Coca-Cola pinched by high HFCS prices

By Lorraine Heller

- Last updated on GMT

Drinks giant Coca-Cola is feeling the squeeze of higher corn
prices, but the impact on its soda formulations - largely sweetened
with high fructose corn syrup in the US - remains unclear.

According to media reports this week, the company said it has been faced with price increases for corn and high fructose corn syrup unlike those seen in many years. "We're clearly starting to feel the pinch and it's been tough,"​ said Scott Young, a food service division executive at Coca-Cola. Speaking at the Reuters Food Summit in Chicago earlier this week, Young said he "wouldn't be surprised"​ if the firm was looking at switching to different sweeteners. However, Coca-Cola told FoodNavigator-USA.com that the company has made no announcement that it is considering alternatives to high fructose corn syrup (HFCS). But according to Reuters, Young said the firm would start rolling out new syrup formulations in 2007, in an effort to help customers reduce costs. The new formulations are expected to be more widely adopted in 2008 and 2009, said Reuters. Indeed, a move away from HFCS would not come as a big surprise in light of the recent raw material price hikes. Coca-Cola is not alone in the food industry to be hit by a remarkable increase in corn prices, as the market revalues corn from its traditional feed and food uses to its value in biofuel production. This sharp increase in corn demand is reducing corn carryover and driving up corn prices. ​Just last week, USDA chief economist Keith Collins said the demand for biofuels is likely to contribute to" very profound shifts in crop production in 2007"."Corn planted area for 2007 is now expected to increase 8.7 million acres to 87 million, slightly above the level reported in USDA Agricultural Projections to 2016, released February 14 2007. This would be the highest corn plantings in more than 60 years (since 1946),"he said.​ Corn production is expected to reach a record 12.2 billion bushels in 2007. Nevertheless, production could once again fall short of demand pulling ending stocks down further in 2007/08 and propelling corn farm prices even higher. However, higher prices are not the only concern for food and beverage manufacturers when it comes to HFCS; the widely used sweetener has increasingly been accused of contributing to the nation's obesity crisis. Campaigners against the ingredient point to science showing that the body processes high fructose corn syrup differently than other sugars due to the fructose content, leading to greater fat storage. However, industry associations and trade bodies, such as the Corn Refiners Association (CRA), say there is no scientific evidence to suggest that HFCS is uniquely responsible for people becoming obese. "USDA data show that per capita consumption of HFCS is actually on the decline, yet obesity and diabetes rates continue to rise. In fact, obesity rates are rising around the world, including in Mexico, Australia and Europe, even though the use of HFCS outside of the United States is limited or nonexistent,"​ claims the CRA on a website dedicated to the ingredient. But research shows that consumers are becoming increasingly wary of HFCS. Earlier this week, a new report published by Packaged Facts said HFCS was on consumers' "watch list".​ The report - Food Flavors and Ingredients Outlook 2007​ - said the industry should expect "ever closer scrutiny and abandonment of 'demonized' ingredients such as salt and high fructose corn syrup."

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