Sugar Processing Industry Procurement Intelligence Report: Emergence Of India As A Leading Sugarcane Producer Will Require Restructuring Of Procurement Strategies By Sugar Processing Suppliers | Grand View Research, Inc.
SAN FRANCISCO, Dec. 2, 2021 /PRNewswire/ --The global sugar processing market is expected to grow at a close to 2% CAGR from 2021 to 2027, owing to the high demand generated from the food and beverages industry. Brazil has been the leading sugarcane producer globally for the last two decades. However, since the beginning of 2019, sugarcane production in the country has decreased by approximately 5%. This can be attributed to the unfavorably dry weather and high incidence of fire outbreaks in the fields. In addition, steady grain prices have encouraged the shift of marginal sugarcane areas to soybeans and corn. This sugar production trend continued due to Covid-19 in 2020. All these issues with sugar production in Brazil help India to reduce the production gap with Brazil, capturing several markets that were previously dominated by Brazil. For instance, Indonesia used to import more than 90% of its sugar from Brazil. However, the country shifted its sourcing destination from Brazil to India due to the pandemic.
The Indian government has taken numerous initiatives to improve sugarcane production in the country. For instance, the government has announced an incentive for sugar mills in the form of an additional domestic sales quota to those that export sugar and divert the commodity toward ethanol making in the new 2021-22 season starting October. The government has also urged sugar mills to take advantage of firm global sugar prices and plan the export of raw sugar during this new season (October-September). Moreover, the Indian government is planning to invest approximately USD 5 billion over the next few years to increase ethanol production by 80%.
Increase in sugar demand from the food and beverage industry will drive the procurement needs for sugar processing – The global sugar processing market was valued at 166 million MT in 2020 and it is expected to cross 200 million MT in terms of volume by 2027, with high demand generated from the food and beverages industry as the key growth drivers. However, a supply shortage due to the COVID-19 pandemic and the substantial reduction in output from Brazil, India, the EU, and Thailand resulted in a decrease in production in 2020.
The global sugar processing industry is witnessing strategic partnerships between large market players and small regional sugarcane suppliers in order to get higher profit margins – The global sugar processing market is moderately fragmented & competitive in nature. With a major difference in the number of sugarcane producers and sugar processing companies, the latter being lower, sugarcane suppliers lose out on the bargaining power for their produce. Larger and established industry participants are therefore, partnering with smaller sugarcane producers to get higher profits for both parties. Moreover, Government initiatives are also being announced to support regional sugarcane suppliers.
Suppliers largely prefer approved provider operating models to reduce risks and improve the potential for value creation – Sugarcane production is outsourced to local producers (farmers) by sugar processing companies in order to reduce additional costs and maintain flexibility of the process. Suppliers are expected to move gradually to proprietary services in the near future.
Sugar Processing Industry Cost Intelligence – Key Components:
Grand View Research has identified the following key cost components for Sugar Processing:
Feedstock is the major cost component of Sugar Processing, accounting for more than 45% of the total cost of sugar production.
Sugar Processing Industry Supplier Intelligence – Capability based ranking & selection criteria with weightage:
Operational Capabilities –
Years in Service – 15%
Geographical Service Presence – 35%
Employee Strength – 15%
Revenue Generated – 15%
Key Clients – 12%
Certifications – 8%
Functional Capabilities –
By Type – 60%
By Source – 40%
List of key suppliers in the sugar processing industry:
Mitr Phol Sugar Corporation
Thai Roong Ruang Group
Wilmar International Limited
Savola Group Company
Cofco Tunhe Sugar Co. Ltd.
Addon Services offered by Grand ViewResearch:
Should Cost Analysis – In the sugar processing category intelligence study, we have estimated the pricing for the key cost components. Feedstock costs are the largest cost component of sugar processing. They account for more than 45% of the overall sugar processing cost. Sugarcane and sugar beet are the main feedstock used for sugar processing. Sugarcane is highly preferred globally owing to its easy availability and low processing cost.
Rate Benchmarking – The type of feedstock is one of the most important aspects while analyzing rate benchmarking of sugar processing. In our research, we have analyzed the weight and price of sugarcane and sugar beet to produce 1 kg of sugar. We found that using sugarcane instead of sugar beet is 50% more cost-efficient. However, the volume of sugar beet required to process 1kg sugar is 38% less than sugarcane.
Salary Benchmarking – As per our research, operations managers at Nordzucker and Sudzucker earn approximately 20% higher salaries than operations managers working in other leading companies, such as Cosan and Biosev. However, the YoY increment rate in such companies largely depends on the KRAs.
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A smart and effective supply chain is essential for growth in any organization. Pipeline division at Grand View Research provides detailed insights on every aspect of supply chain which helps in efficient procurement decisions.
Our services include (not limited to):
Market Intelligence involving – market size and forecast, growth factors, and driving trends
Price and Cost Intelligence – pricing models adopted for the category, total cost of ownerships
Supplier Intelligence – rich insight on supplier landscape, and identifies suppliers who are dominating, emerging, lounging, and specializing
Sourcing / Procurement Intelligence – best practices followed in the industry, identifying standard KPIs and SLAs, peer analysis, negotiation strategies to be utilized with the suppliers, and best suited countries for sourcing to minimize supply chain disruptions
CDMO Industry Procurement Intelligence Report – The global contract development manufacturing organization market is expected to witness sustainable growth at 7.3% CAGR from 2020 to 2025 with innovative APIs driving market growth. Requirements for accelerated time to market, increasing operational flexibility, and GDUFA guidelines streamlining GMP of Asian countries to maintain parity with manufacturing practices of the USA is driving the need for pharmaceutical companies to outsource its manufacturing needs to CDMOs.
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