CCM: World’s sugar cut in drinks beneficial to easing HIS overcapacity in China 05-11-2016

The World Health Organisation (WHO) marked the World Health Day, 7 April, 2016 (“Beat Diabetes”), by calling for actions on diabetes. “Now diabetes is widely and rapidly spread in many countries, especially in those low- and mid-income countries,” announced WHO. In 2012, it caused 1.50 million deaths, of which 80%+ came from the said countries. “By 2030, diabetes will become the 7th largest cause for death,” is a claim by WHO.



                                                                                              Source: Baidu


“Most diabetes can be prevented and treated, that is the Type 2 diabetes, accounting for 90% of all diabetes around the world”, stated WHO. Accordingly, such patients can secrete insulin themselves. However, the overweight and sedentariness largely increase the demand for insulin. When the insulin balance is broken, the blood sugar will rise. “Such patients should have regular physical activities and healthy diets,” continued WHO.


Prior to this global activity to beat diabetes, some countries have already taken measures. On 16 April, 2016, George Osborne, the UK’s Chancellor of the Exchequer noted in his annual budget report about a plan to levy sugar tax on soft drinks (incl. imported and local-made soft drinks and excl. fruit juices and milk). Particularly, the tax will be decided by the sugar content in soft drinks: GBP0.18/L for 5+g/100ml and GBP0.24/L for 8+g/100ml. This policy will be officially implemented from 2018, “Time will be given to producers for their adjustment in formula to reduce the sugar content,” said George Osborne.

 

It is a common view that sugary drinks are an important factor causing overweight and diabetes. The collection of sugar tax will push up the sales price of drinks that contain sugar in large quantity, and will knock down consumers’ desire for goods, so as to help control consumers’ intake of sugar. In Nov. 2013, Mexico, suffering much from obesity and diabetes, passed a bill that from Jan. 2014, special taxes would be imposed on the “junk food” that contain 275+cal/100 g (tax rate at 8%) and the sugary drinks (tax: MXN1/L), and that from 2015, producers shall mark out the contents of sugar, fats and saturated fat for drinks and foods.




Actually, Mexico made significant results from this policy. According to the research organised by scientist M Arantxa Colchero, in 2014, the purchase of sugary drinks by each Mexican was down by 4.2 L; meanwhile, the purchase of nontaxed drinks (soda water, milk, sugar-free fruit juice) was up by 4%, mainly purified water.

 

The UK’s plan to levy sugar tax aroused strong reactions. For instance, researchers from New Zealand called for the imitation of the UK to collect sugar tax in New Zealand. Probably low-sugar or sugar-free drinks will play a role in the future. Then what could producers do?


Maybe it's a good choice for them to modify the formulas and reduce costs, to meet the demand for low sweetness, if they intend to avoid declines in sales volume. High intensity sweeteners (HIS) and natural sweeteners will be the best substitutes for sugars and starch sugars of high sugar content and high calorie. Take Mexico for example. In 2015, the combined export volume of 2 HIS (aspartame and sucralose) from China to this country increased largely, by 500% YoY to over 900 tonnes. From this point of view, China, as a large sweetener-producing country, will have opportunities to ease the domestic HIS overcapacity, if countries having great demand in succession collect sugar taxes. On the contrary, natural sweeteners, though they are the answer to consumers’ “health” concept, still need vigorous market exploration due to its high use costs.


This article comes from Sweeteners China News 1604, CCM




About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

        

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