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The well being dangers of an excessive amount of sugar have been made clear, however the billion-dollar world market to provide it’s thriving. Gross sales of candy treats stay robust, and waistlines maintain increasing. May weight-loss medicine now succeed the place governments, scientists and medical doctors have failed: crushing demand for sugar?
So-called glucagon-like peptide-1 receptor agonists (GLP-1s) contained in such medicine as Wegovy, Mounjaro and Ozempic curb customers’ appetites and are being hailed as sport changers for tackling weight problems and probably a variety of different circumstances, from diabetes to dependancy. 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 buyers. Mondelez and PepsiCo shares took a success after Walmart chief govt John Furner reported that clients on these medicine have been shopping for fewer groceries. Hershey has additionally acknowledged experiencing a “gentle influence” on gross sales, attributed to the rising use of GLP-1 drugs.
Sugar merchants, for now, are dismissing issues about weight-loss medicine’ potential to dent demand. Maybe they’re battle-hardened — many years of sugar-is-bad campaigns haven’t made a dent in world consumption, which has quadrupled previously 60 years, in keeping with 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 using excessive on climate woes and rising manufacturing prices.
There are different causes for merchants’ nonchalance. To date, Ozempic and different medicine are dear and solely out there to a small phase of rich customers in developed nations. Even when these appetite-suppressing medicine do begin lowering demand, the considering goes, it’ll be a sluggish burn, giving markets and sugar producers loads of time to regulate.
However may this confidence be misplaced? Weight-loss medicine do work in curbing appetites. That makes them way more more likely to reshape sugar consumption — and with it, the sugar market.
Stephen Geldart of London-based sugar service provider Czarnikow believes the GLP-1 medicine are already on observe to disrupt demand, beginning with rich nations. “I believe we’re simply within the early phases of it, partly as a result of these medicine are nonetheless fairly costly,” he advised me. “So 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 more likely to drop elsewhere too, particularly as pharmaceutical firms race to sell compounded variations of medicine, circumventing patents.
If costs fall and entry broadens, the ripple results may attain middle-income and even creating markets. The weight problems epidemic and slew of well being circumstances that include it will not be restricted to wealthy western nations. In India, the world’s greatest sugar client, charges of diabetes and weight problems are hovering. Indians devour a staggering 29mn tonnes of sugar yearly — 15 per cent of world demand. Even a modest uptake of GLP-1s there may shake the market in ways in which merchants may discover onerous to disregard.
Geldart highlights one other phenomenon that ought to give sugar market members pause: heavy consumers of merchandise with excessive sugar ranges comparable to ice cream, cookies and chocolate account for a disproportionate quantity of gross sales. If such customers reduce, there might be a huge impact.
Monitoring sugar consumption is notoriously tough, although. There’s an actual danger, due to this fact, that these developments may develop below the radar earlier than the trade wakes as much as what’s taking place.
Nonetheless, 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 may face a provide glut that drags costs decrease and forces a painful adjustment. Already, costs have fallen again just lately on lowered 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?
