HFCS demand continues multi-year slide

by Ron Sterk
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KANSAS CITY — News last week that Starbucks Corp. planned to eliminate high-fructose corn syrup from its food menu items by June 30 was the latest blow in an increasing number of negative hits to the corn-based sweetener that has seen use fall for six consecutive years with 2009 likely to be the seventh.

Starbucks food items joins Jones Soda, Snapple, limited editions of Coca-Cola and Pepsi-Cola, Oroweat bread, Rudi’s Organic baked goods, various Kraft Foods, Del Monte and Dannon products and numerous others in recent years switching from HFCS to sugar. And the trend to switch appears to be gaining momentum.

New food and drink products with HFCS labeled as an ingredient launched in the United States totaled 926 in 2008, down 18% from 2007 and down

22% from 2006, according to the Mintel Global New Products Database. Through June 4, 2009, only 289 new products so labeled had been introduced, which would appear to be leading to another decrease for the year.

Since gaining popularity as a low-cost sweetener in the early 1980s, especially as an alternative to beet and cane sugar in beverages, and contributing about half of all added sugar in all food and beverage items by the early 2000s, HFCS has come under nearly constant fire. It was labeled "public enemy No. 1" by one group and the "demon ingredient" by another. It has been blamed for causing obesity, diabetes and other ailments and said to contain mercury, leading some to call it "America’s melamine," the toxic substance once added to some food products made in China.

The Corn Refiners Association (C.R.A.) has seemingly fought a losing battle against the attacks on HFCS, citing study after study to counter the repeated blows of the anti-HFCS side. The C.R.A. last year launched a national advertising campaign promoting HFCS as a safe product in an effort to counter the growing negative perception of HFCS by consumers.

But dollar sales of products labeled as HFCS-free rose by 13.4% and unit sales by 8% in the 52 weeks ended April 18, 2009, from the same period a year earlier, according to The Nielson Co.

Data from the U.S. Department of Agriculture show that HFCS production peaked at 9,045,000 tons, dry basis, in 2002, just 64,000 tons under refined sugar output of 9,109,000 tons. Production of HFCS has fallen every year since, with outturn in 2008 estimated at 8,066,000 tons, or 11% less. Refined sugar deliveries during the same period rose 11%, to 10,073,000 tons.

Per capita deliveries (use) of HFCS and refined sugar were even at 61 lbs in 2003. HFCS deliveries have since fallen 13% while refined sugar rose 9%. HFCS per capita deliveries in 2008 were down 17% from the peak of 63.7 lbs in 1999.

"Actual human intake of caloric sweeteners is lower (than deliveries) because of uneaten food, spoilage and other losses," the U.S.D.A. noted.

The share of the U.S. corn crop used to make HFCS has declined slightly since the mid-1990s, fluctuating between 5% and 6% from 1995 through 2003, between 4% and 5% from 2004 through 2006 and has held around 4% since 2007. The amount of corn used to make HFCS peaked at 541 million bus in the 2001-02 crop year and fell to 470 million bus in the current year. Use was forecast by the U.S.D.A. to hold at 470 million bus in 2009-10.

About the only bright spot for the beleaguered corn refining industry has been exports to Mexico. Use of HFCS in Mexico has risen significantly since a 20% tax on beverages sweetened with the product (imposed to protect Mexican sugar cane producers in 1998) was lifted in 2006. The U.S.D.A. projects Mexico will import 800,000 tonnes, dry weight, (882,000 short tons) of HFCS next year, up from 610,000 tonnes (627,000 short tons) estimated for this year.

With Mexican cane sugar supplies expected to be tight in the coming year, that nation shows little concern about the public perception of HFCS, unlike the United States, where even medical experts’ comments that calories are calories despite the source seemingly fall on deaf ears.

"The source of the added sugar — whether sucrose, HFCS, honey or fruit juice concentrate — should not be of concern; rather it is the total calories that is important," the American Dietetic Association was quoted by the C.R.A.

It is important to note that major soft drink bottlers in the United States still use HFCS as the sweetener of choice in the majority of their products in part due to the complications of making such a switch, but most likely because of price. As of last week, 55% HFCS, the kind used in beverages, was more than 25% below the cost of refined sugar. Looking at it another way, sugar was about 40% above the cost of HFCS.

Further, should bottlers decide to deliver the ultimate "knockout" blow to HFCS and switch to sugar, which experts agree is unlikely anytime soon, there would not be enough sugar to meet their needs under the current sugar program.

This article can also be found in the digital edition of Food Business News, June 9, 2009, starting on Page 1. Click
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