- Tate & Lyle Sugars anticipates disruption of sugar, syrup supplies in Northern Ireland from 2021 onwards
- As per Greenpeace’s investigations team, the British sugar company is all set to save £72.8 million out of post-Brexit trade reforms
- Northern Ireland would continue to be a common market for both UK and EU after the Brexit
Lockdown 2.0 and sudden spike in the number of active coronavirus infections have prolonged the uncertainties with respect to UK and EU trade relationship, which could lead to sugar and syrup shortages in Northern Ireland next year. According to some reports, Tate & Lyle Sugars might struggle to push its products to retailers next year onwards and therefore has advised retailers to draw up contingency plans to source sugar and syrup from elsewhere.
As far as Brexit is concerned, Northern Ireland shall remain to be a part of the UK but will also behave as a single market and enforce the EU’s customs rules from 2021 onwards. The company being a leading supplier of sugar, is chalking out plans with Northern Ireland based retailers to ensure undisrupted supply for consumers in 2021. The company believes that the UK and EU should come together to prioritise the Northern Ireland region as it is a common market. The other players in the industry are open to a constructive discussion with officials to identify potential issues and their respective alternatives. Notably, the British government has allowed goods to move from Northern Ireland to the rest of UK; however, it’s not the case with other side. Sugar is consumed in most parts of the world and is often a highly regulated commodity. Thus, it is a part of the essential supply that should remain intact even in the case of a geopolitical event.
Brexit has got a massive backing for the sugar company; Tate & Lyle Sugars recently made the headlines for being the biggest beneficiary of the post-Brexit trade reform. The British company boost its growth by importing cane sugar and has lobbied with the British government to end tariffs. According to the Greenpeace’s investigations team, the British sugar company is all set to save £72.8 million out of post-Brexit trade reforms, which are expected to come into force at the end of 2020.
As per the reforms, the companies will be able to import 260,000 tonnes of raw sugar cane from anywhere in the world without any tariffs imposed. However, the new import regime is criticised by Greenpeace investigations. The reform is expected to cause a split in the British sugar industry. Most of the players operating in the sector rely heavily on the sugar made from sugar beets contributed by British agriculture sector. The existing system was backed by EU as it was in the interest of domestic sugar industries and was protecting them.
Most of the emerging countries deploy pesticides in their agriculture practices. Removing tariffs on sugar imports would mean that sugar would be procured from these countries, which could be harmful for consumers.
Tate & Lyle Sugars is therefore concerned about the post Brexit reforms as it eyes immediate saving of more than 70 million pounds plus it could become the largest importer of caned sugar that will help the company in staying ahead of the competition.
Tate & Lyle Plc
United States based cane sugar refining company; American Sugar Refining Inc bought Tate & Lyle Sugars from its parent company Tate & Lyle Plc in 2010. Tate & Lyle Plc (LON: TATE) is a FTSE 250 listed, British-headquartered Company, which provides solutions and ingredients for beverage, food, and industrial markets. In a bid to enhance its texturant portfolio, Tate & Lyle Plc recently agreed to purchase 85 per cent shareholding in Chaodee Modified Starch, tapioca business in Thailand.
During the first half of 2021, the company demonstrated revenue growth in Food & Beverage Solutions along with strength, resilience, and agility of the business. The company practised rigorous cost discipline to achieve excellent operational performance across its business divisions. The acquisition of speciality tapioca food starch business is likely to strengthen its Texturant portfolio.
The company possesses a strong balance sheet with US$1.4 billion liquidity. The company witnessed a 3 per cent increase in adjusted profit before tax during the first half of 2021. The company announced an interim dividend of 8.8 pence per share during the first half of 2021.
On 13 November around 13:19 PM GMT, the shares of Tate & Lyle Plc were trading at a price of GBX 676.20 per share, down by 0.50 per cent from the previous day’s last closing price. Tate & Lyle group’s market capitalisation was hovering around £ 3,183.39 million. In a year’s time, Tate & Lyle shares plummeted by 6.18 per cent. During the course of the last four years, the company’s operating profit grew at a CAGR of 23.56 per cent.
Tate & Lyle has been partnering with customers to create solutions and ingredients for making healthier and tastier products at affordable prices. It has been targeting low sugar, low calories and fibre enriched food solutions and ingredients. Therefore, it has a high-quality portfolio of ingredients to meet the changing trends and rising demand. Combined with financial strength and robust product portfolio, the company shall be able to navigate the uncertain short-term period successfully.