FREE Market Commentary: Companies Affected by Sugar Price Increase

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Market Issue or Event

Sugar Prices Surge 42% on Low Supply

The Sugar Regulatory Administration (SRA) reported that as of the first week of July, ave. retail price of sugar has climbed to PHP 2,288 per 50 kg bag from PHP 1,620 a year ago. The government is counting on imported sugar to stabilize supply, but this faces delays and will arrive by September at the latest. The price increase was caused by a 9% drop in production as well as a shift to local sugar from high-fructose corn syrup to avoid higher taxes under the TRAIN law.

 

Our Partner Broker’s View and Commentary

Aside from the proposed warning label scheme for high sugar drinks by August, beverage companies are also contending with high raw material costs as well as cutthroat competition. Combined with the impact of rising inflation affecting volumes, margins of these companies will remain under pressure.

Among listed companies, negatively affected are PIP, URC, LTG (through Asia Brewery), and MACAY.

 

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AP Securities (formerly Angping & Associates Securities)
AP Securities (formerly Angping & Associates Securities)

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