FDBusiness.com

Concern is mounting about escalating sugar prices and the security of supply in the EU. World sugar prices reached their highest level in thirty years in November and demand is expected to outpace supply again in 2011 for the third consecutive year. In the UK, British Sugar has warned that the recent severe weather will have an adverse effect on the quality of 25% of its sugar beet crop that has still to be processed.

The EU sugar supply problem is particularly acute in Ireland, as all sugar is now imported following the withdrawal of Greencore, which operated Ireland’s quota, from sugar processing to focus on its UK convenience food business.

Northern Foods Deal

Of course, Greencore was hoping to merge with UK convenience food group Northern Foods in an all share deal of equals to create Essenta Foods, a £1.7 billion turnover business. Boparan Holdings, controlled by Ranjit Singh Boparan, who is head of major British chicken processor 2 Sisters Food Group, has spoiled Greencore’s plans by making a £342 million cash bid for Northern Foods, which has been recommended by the Northern board. Boparan has since cranked up the pressure on Greencore by increasing its stake in Northern Foods from 6.6% to 11.4%.

Greencore has requested and been granted more time by Northern Foods to come up with a revised offer beyond the January 31st date when its original merger offer was due to have been voted on by shareholders.

Meanwhile, Premier Foods, the UK’s largest domestic food processor, has eased its £1 billion debt burden by selling its meat-free business, including the Quorn brand, for £205 million. Premier’s East Anglian canning business is also on the block and is expected to also fetch over £200 million.

Sweet Alliance

The current sugar situation in the EU will focus increased attention on the developing non-sugar sweeteners sector. During the week, British Sugar’s sister company, Silver Spoon, formed an alliance with Cargill, the US-based global food and agri-business group. The two companies are introducing Truvia tabletop sweetener in the UK in anticipation of EU approval of stevia extracts later this year.

Developed by Cargill, Truvia is a zero calorie sweetener, made with rebiana extracted from the stevia leaf. Truvia rebiana is also used as an ingredient to sweeten foods and beverages. Cargill is now launching an assault on the European non-sugar sweeteners market at both industrial and retail level. Raising consumer awareness of the Truvia brand will help to drive acceptance of the sweetener for use in food and beverage products. Truvia rebiana is already being used in France by Coca-Cola and Eckes-Granini in juice drinks.

Having decided to divest its 64% stake in Mosaic Company, Cargill is seen as a possible suitor for Tate & Lyle, the UK-based international sweeteners group.