Sugar Manufacturing
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Industry Overview
The US sugar manufacturing industry consists of 52 companies with combined annual revenue of $7 billion. Large companies include American Crystal Sugar, Imperial Sugar, US Sugar, and Florida Crystal. The industry is highly concentrated: the 50 largest companies account for nearly 100 percent of industry revenue.
Competitive Landscape
Demand is driven by domestic sugar consumption and government controls on imports and pricing. The profitability of individual companies depends on efficient operations and cost controls. Large companies have economies of scale in production and distribution. Small companies can compete effectively by serving local markets. The industry is highly automated: average annual revenue per worker is over $400,000.
US sugar consumption fell in the last two decades as domestic food manufacturers switched from sugar to lower cost sweeteners, such as high-fructose corn syrup. Candy and pastry makers continue to use refined cane sugar.
Products, Operations & Technology
The major product of sugar manufacturers is refined sugar (sucrose) for industrial and consumer use. Sugar is produced in various forms, including granulated, powdered, liquid, brown, and molasses. The basic production method is to dissolve sucrose out of those plants that concentrate it naturally in their stem or roots, and then remove impurities and water. Sugar cane and sugar beets are the major plants used. Sugar cane grows mainly in subtropical and tropical regions, sugar beets in colder climates.
Sugar cane is crushed in sugar mills, producing a syrup that is concentrated to raw sugar by evaporators and centrifuges. The raw sugar is processed further in refineries, using various chemical methods to precipitate out the remaining impurities. The final products are refined white sugar, brown sugar, and molasses. Processing from sugar beets is similar, with stages for soaking sucrose out of sliced beets, chemical removal of impurities, and concentration and drying of the final product using evaporation and centrifuges.
Large sugar cane mills can process 20,000 tons of cane per day. Large beet processing installations can process 15,000 tons of beets per day. Bagasse, the fibrous material left behind after sucrose is separated from the cane, is used as fuel. Sugar beet waste is used as animal feed, or can be burned to provide energy.
While some sugar refiners buy raw material from independent farmers, some also own agricultural operations that produce a portion of their needs. Sugar cane refiners typically buy raw cane sugar from a number of suppliers. Supply contracts specify quantities but prices are typically tied to market prices, which can vary substantially. Since sugar refining is energy-intensive, manufacturers have supply contracts for natural gas, fuel oil, or coal if they need more energy than they can produce from burning waste.