New Horizons: The Time Is Right for Sugar Companies to Evaluate Diversification Options

Diversification is a recurring strategic theme for sugar companies around the world. But a combination of circumstances – the question mark over the future growth of sugar consumption, the post-Covid and post-COP26 focus on sustainability and renewables, plus the cyclical high in world sugar prices – creates a compelling case for diversification to be at the heart of strategic discussions in the boardroom of any sugar company these days.

This study looks at diversification options for sugar companies in areas such as clean energy, renewable chemicals and bioplastics, fermentation, and alternative sweeteners. Interviews with a number of sugar sector players around the world helped to highlight the appeal, or lack thereof, of various strategies. There are four main conclusions:
- First, where energy policy is supportive, renewable energy continues to be an attractive  option, moving sugar businesses towards an ‘energy hub’ diversification model. 
- Second, there is likely to be heavy competition for sugar as a raw material in a number of the emerging diversification opportunities in renewable chemicals and bioplastics.
- Third, partnerships and collaborations will be more important than ever if sugar companies are to capture lasting value from emerging trends in renewable chemicals, bioplastics, and alternative sweeteners, and move towards a ‘biorefinery’ type of diversification model. 
- Fourth, an increase – if not a step change – in R&D spending is also likely to be required in order to actively explore and pursue ‘biorefinery’ opportunities beyond the more traditional diversification options.
Many excellent companies have been built around sugar over the last century. With the world now increasingly focused on putting renewables and sustainability at the center of economic activity, cane and beet sugar companies have a chance to visibly contribute to this effort while at the same time creating more diverse and future-proof business models for themselves.