This paper provides a comprehensive stocktaking of the major mergers and acquisitions and foreign direct investment flows (M&A/FDI) including joint ventures - in the world sugar industry over the past 5 years. It updates an ISO paper released in 2012, when some of the world’s biggest sugar production companies like Raizen, Tereos and Biosev were noted as rapidly increasing their interests in Brazil; AB Sugar had become dominant in Sub-Saharan Africa while Thailand’s Mitr Phol and Singapore-based Wilmar International had enlarged their dominance in key producing regions in Asia. Since 2011, however, pressures created by falling world sugar prices and depressed margins have tended to stymie M&A/FDI activity. Even so, there is evidence that some large producing companies have still continued to integrate operations across their entire supply chain to rationalise costs and boost margins. However, the picture has been far from straightforward. In Brazil, challenging market conditions and poor profitability have led to a lull in FDI and M&A activity. Indeed, there has been a spate of bankruptcies over recent years with the financially poor condition of the industry only improving very recently with the marked recovery in world sugar prices. In the EU, M&A activity ahead of sugar market reform in 2017 began in April 2015, when
Tereos announced the takeover of UK’s Napier Brown.
Meanwhile, sugar companies, trade houses and marketing firms have pursued opportunities to invest and join operations in search of new income streams and better margins. Examples include the recent creation of Alvean, a joint venture between Cargill and Copersucar, and Wilmar’s investment in Shree Renuka Sugars. The RAW marketing joint venture between Raizen and Wilmar is another key sugar trade alliance. In the least developed countries of Sub Sahara Africa identified in the ISO’s earlier study as one of the most dynamic recipients of FDI, due to relatively lower production costs, fast growing domestic market, relatively high level of domestic prices, as well as special access to preferential markets such as the European Union several greenfield projects have been abandoned (temporarily at least). Furthermore, investments in sugar production/refining backed by FDI (involving national development banks and private companies from large Asian economies like China and India) have not advanced as quickly as initially anticipated - in Ethiopia and Tanzania, for example. Several major divestments of assets have also taken place.