Kingsman EU Sugar Seminar Geneva 14-15 April 2016 EU sugar and its evolving role on the world stagehow are the value chain adapting? A buyers perspective Marc Painsmaye 1
1. Couplet sugars in few words 2. What will the post 2017 quota free EU sugar market look like? 3. The challenges for the Users 2
Couplet sugars is transforming sugar into specialities for more than 150 years Sucrerie de Fontenoy SA 3
HISTORY 1847 First sugar production of Couplet family in Marchiennes (FR) 1890 Transfer to Wez (actual place) 1937 Start of production of «Cassonade» (brown sugar) 1987 First production of PEARL SUGAR 1992 First production of FONDANT POWDER 1993 Transfer of sugar production to Fontenoy 2000 Couplet sugar 100% independent company 2007 First production of coated sugars 2015-2017 Increase capacity on our lines 4
Our product range 5
OUR MISSION: We deliver to consumers more taste and pleasure, developing with and for the food industry, sugar specialities that bring taste, texture and colour. 6
100% family company since 5 generations 1 factory close to TOURNAI, Belgium Recognised technical expertise and know-how A team of 60 people 7
We sell our products to industrial bakeries, chocolate and ice cream factories We export in more than 30 countries Our products are key ingredients for top quality European food 8
We buy high quality EU2 sugar (<25 ICU) We need full flexible supplies in bulk trucks We have a storage capacity We compete with local sugar 9
As many European sugar users, we have a lot of questions regarding the post 2017 sugar market 10
A new EU sugar market 2 changes which are the main drivers for the future: No production limit for sugar and fructose syrups/ isoglucose (quota system is abolished) Producers can export as much as they want BUT 2 factors remain unchanged: Import possibilities are restricted to ACP, CXL and some FTAs. Prohibitive MFN Import Duties remain for other sources 11 11
New opportunities for the whole supply chain will happen: 12
PRODUCTION Farmers will be able to optimise their returns/ha as sugar beet is entering into competition with other crops. Mills will optimise their industrial capacity. Mills will have the opportunity to use various commercial channels (ethanol, sugar, etc.) 13 13
IMPORTS : Access to imports are restricted and limited Level of imports will continue to depend on the price gap between the world and the EU market price. EXPORTS : EU farmers/industry should be competitive producer on the world market. * EU sugar market should be in surplus, leading to significant exports.** Due to EU exports, domestic prices should be partly linked to world market prices. * Assuming that the world price stay at decent level ** Source: e.g. D-G for Agriculture and Rural Development, CGAAER report 14 14
There is an unbalanced situation between restricted imports and unlimited exports Will EU sugar suppliers serve their European customers FIRST and then export the surplus to avoid a market in deficit? World sugar (Brazil, Thailand etc.) EBA/EPA, CXL, Balkans etc. EU exporting after 2017
A new challenge for EU sugar users: predicting the future 16 16
The unknowns of sugar availability on the market: Who, What, When Sugar Beet volumes will be decided 10 months before the crop Can sugar users influence the beet quantity, the sugar available? EU can export without restrictions: How will users follow that? What is the future of EU refineries? Internal demand or refining for export? Competitiveness versus beet processors Who will supply the European deficit countries without local/national production? Imports remain limited: for refining or TRQ s. How flexible will be import possibilities? 17 17
What will the sugar price do? Ups and downs of the world market will influence EU prices How can the users monitor this? Protect themselves? Will we need to change contracting methods? Energy price complex : influence of oil/ethanol prices How will users follow that? 1 single market for food sugar and fermentation sugar Will Food prices follow the volatility of current fermentation prices? 18 18
What will the sugar price do? What influence will cereal / isoglucose prices have on the market? Exchange rate factor: /$, Real/$ Will further concentration of the sugar industry influence price levels for European users? 19 19
In general, official reports say: Most of the outlook reports predict a surplus in EU The EU sugar price is expected to approach the world market price, forcing the sector to become more competitive and reducing the incentive for trade partners to export to the EU. Despite lower prices, production of white sugar is expected to increase to close to 18 million t in 2025, i.e. around 5% more than in the years preceding quota expiry (according to the European Commission). On the domestic market, EU sugar will have to compete with isoglucose, which is expected to become an important sweetener in regions with a sugar production deficit. By the end of the outlook period, the EU expected to become a net exporter of white sugar, mainly to nearby high-value markets. * References to ABF annual report and EC Outlook Report 20 20
* Source: EU Commission * European Commission 21 21
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Thank You Marc Painsmaye Sales & Marketing director April 14th, 2016 23