Merchants Noticeably Reduce Sugar Costs Significantly
The sugar market has seen some drastic changes recently, with prices plummeting. Global markets are seeing price drops of up to a third, and Südzucker, a major corporation, is having to revise its annual targets as a result. The SDax company has significantly reduced its forecast for the year, which ends in February 2025, anticipating a loss in the sugar segment.
Südzucker is grappling with an oversupply of sugar in the European market and a decline in global prices. However, this is good news for consumers, as discount retailers like Aldi Nord, Aldi Süd, Edeka, and Netto are slashing prices. For instance, a 1-kg pack that once cost 1.49 euros now sells for 89 cents. Similar price cuts are being announced at Kaufland and Lidl, with Rewe, Penny, and Norma following suit. Even other sugar products like powdered and jam sugar are expected to see a price drop.
Germany has seen a significant increase in food prices over the past few years, with sugar being among the most affected. The cost of a sugar pack was over 82% more expensive in August 2024 than it was four years prior. This price hike was primarily due to higher energy, material, and labor costs, according to the German sugar industry. In December 2023, the average sugar price in the European domestic market reached an all-time high of 856 euros per tonne.
The current price trend is influenced by oil prices and the sugarcane harvest prospects in countries like Brazil, Thailand, and India. According to agricultural portal Agrarheute, the sugar price on the London futures market has dropped by a fifth in the past year, to its current level of 520 dollars per tonne, or 469 euros.
This drop in price means a decrease in revenue for Südzucker. The company now expects revenues between 9.5 and 9.9 billion euros, down from its previous expectation of 10 to 10.5 billion euros. The EBITDA is also expected to be between 550 and 650 million euros, with even the upper limit barely reaching half of last year's result.
The company now anticipates a loss in the sugar segment in the second half of the year, a significant shift from its previous expectation of a profit between 200 and 300 million euros. In the second quarter, which ended in August, Südzucker's preliminary revenue fell slightly below the previous year's level to around 2.5 billion euros. EBITDA halved to 190 million euros, and the operating result dropped by nearly two-thirds to 115 million euros. The final figures for the second quarter will be released on October 10.
Despite the decline in global sugar prices, leading to a decrease in revenues for Südzucker, the situation benefits consumers who can now purchase sugar at lower prices. Consequentially, discount retailers like Aldi Nord, Aldi Süd, Edeka, and Netto have reduced the price of a 1-kg sugar pack from 1.49 euros to 89 cents.
