May 7 - 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 is 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 the syrup 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 prices of the syrup 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 the syrup -- 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 more than 99% sucrose.
Prices for the 55%-fructose syrup averaged 28.41 cents a pound in first quarter 2008, exceeding wholesale refined-beet sugar prices at 26.18 cents, according to the Department of Agriculture. Until recently, high-fructose corn syrup was considerably cheaper than sugar. In 2000, for example, 55%-fructose syrup prices were five cents a pound less than refined sugar. Corn prices tripled in the past 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 the syrup under long-term, calendar-year contracts, he said.
When next year's contracts are negotiated, the syrup could be more expensive than sugar.
Current list prices for 55%-fructose syrup 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, Mr. Sterk said. Meanwhile, list prices for 42% fructose -- used in food -- are three cents below 55% list levels in both regions.
In the 1970s and 1980s, U.S. beverage and food makers switched to high-fructose corn syrup after its development in Japan, and that move accelerated when sugar prices rocketed in 1980. Manufacturers found the syrup 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 demand for the syrup.
By the early part of this decade, U.S. per capita use of the syrup had swelled to match sugar consumption.That trend has reversed since, however, with syrup demand slipping while sugar use rises, according to the USDA. In 2007, U.S. per capita consumption of the syrup 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 consumption of the syrup "may play a role in the epidemic of obesity."
Researchers at New Jersey's Rutgers University in 2007 learned that drinks sweetened with the syrup contained high levels of compounds associated with diabetes and said the syrup 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."
Mr. Sterk noted that early this month, comments by a U.S. Food and Drug Administration representative -- saying products containing the syrup 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 the syrup -- 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.
High-fructose corn syrup 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," Ms. 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."
Companies, however, are listening to consumers when it comes to the syrup.
Thomas Kemper Soda Co. in Oregon this month was the latest beverage maker to reformulate soda with sugar, eliminating the syrup. "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's Hansen's Natural Corp. made the same move, saying consumers requested the change. Jones Soda Co. in Seattle switched all its soft and energy drinks and teas to sugar a year ago.
Meanwhile, several companies using the syrup and accused of not being "natural" rushed to avoid lawsuits in recent years. Kraft Foods Inc. 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 PLC did the same in response to questions about Seven Up.
Coca-Cola Co. and PepsiCo Inc., however, have used the syrup for more than 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.