•  We think Chinese consumption will increase by 300kmt this year. 
• This is due to an increase in food and beverage manufacture along with increased household consumption. 
• However, there is a downside risk due to competition from HFCS low-calorie sweeteners.  

Total Sweetener Consumption to Increase  

• We think industrial sweetener consumption continues to increase in 2019. 
• This is because food and beverage (F&B) production is increasing in the range of 2% to 34% as of May 2019, except for juice products, according to Chinese National Statistics Bureau. 
• Despite continued substitution to HFCS we think this could increase sugar consumption by around 100kmt.   

• Meanwhile, we think household sugar consumption is also increasing with a higher disposal income per capita and population. 
• Therefore, we maintain our forecast of 15.3mmt sugar consumption in 2019, 300kmt higher than last year. 
• However, there’s a downside risk if end users decide to switch more sugar to HFCS or other sweeteners. 

HFCS Still Has Price Advantage  

• The price difference between sugar and HFCS maintained at RMB 1724 (USD 246) per tonne. 
• This is good enough to incentivize end users to continue the substitution away from sugar to HFCS. 
• We think the switch will mainly happen in drinks because the formula can be 100% HFCS and current average ratio is below 50%.  

Low-Calorie Sweetener / Sugar Free Driven by Health Concern  

• Meanwhile, sugar consumption is under more pressure because consumers’ preference for high-sugar and high-calorie beverages continues to decline. 
• Several companies have introduced sugar-free or less-sugar tea drinks in recent years. 
• And the usage of low-cal sweeteners like stevia is seen more often in beverages and even tea shops. 
• Currently this market segment is relatively small, but it keeps growing.