• Market Crumbs

Sugar Demand Plummets


Image via Sharon McCutcheon on Unsplash

COVID-19 has caused countless supply and demand disruptions across the globe.


It appears the coronavirus has caused a demand hit to one commodity in particular that not even doctors and governments could despite years of warnings.


With restaurants, sports arenas and cinemas all temporarily closed, sugar demand is set to drop for the first time in 40 years, according to supply chain services firm Czarnikow.


"Consumption out of home is normally more than what you would now substitute and have at home," Czarnikow analyst Ben Seed said. "If you go to the cinema you would probably quite happily have a liter or maybe more of soda while you watch the film, whereas we just don’t think people would drink a whole liter of soda while watching Netflix."


Czarnikow predicts sugar consumption will fall 1.2% this season to 169.9 million tons. The U.S. Department of Agriculture also sees sugar stockpiles rising as demand falls. The USDA reduced its estimate of sugar deliveries "based on initial analysis of the effects of pandemic lockdowns on the demand for sugar."


With the drop in demand has come a drop in prices. Raw sugar prices hit a 12-year low in April after falling more than 30% in just three months.

The International Sugar Organization believes the coronavirus has wiped out all of 2020’s projected consumption growth. The organization warned bigger losses may follow, while also saying hedge funds switched from net long to net short.


Notable companies that are heavily dependent on sugar such as Coca-Cola and PepsiCo have already seen a hit to demand. Coca-Cola said volume fell 25% in April, while PepsiCo warned second-quarter revenue will take a hit.


"The bigger picture of falling sugar consumption comes from sales data of Coke and Pepsi, which is terrible," said John Stansfield, a trader at Group Sopex who works in the sugar industry. "But what I fear more is falling global GDP. Unemployed people won’t be going to restaurants and bars. As GDP stalls, so will sugar consumption."


While governments have fought sugar for years over health concerns, it's ironic that the forces of supply and demand as a result of the coronavirus are what finally caused demand to drop.


Leftover Crumbs

  • Walmart teams up with Shopify. Walmart is partnering with Shopify to expand its third-party marketplace site in the company's latest attempt to compete with Amazon. Walmart's marketplace site, which is growing faster than the company's overall web business, aims to add 1,200 Shopify sellers this year. "There are many Shopify sellers who were already on Walmart.com, but we have not penetrated their base to the extent possible," Walmart Marketplace vice president Jeff Clementz said. "There’s a tremendous opportunity."

  • Bezos will testify. Amazon founder and CEO Jeff Bezos will be "available to testify at a hearing with the other CEOs this summer" after requests from Congress to explain Amazon's alleged use of third-party seller data to launch competing products. "Of course, we will need to resolve a number of questions regarding timing, format, and outstanding document production issues, all necessarily framed by the extraordinary demands of the global pandemic," lawyer Robert Kelner said. Kelner said Amazon has turned over more than 225,000 documents to lawmakers covering "an extraordinarily wide range of complex topics."

  • Unilever announces climate plan. Unilever will invest 1 billion euros into a climate and nature fund, while pledging net-zero emissions across all of its businesses by 2039. The funds will be deployed over the next ten years on water preservation, landscape restoration, wildlife protection and carbon sequestration projects. "While the world is dealing with the devastating effects of the Covid-19 pandemic, and grappling with serious issues of inequality, we can’t let ourselves forget that the climate crisis is still a threat to all of us," Unilever CEO Alan Jope said.

  • EV charging stations jump. The International Energy Agency said in its annual Global EV Outlook that the number of electric vehicle charging stations increased by 60% last year to 862,118 globally. The increase marks the biggest jump in three years and outpaced sales of battery-powered cars. China is the world's leader in electric vehicle charging stations with a 60% share of the global total. "China continues to lead in the rollout of publicly accessible chargers, particularly fast chargers, which are suited to its dense urban areas with less opportunity for private charging at home," the report said.

  • Impossible Sausage hits Burger King. Burger King will role out its Impossible Croissan’wich nationwide, making it the first national chain to sell Impossible Foods' sausage for breakfast. Burger King began testing the sandwich at select locations in January. To promote the Impossible Croissan’wich, Burger King will offer 100,000 free sandwiches through its mobile app with any purchase of at least $1.