According to Bloomberg, the world is eating less sugar, a trend that mirrors the lockdown restrictions enforced by many countries.
A key driver for the fall in sugar demand is with the closure of restaurants, sports arenas and cinemas. These measures mean that for the first time in four decades sugar demand drops. This is based on data collated by the Czarnikow Group. In terms of the scale of the fall in demand, drink and confectionery sales at such big corporations as Coca-Cola Co. and Nestle SA have plummeted (in April, for example, Coca-Cola sales fell 25 percent).
A further indicator of change was seen in June 2020, as the raw sugar futures in New York ended considerably lower. This was primarily the consequence of production of the sweetener declining in Brazil.
To gain a business insight into the fall in sugar demand, Digital Journal asked Lux Research’s Director of Research, Sara Olson for a comment. Olson describes the fall in demand as: “Truly Disruptive”.
Olson goes on to say: “Sugar consumption is in focus as the most recent commodity to exhibit rapidly falling demand associated with COVID-19 and global lockdowns, but it is by no means an outlier among consumer products and ingredients. Periodic fluctuations in demand are commonplace, but COVID-19 is having once-in-a-generation impacts on consumption that are accelerating the need for commodity companies to learn how to do more with less – namely, how to grow their businesses from shrinking top-line sales.”
In terms of general lessons for business, Olson recommends that as the COVID-19 situation shifts: “Don’t wait for sales to miraculously bounce back (they will not), but rather start now to innovate your business model – offer services, diversify products, explore new routes to market – to get ahead of the (falling) demand curve.”