 responses, (too few to make any robust estimates), a trend could

be seen indicating that the abolishment of isoglucose quotas would possibly lead to an increase in

the usage of this ingredient, regardless of price reduction of sucrose (See Figure 11).

2 %

3 %

12%

2%

6%

5 %

5 %

5%

3%

2%

3%

2%

8%

8 %

9%

9 %

8%

88%

86%

82 %

80%

74 %

2 %

0% 100%

1 0 U nc hang ed

1 0 A b ol is h ed

3 0 U nc hang ed

3 0 A b ol is h ed

5 0 A b ol is h ed

>1 0 % 5 to 1 0 % 2 to 5% 0 to 2 % Unchange d /le ss s ug a r use d

Fall in sugar price

Isoglucose quotas


Figure 11: Likely increase in isoglucose usage as a result of changes in the EU sugar regime

6%

6%

6% 6 %

6 %

0%

6%

18 %

6%

1 2%

6%

9 4%

77 %

9 4%

77 %

82 %

0%

0% 100%

1 0 U nc hang ed

1 0 A b ol is h ed

3 0 U nc hang ed

3 0 A b ol is h ed

5 0 A b ol is h ed

>1 0 % 5 to 1 0 % 2 to 5% 0 to 2 % Unchange d /le ss s ug a r use d

Fall in sugar price

Isoglucose quotas


Additional Information

A number of companies (N=4) wished to remain anonymous in their reply to this questionnaire.

The UKISUG volunteered to collate and blind the responses of these companies. The replies of

these four companies had already been summarized by the UKISUG and were therefore

impossible to incorporate in the main analysis. The summary provided by the UKISUG is presented

below.

The four companies that replied were either the category leader or number two in their field, with

each employing over a 1,000 employees. Between them, they used more than 300,000 tonnes of

sugar each year and 40,000 tonnes of isoglucose. The product areas concerned included almost

the entire range of products containing sugar. The UKISUG stated that their reply may be taken as

an authoritative representation of the ‘sugar-using’ industry.

All of the companies considered sugar to be one of their main ingredients, and amount used was

largely determined by consumer taste. All were looking at reducing the amount of sugar used for

reasons of health, consumer preference and its high price. If the price of sugar were to fall, then

the use of sugar might increase a little, but this would be in place of isoglucose or glucose syrup.

The overall calorie content of products was likely to remain unchanged.

The UKISUG further reports that these findings correspond with observations in the market place.

Their summary states that over the last 20 years, the real cost of food and drinks containing sugar

has fallen, and it has fallen even faster as a share of disposable income. Furthermore, during those

20 years, per capita confectionery consumption has risen only slightly and per capita consumption

of soft drinks containing sugar has actually been constant or even reduced.

Based on these observations, the UKISUG concludes that the limiting factor on consumption of

food and drink containing sugar is not cost but consumer taste. The UKISUG concludes that there

is no evidence that a fall in sugar price arising from reform of the EU sugar regime would lead to in

increase in its consumption.


Final Conclusions

Sugar is regarded as an essential ingredient to the manufacture of food. Current sugar levels are

primarily determined by product recipe. The product recipe is to a very large extent based on

consumer preference.

When consumer preference is satisfied, secondary factors are more relevant in determining sugar

levels used. The most important secondary considerations are technical reasons and the price of

sugar. Respondents were divided over these two secondary factors. Small volume sugar users

regarded technical reasons as being more important, where as large volume sugar users regarded

price as being more important.

Respondents confirmed that the EU sugar reform will have a considerable impact on the industry.

However, due to the complex nature of the issue, it was difficult for respondents to predict the

exact nature of their response to the changes. Any adverse effects were likely to come as a result

of sugar containing products becoming cheaper. Around 70% of respondents said that the price of

products would fall should sugar become cheaper. In terms of sugar usage, however, only 17% of

the respondents thought that the amount of sugar in their products would increase, if the price fell.

Small volume sugar users were agreed upon the fact that their products will become cheaper and

that they will not increase in sugar content as a result of the reform. Large volume sugar users also

expressed the opinion that their product might become cheaper and they will not increase sugar

content, but they were less explicit. They were also more inclined to agree that future product

development efforts would be affected. Smaller companies were more likely to respond to small

falls in sugar prices; large companies were likely to respond to significant falls in sugar prices only.

The affect of liberalisation of isoglucose/HFCS quotas is expected to be smaller than the EU sugar

reform. The changing quotas of isoglucose/HFCS were unlikely to have a major impact on

sweeteners used. It appeared more likely that sugar might replace isoglucose/HFCS, rather than

the other way around.


About Leatherhead Food International

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nutritional, sensory and consumer studies. We have over 1,000 members internationally, who we

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