The largest trehalose project in Asia was put into construction

Enjoying the "Fat House Happy Water" but leaving only happiness will not be fat? This is the dream of many people.

Things will be reversed. When people's consumption of sugar, oil, fat, and salt accumulates to a certain amount, causing risks and pressures to human health and even the natural environment, consumption trends will begin to reverse.

At present, low-sugar, low-oil, low-fat, and low-salt are becoming the right direction of the global diet. In response to changes in the demand for sugar, an important source of calories and happiness, a wave of low/no sugar consumption in the food and beverage industry has been formed. Many industries The giants have had to re-adjust their market strategies and product formulas, and at the same time, emerging brands such as vitality forest with clear points have emerged.

Sugar substitutes are nothing new. Food and beverage giants such as Pepsi and Coca-Cola have been promoting sugar-free cola and beverages many years ago. After more than ten years of market cultivation period, domestic sugar-free consumption has finally gained the upper hand.

The trend of sugar control and the high cost of domestic sugar not only affect the choices of more and more consumers and food manufacturers, but also provide a broad alternative space and promote the prosperity of the upstream sugar substitute industry.

The sugar substitute has come, and the upstream and downstream industry chain has a lot of room for substitution

Located in the first phase of the first self-built production base of Yuanqi Forest in Chuzhou, Anhui, a batch of the company’s signature sugar-free soda sparkling water and burning tea are being canned, sealed, plasticized, inspected, and coded on a highly automated production line. Through self-built factories, Yuanqi Forest bid farewell to the asset-light model that relied entirely on OEMs.

Researcher Wang Yuan (pseudonym) said that the three high-speed production lines of the first phase of the factory have been fully put into operation, and the technology, safety, quality control, and management have reached international standards, with an annual output of more than 450 million bottles. There are two other such production bases, which are opened in Tianjin and Guangzhou.

As the hottest beverage brand this summer, Yuanqi Forest, which has been established for more than four years, has seized the enthusiasm of sugar-free consumption and has become a dark horse in the food and beverage industry with many giants. Public data shows that the sales performance of Yuanqi Forest in the first five months of this year exceeded 660 million yuan, and the performance in May alone exceeded the full-year sales of 2018. After completing several consecutive rounds of financing, the company's valuation has risen to 14 billion yuan.

The main reason for pursuing less sugar or sugar substitutes is to focus on health.

The "Healthy China Action (2019-2030)" issued by the National Health Commission in July 2019 advocated that the per capita daily intake of added sugar should not be higher than 25g by 2030. At present, China's per capita intake is much higher than the above standards, and the policy orientation has given strong support for the shift in sugar consumption trends. Nielsen's 2019 survey data shows that 82% of Chinese consumers are willing to spend more on healthy drinks, which is higher than the global level of 68%.

Judging from the current sweetener market, as a major producer of sweeteners in the world, China has a leading market share in many segments of the world, including sugar substitutes. In the consumption structure, sucrose still occupies the largest domestic sweetness market share, and the sugar substitute sweetener market accounts for only about 10%.

It is worth noting that China's cane sugar production cost is high, and the price is much higher than that of Brazil and other countries. Nearly 30% of cane sugar needs to be imported. In order to ensure the safety of sugar, it is also an inevitable trend to seek suitable sugar substitutes as supplements. In addition, in order to more effectively control the sugar intake of residents, many countries around the world have begun to impose a "sugar tax" on cane sugar beverages, and the international demand for sugar substitutes is also expanding.

The capital market also reacted very quickly. The A-share listed companies Baolingbao (002286.SZ), Jinhe Industry (002597.SZ), Fengyuan Pharmaceutical (000153.SZ), Rhein Biology (002166.SZ) and other sugar substitutes Concept stocks continued to strengthen. Take Baolingbao, a supplier of Erythritol, the main sugar substitute for Yuanqi Forest Products, as an example. In July and August, the company's stock price increased by more than twice.

Baolingbao’s previous profitability was not ideal. Its income structure was dominated by starch sugar and Fructose syrup. The proportion of sugar alcohol products has always been very low. Driven by emerging customers such as Yuanqi Forest, Baolingbao sugar alcohols in 2019 Revenue from similar products increased 24% year-on-year. According to its 2020 semi-annual report, net profit increased by 78.21% year-on-year. From 2018 to 2019, Baolingbao’s erythritol revenue accounted for 11.37% and 13.54%, and its gross profit margin was 19.66% and 21.10%, respectively; as of the first half of this year, these two indicators had risen to 20.54%. , 21.67%, it can be seen that erythritol has become a new source of revenue for Baolingbao, and the company has become one of the world’s five largest erythritol producers.

Not only are many local listed companies expanding their production capacity and launching new-generation sugar substitute projects such as erythritol and sucralose, multinational companies are also taking action.

It is understood that the grain and oil giant Cargill and its partners are building a 50,000-ton (the largest in Asia) trehalose project, which is expected to be put into operation in June next year; in addition, the company is also investing in the construction of a flavored syrup production line in Pinghu, Zhejiang, to provide different products to the market. Standard sugar substitute and compound sugar solutions, serving downstream milk tea shops and catering companies.

In an interview with reporters, Liu Jun, President of Cargill China and President of Cargill China Starch, Starch Sugar and Thickening and Stabilization Division, said that people have an innate demand for sweetness. In the past, sucrose, fructose, etc. were consumed more. These traditional sugars are not bad, but in areas, scenes, and people where excessive consumption, they will bring suppressive demand based on health considerations. With the increase in health awareness, the consumption demand for sugar reduction and sugar substitutes actually exists, and it will not be just a short-lived outlet.

"In this regard, companies need to respond quickly, but they cannot blindly follow suit. They should be prepared for such a sustainable change, and they need to come up with diversified products and solutions that meet the needs of various segments. In order to win the trust of customers and end consumers." Liu Jun said.

The overall consumption is increasing, and compound and diversified sugar will become a trend

The birth of sugar substitutes came from the shortage of sucrose. In 1879, the first generation of artificial sugar substitute "saccharin" was born. In 1884, saccharin was introduced to the market and widely used. Since then, cyclamate, ASPARTAME, acesulfame K, sucralose, steviol glycosides, erythritol, etc. Artificial sugar substitutes have come out one after another. The hottest erythritol and sucralose are the new generation of sugar substitutes.

These sugar substitutes differ in cost, sweetness, safety, etc. For example, the sweetness of aspartame and acesulfame K can reach more than 150 times that of sucrose, while the sweetness of erythritol is only 0.65 times that of sucrose. ; Saccharin, which was once widely used, has gradually withdrawn from the market due to poor taste and safety issues, while consumers do not know much about the performance and safety of the new generation of sugar substitutes.

According to Liu Jun’s analysis, the new generation of sweeteners has two major advantages over the older generation: first, they may be much safer than the earliest saccharin and acesulfame potassium; second, they are expected to solve the biggest problems in the past. Problem-it tastes more like sucrose.

"In terms of safety and taste, the new generation of sugar substitutes are better, and there is not much controversy than previous products. Questions about safety, such as whether it is harmful to human metabolism, are more complicated issues. This may require Tracking and experimenting with several generations of consumers to track and explore the results cannot be easily asserted." Liu Jun said that the expansion of sugar substitute applications is the inevitable way to reduce sugar consumption trends, and should not waste food due to choking.

As the world's largest producer and exporter of sugar substitutes, China's sugar substitute production in 2018 accounted for 75% of the world's total. However, the application of sugar substitutes in China has been lagging behind that of foreign countries. This is related to the suppression of patents by foreign companies in the early development of Chinese sugar substitutes. For example, the large-scale expansion of the production capacity of Acesulfame by Jinhe Industry and the launch of large-scale erythritol projects such as Baolingbao and Fengyuan Pharmaceuticals are all carried out after the expiration of the patents of related foreign companies; while the price war is in the upstream industry. It is a necessary process to gain the dominant position in the market segment after expansion.

In this regard, Liu Jun believes that in terms of functional sugar itself, erythritol is in short supply in the short term, but the gap is also temporary. Several domestic companies are launching large-scale erythritol projects. The market segment will quickly become saturated, so companies should be cautious in investing and constructing related projects. “The problem of differentiation and diversification of the Chinese market is obvious. Perhaps in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, where people’s income is high, and health and environmental awareness are relatively high, products like erythritol are very in line with consumer needs, so now this A market has a low base and a fast growth rate. However, there are still a large number of low- and middle-income regions and groups in China, and many people have not yet met their basic sugar needs. The popularity of sugar substitutes will not completely replace sucrose and fructose. Market space."

At present, there are still several obstacles to the development of China's sugar substitute industry. First, the cost problem must be solved. Products such as erythritol have good performance but high cost, which will directly limit the scope of downstream applications; secondly, taste, the sweet price of different sugar substitutes. The ratios are different, some sugar substitutes still have problems such as bitter taste, and there is room for further improvement in R&D technology.

Wang Yuan said that the main sugar substitute added to the company’s soda sparkling water is erythritol. Because of its low sweetness, it needs to be added in large quantities and the domestic production cost is relatively high. For beverages of the same specification, the cost of adding erythritol is About 80 times that of honey and aspartame. In order to balance the cost and taste, Yuanqi Forest chose a compound sugar substitute scheme based on erythritol and sucralose.

Yuanqi Forest is not the only company that chooses the compounding plan, but it also places new requirements on upstream related companies.

Liu Jun said that in the past, the company was positioned as a sweetener (fructose, starch sugar) manufacturer, and now downstream companies and consumers have put forward new demands, and upstream companies also need to transform to provide a variety of products and compounds. The sweetener solution provider of the scheme.

"In the future, in addition to the mainstream direction from single product to compounding, the development of specifications from large packaging to smaller and smaller packaging will also become an important trend, and the requirements for enterprise flexibility will be higher." He analyzed. The overall sugar consumption in China is still growing. In the future, the absolute number of traditional sweeteners such as sucrose will still increase, but the proportion will gradually shrink; other sweeteners such as sugar substitutes will grow rapidly because of their small base. , The proportion will gradually increase, "both are growing, but the speed is different, the two will not be a complete replacement relationship, but complement each other to meet different needs."