Chinese beet and cane farmers rely on state support to offset steep production costs. Imports, meanwhile, are subject to hefty duties meant to protect the industry, with an additional tariff introduced just this week.
As a result, domestic sugar prices are around double those on the world market. This, coupled with an abundance of cheap corn, has made HFCS highly competitive.
The USDA last month highlighted the decline in Chinese sugar demand when it slashed its estimates for consumption in that country for 2015/16 and 2016/17 by roughly 10 percent and signaled more modest growth than previously expected.
“People in China are still eating ice cream and drinking soft drinks,” said John Stansfield, analyst at commodity trader Group Sopex.
“It’s just the fact that these products are now increasingly made from corn syrup rather than sugar.”
Brazil, the world’s third largest consuming nation, has also seen demand growth slow over the last three years as an enduring recession slashed the incomes of many Brazilians. Consumption was growing at roughly 2-3 percent over the previous decade.
Soda and Confectionery
Manufacturers seem to think the anti-sugar movement is here to stay, and many food and beverage companies are preemptively reformulating their products as a result.
Coca-Cola has committed to reducing sugar in its drinks, with more than 200 reformulation initiatives underway.
PepsiCo also said that by 2025 at least two-thirds of its drinks globally will have 100 calories or fewer from added sugar per 12-oz serving.
Nestle said in 2016 it is developing technology to reduce sugar in some confectionery products by up to 40 percent without affecting the taste.
“Globally, sugar is in the spotlight,” said Sara Petersson, nutrition analyst at Euromonitor. “The regulations are increasing with time. And if they’re being smart, they’re going to tackle this in advance.”