Tate & Lyle deals with sweetener issues

by Jeff Gelski
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LONDON — While a competitive market for sucralose continues to hold back profit growth for Tate & Lyle, P.L.C., two other issues may increase their influence on the company’s financial results in the future.

For one, a tax on sweetened beverages and certain snacks took effect Jan. 1 in Mexico and might affect demand for high-fructose corn syrup.

“It’s a little bit too early to read any direct elasticity or consumption trend on HFCS in Mexico,” said Javed Ahmed, chief executive officer of London-based Tate & Lyle, in an April 3 trading update conference call. “I think what we’re seeing in terms of the flows down there, we saw circa 20% reduction in volume.”

He added the tax may create opportunities for Tate & Lyle’s Speciality Food Ingredients division, “which, as you can imagine, we’re pursing pretty aggressively.”

For another issue, Tate & Lyle recently introduced two natural sweeteners — a stevia-based one called Tasteva and a monk fruit-based one called Purefruit — as well as Soda-Lo, a sodium reduction ingredient.

“We don’t disclose those numbers separately, but for the full year we would expect to see strong double-digit growth coming out of them,” Mr. Ahmed said. “These things are not overnight burns here. They’re a slower burn, but all headed in the right direction, all moving ahead with healthy growth rates.”

A more competitive market for the company’s high-intensity sweetener Splenda sucralose held back operating profit growth in Speciality Food Ingredients in the year ended March 31, according to an April 3 trading update. Results in the United States partially offset volume growth in emerging markets and Europe.

Within Bulk Ingredients, operating profit in the full year should be lower than the previous fiscal year. A soft beverage season in the United States reduced demand for liquid corn sweeteners, and co-products had lower returns.

Tate & Lyle plans to report full fiscal year results on May 29.
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