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07-09-2016

Sugar and Sweeteners in China

TRENDS
  1. China's sugar and sweeteners industry in 2015 continued to face severe challenges from cheap imported sugar products since 2012, with 43 sugar and sweeteners manufacturers closing down from 2012 to 2015 and up to CNY10 billion loss from 2014 to 2015. In spite of the unfavourable conditions, sugar and sweeteners saw steady volume growth of 2% in 2015, mainly driven by the more robust sales growth from inland lower-tier cities due to rising household incomes.
  2. Domestic production of sugar and sweeteners saw negative growth in 2015, partly influenced by the unfavourable market environment. Because of the price advantage of imported sugar, the price of sugar and sweeteners in China was forced down. With the lower profit margins, many manufacturers chose to quit the market, leading to lower domestic production.
  3. In addition to sugar and sweeteners, China plays a key role in global starch sugar production with more than 12 million tonnes of production volume each year, widely used in biological production. The major difference is that sugar and sweeteners are widely used in the food and beverage industry while starch sugar is mainly for industrial use.
  4. Smaller pack sizes of packaged sugar are more popular and widely available in China. Compared to western consumers who have the culture of baking at home, Chinese families usually consume less sugar, mainly for cooking, and thus the package size is normally smaller than in western countries.
PROSPECTS
  1. Volume growth of sugar and sweeteners is expected to remain stable thanks to the strong demand from foodservice and consumers. However, due to growing health concerns, the forecast period volume CAGR of sugar and sweeteners is expected to be lower than in the review period because of high product penetration and the saturated market. However, functional sugar and sweeteners is expected to see stronger growth eg sugar mixed with herbs such as motherwort and ginger, with the health claims appealing to women consumers especially.
  2. Market centralisation is expected to improve due to the impact from imported sugar. Faced with the competitive prices of imported sugar, many small local manufacturers left the market in the review period while large-scale domestic manufacturers are likely to strengthen their competitive edge to combat the unfavourable market conditions and thereby gain more market share.
(Source: Euromonitor)