1 May 2008 - Rapid increases in high-fructose corn syrup prices will encourage a return to sugar usage in U.S. soft drinks and foods -- a move that's already gathering steam among consumers -- sugar industry members predict.
Even before demand for ethanol lifted corn prices recently, the nation's smaller soda and food makers began to reject HFCS in favor of sugar as consumers shied away from heavily processed snacks and ingredients.
Dalton Yancey, executive vice president of the Florida Sugar Cane League, said more soda makers are shifting to sugar, with the move based on a trend toward perceived-natural products. Escalating corn prices have lifted wholesale HFCS prices so that they now match, instead of being at a discount to, sugar values, he pointed out. He added that few manufacturers are paying those higher prices since they locked in at lower levels under agreements for the year.
High fructose corn syrup is produced in several strengths. Syrup containing 55% fructose is used to sweeten soft drinks and other beverages in the U.S., with smaller amounts of 55% found in frozen dairy products. Most foods listing HFCS -- ketchup, cereal, pasta sauce, soup, salad dressing, and fruit yogurt -- contain 42% fructose. A 95% fructose syrup is used in some beverages, canned fruit, confectionery products and dessert syrups.
Refined sugar is over 99% sucrose.
Prices for HFCS 55% averaged 28.41 cents a pound in first quarter 2008, exceeding wholesale refined beet sugar prices at 26.18 cents, according to the U.S. Department of Agriculture. Until recently, HFCS was considerably cheaper than sugar. In 2000, for example, HFCS 55% prices were 5 cents a pound less than refined sugar. Corn prices tripled in the last two years, however, while U.S. sugar values stagnated.
Ron Sterk, an editor at Milling and Baking News, agreed that manufacturers switching to sugar "have done so because of its natural properties," but says "we're starting to hear more talk about price now." U.S. soda and food makers mostly buy HFCS under long term, calendar-year contracts, he said.
When next year's contracts are negotiated, HFCS could be more expensive than sugar.
Current list prices for HFCS 55% at 21.875 cents a pound in the Midwest and 23.425 cents in the Northeast are less than wholesale prices and more like what manufacturers are paying now, Sterk said. Meanwhile, list prices for 42% fructose--used in food--are 3 cents below 55% list levels in both regions.
US HFCS Usage Peaked Early This Decade
In the 1970s and 1980s, U.S. beverage and food makers switched to HFCS after its development in Japan, and that move accelerated when sugar prices rocketed in 1980. Manufacturers found HFCS easy to transport and mix and able to extend food shelf-life, while also preventing freezer burn. U.S. sugar usage dropped as a result but still exceeded HFCS demand.
By the early part of this decade, U.S. per capita HFCS use had swelled so that it matched sugar consumption. That trend has reversed since, however, with HFCS demand slipping while sugar use rises, according to the USDA. In 2007, U.S. per capita HFCS consumption totaled 40.1 pounds, below sugar use at 44.2 pounds. Scientists from the Pennington Biomedical Research Center, Louisiana State University and University of North Carolina found in 2004 that increased HFCS consumption "may play a role in the epidemic of obesity."
Researchers at New Jersey-based Rutgers University in 2007 learned that HFCS-sweetened drinks contained high levels of compounds associated with diabetes and said HFCS may contribute to the disease.
Audrae Erickson, president of the Corn Refiners Association, challenged the Rutgers study, saying "researchers failed to mention that reactive compounds are also found in numerous other common foods and beverages, including bread and toast, honey, soy sauce, sugar-sweetened baked goods, and yogurt."
Sterk noted that early this month, comments by a U.S. Food and Drug Administration representative -- saying products containing HFCS can't be considered "natural" and shouldn't be labeled that way -- sparked debate. Those comments came from Geraldine June, supervisor of product evaluation and labeling at FDA in response to an inquiry by Web site FoodNavigator-USA. She said use of synthetic fixing agents in enzyme preparation -- needed to produce HFCS--wouldn't be consistent with "natural."
The FDA itself hasn't established a definition of "natural," though various groups have petitioned the agency to clearly define the term.
HFCS is made by processing corn starch to yield glucose, and then processing glucose to produce a high percentage of fructose. To make sugar, sugar cane is processed into raw sugar, which looks like brown sugar, and then refined.
"There is no reason to switch from HFCS to sugar -- even the FDA recognizes that they are compositionally essentially the same," Erickson said. "HFCS and sugar have the same number of calories, are equally sweet and contain the same simple sugars."
James M. Rippe, cardiologist and biomedical sciences professor at the University of Central Florida, said based on recent research in which he participated "there is no difference in how the human body handles HFCS and sugar. The two sweeteners are equivalent metabolically."
Some Companies Making Decision To Reformulate To Sugar
Companies, however, are listening to consumers when it comes to HFCS.
Thomas Kemper Soda Co. in Oregon this month was the latest beverage maker to reformulate soda with sugar, eliminating HFCS. "Our switch to cane sugar was important to delivering the most flavorful, highest-quality soda on the market without compromising on ingredients," said Bill Germano, company president.
In early April, California-based Hansen's Natural (HANS) made the same move, saying consumers requested the change. Jones Soda (JSDA) in Seattle switched all its soft and energy drinks and teas to sugar a year ago.
Meanwhile, several companies using HFCS and accused of not being "natural" rushed to avoid lawsuits in recent years. Kraft Foods (KFT) in 2006 removed the word natural from Capri Sun beverages after the Center for Science in the Public Interest threatened a suit and Cadbury-Schweppes (CSG) did the same in response to questions about 7-Up.
Sugar deliveries to the U.S. beverage sector reached a 10-year high of 312,000 short tons last year, said Melanie Miller, spokeswoman for the Sugar Association, citing USDA data.
Coca-Cola Co. (CO) and PepsiCo (PEP) however have used HFCS for over 20 years, and defend its safety.
"HFCS is a natural sweetener, derived from corn and free of artificial ingredients or additives. Like table sugar and honey, HFCS contains fructose and glucose, which are found in many other naturally occurring foods," said Allyson Park, spokeswoman for Coca-Cola.
U.S. Coke is sticking with HFCS but Pepsi is testing its all-natural Pepsi Raw with sugar in pubs and bars in U.K. cities. Dublin Dr. Pepper, based in Dublin, Texas, uses only sugar in its non-diet products.