Economy

Rising sugar costs striking the sweet tooth?

Are cupcakes an endangered species?
Are cupcakes an endangered species? Joe Barrentine/Tacoma News Tribune/MCT

Sweet tooths won't have to pay more for their sugar fixes — at least, not yet.

Although analysts predict that rising sugar prices will decrease consumption and hurt food manufacturers, some local in Charlotte companies who buy sugar say they haven't seen a recent spike in prices.

The cost of raw sugar sold on the world market has jumped 88 percent this year, to the highest price since March 1981. Prices are up on expectations that there will be a sugar shortage for a second year because of smaller-than-expected crops in India and Brazil.

Larry Mabry, who's in charge of purchasing at Orange Bakery Inc.'s Huntersville plant, said sugar prices always vary but he hasn't dealt with higher-than-normal prices yet. He pays about 42 cents for a pound of sugar — pretty typical — and orders about 40,000 pounds a month to the plant, which specializes in making croissants.

The cost of raw sugar sold on the world market has jumped 88 percent this year, to the highest price since March 1981. Prices are up on expectations that there will be a sugar shortage for a second year because of smaller-than-expected crops in India and Brazil.

Larry Mabry, who's in charge of purchasing at Orange Bakery Inc.'s Huntersville plant, said sugar prices always vary but he hasn't dealt with higher-than-normal prices yet. He pays about 42 cents for a pound of sugar – pretty typical – and orders about 40,000 pounds a month to the plant, which specializes in making croissants.

Mabry said Orange Bakery, a national, California-based pastry manufacturer, uses sugar in about 90 percent of its products, but it makes up only 8 percent of the company's total costs.

“If we lost all availability of sugar, this plant wouldn't be operational,” said Mabry, who has seen a few major sugar shortages in 20-plus years at the plant. “But this time (the problems) shouldn't be widespread.”

Mabry said he orders his sugar from Atlantic Sweetener Co. Inc., an S.C. distributor, Hardman Distribution in Atlanta and a variety of other distributors. Using multiple distributors safeguards against sugar shortages, Mabry said. That way, if one provider can't deliver, another most likely can.

He expects the price he pays for sugar to rise because of the shortage but says Orange Bakery item prices won't rise for another year. That's because companies usually try to hold off passing higher commodity costs along to consumers, Mabry said.

Citing the potential for rising consumer costs, a coalition of food companies including General Mills Inc., Kraft Foods Inc. and ConAgra Foods Inc. has requested the U.S. government to increase sugar import quotas after inventories fell to a 34-year low.

Like Mabry, Louis Coletta, owner of Tony's Ice Cream Company, said he hasn't had to pay more for sugar prices yet. He buys about 600 pounds of sugar from Sam's Club each week for the iced tea he makes at his shop. If he pays more for sugar, the ice cream company's prices won't go up until next year, said Coletta – a third-generation owner of the nearly 100-year-old Gastonia shop.

Read the complete story at charlotteobserver.com

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