High fructose corn syrup consumption increased by 14.8% from 2009/10

High fructose corn syrup consumption increased by 14.8% from 2009/10

Higher global sugar prices have caused soft drinks firms in Mexico to increase their reliance on high fructose corn syrup (HFCS), according to a BBVA Bancomer analyst.

According to a US Department of Agriculture report published this week, HFCS consumption has increased by 14.8% Mexico over the past two years. Most of the HFCS is imported from the US.

BBVA Bancomer analyst Fernando Olvera Espinosa told just-drinks that soft drinks companies are choosing to purchase more HFCS over sugar as a result of high sugar prices.

"I believe companies will be committed to buying HFCS, the main reason being price," he said. "It is cheaper. If sugar prices in the market lower then we might see a change, but I believe it will remain this way in the short and medium term."

However, he added: "[Companies] are not able to buy only HFCS. Most bottlers in Mexico have [to purchase] 60% HFCS and 40% sugar. They are not able to use 100% fructose, which I believe is an internal policy and related to the Government.

"In some cases, bottlers also hold a stake in sugar companies so it is something they have to adhere to," he added.

A number of Mexican companies, including Coca-Cola FEMSA have all pointed to additional pressures on profit from rising sugar prices.

Coca-Cola FEMSA CFO, Hector Treviño, told analysts last month that the company has increased its prices significantly in each of the nine countries where it operates to offset the higher costs.