Danisco sees promise despite tough sugar conditions

By staff reporter

- Last updated on GMT

Related tags Russia European union Sugar beet Eu

Danisco's sugar beet seed business in Denmark is bracing itself for
tough new market conditions following the implementation of the EU
sugar reform.

The new regulations, which came into force in July, represent not only a challenge to growers and factories, but also to seed suppliers.

For example Danisco Seed, which sells Maribo beet seeds to about 40 countries, is facing sharply changed market conditions. In this season alone, the EU beet acreage has declined by around 10 per cent.

As a consequence, Danisco Seed president Niels H. Gram estimates that sales of Maribo seed in the EU could drop by 25 per cent over the next few years. Some markets could even disappear.

In Italy, until recently one of Danisco Seeds focus areas, two thirds of the beet acreage has disappeared this year. Italy has therefore shifted from being a core market to a 'miscellaneous' market for Danisco Seed.

But despite such challenging conditions, Danisco believes there are good opportunities in markets outside the EU. Indeed, the company's response to the EU challenge has been to focus on certain EU markets and enhanced sales efforts in non-EU markets such as Russia, Belarus, Ukraine, Croatia, Serbia and Iran.

Danisco Seed already has a strong foothold in the Russian and Belarussian markets, which offer huge potential. And Croatia, Serbia and Iran could also become attractive markets, according to Gram.

"The Russian market has virtually exploded due to the high world market price of sugar and the relatively strong Russian economy. Since Russia is only 50 per cent self-sufficient in sugar, sugar beet growing offers huge potential."

Gram said that the firm's sales in Russia have nearly doubled, and that the country is now the biggest market in revenue as well as volume terms.

"In addition to these countries, we have singled out a few markets in the EU where increased efforts could improve results,"​ he said. "These markets include Scandinavia, France and the UK."

Sugar production is to be cut by 25 per cent in the EU, but Gram said that this does not imply that all countries cut down production by 25 per cent - some will cut more, some less he said.

"Ireland has already closed down its entire production while Italy and Spain have reduced their production markedly. We still see potential for increasing our market shares in some of the EU countries, and that is the strategy we intend to pursue."

Danisco Seeds confidence is underpinned by the sales data for the current season. The company claims that its market leading positions in Hungary, the Czech Republic and Slovakia are intact. Large market shares have also been won in Denmark and Sweden.

In addition, Danisco Seed is about to enter into a local company, having attempted to penetrate the French market for many years. The UK is another key target.

"This year we will penetrate the UK market strongly while sales last year were more modest because our varieties were new on the market,"​ said Gram.

"We expect to win a large market share, and since the market is big bigger than Denmark and Sweden combined it could become quite valuable to us."

Danisco Seed also has a minor sale of sunflower and pea seeds, but Gram said that beet seeds would undoubtedly continue to be the strategic focus area in the future.

"Sugar beet is our main income and growth will come from market developments,"​ he said. "Given the circumstances we are doing quite well and are confident about the future. We are certain that the future is bright for us."

Gram said that on a five to six-year outlook, a slight decline in volume could be expected but that capacity in Holeby, Denmark would remain unchanged.

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