UK sugar manufacturer Ragus says that it could capitalise on developments at Tate & Lyle’s Thameside refinery in London, due to the facility's ageing infrastructure and gradual capacity declines.
Slough-based Ragus produces specialist syrups, treacle and unrefined sugars, and director Ben Eastick told FoodNavigator.com that Tate was his firm's main rival in cane sugar, where the two firms supply most of the UK’s blue-chip food manufacturers.
American Sugar Refining (ASR) acquired Tate & Lyle’s refineries in Silvertown, London and Lisbon in July 2010 for £211m; the purchase also included a licence to use Tate’s brand for sugar sales.
Revealing that Ragus intends to open a new multi-million pound 35,240 sq ft UK facility in Slough, “with kitting-out starting in April, and completion due this September”, Eastick said.
“Our new facility is designed to meet home demand for specialist fractions, but a lot depends on Tate’s Thameside refinery, the capacity of which has fallen over the years, while EU CAP reforms have limited production there.”
New factory meets specialist fractions demand
Eastick said that cargos of raw cane shipped into Thameside had gradually fallen in recent years, while the plant’s ageing infrastructure means that, increasingly, it cannot match Ragus’ wide range of specialist sugar substrates.
“Questions remain over the efficiency of Silvertown going forward and its impact on specialist sugar supply,” said Eastick. “Could it be revamped? It would need a hell of a lot of money.
“Given what’s happening at Tate we saw a possible foothold in the market: if Thameside were closed down or Tate’s market foothold diminished, then we would need to take advantage, and the upshot would be huge demand for us.
“I’m just talking about what might happen. Tate is a great company: the market needs them and we need them as a competitor. They will always be there – the question is ‘what will they produce’?”
Baking industry is main market
The UK and France are the EU’s main markets for cane sugar, said Eastick (where other countries use beet) but he said the UK led the way in flavour and colour development, with the French market “pretty small” by comparison.
75% of Ragus’ turnover comes from baking, while brewing and confectionery are also big markets. Said Eastick: “Brewing used to be reasonably large until around 30 years ago, but due to the rise of glucose syrups it has declined over the years.”
And had the growing trend towards healthier food formulation, with reduced sugar content, hit Ragus? “Usage of sugar in our customer base has actually gone up – although household consumption of sugar, adding a spoonful to foods, for instance – has declined,” said Eastick.
Crazy sugar spot market
As for sugar supply, Eastick said the world sugar spot market was currently “going crazy” due to drawdowns on global stocks over the past three years, with recent dry weather damaging crops in South Africa, Brazil and Russia, while wet weather has hit Australia and Indonesia.
Ragus contracts directly with plantations to establish prices well in advance, but Eastick said current 30-year high spot prices for white cane (at over £1,000/t) that had doubled in six months were prompting EU supply worries.
Aside from the weather there had been speculative hedging on supplies and stockpiling across the world, he said, adding that recent price fluctuations had unsettled everyone from traders to producers, “who have been used to ‘just-in-time’ supply over the past 15 years”.
Said Eastick: “We can’t really quote new clients now. We are honouring contracts with existing customers, but we have to be totally honest with new people and say we will only deal upon the basis of spot prices.”