Capturing Cross-Border Sugar Growth

If all the sugar produced in America every year – 10 million tons of it – was transported magically to one location, the result would be almost twice as large as Egypt’s Great Pyramid of Cheops. Add in Mexico’s annual production of 5.6 tons and … well, you get the idea.

The point is this: for sugar producers, success is measured by the ton. And with the start of free trade of sugar between the U.S. and Mexico in January 2008, Imperial Sugar has created a joint venture with partner Ingenios Santos S.A. de CV (Santos), a privately held sugar processor and marketer, to increase its access to production tonnage and to capture cross-border growth opportunities. Santos operates five sugar cane processing mills in Mexico.

The new company, Comercializadora Santos Imperial, or CSI, based in Monterrey, Mexico started operations in November 2007. CSI’s goal: market sugar produced in Mexico or imported there from the U.S. and facilitate exports of sugar to the U.S. from Mexico.

“In 2008, tariffs on sugar were eliminated through NAFTA (North American Free Trade Agreement) and that opened new doors for us,” said Pat Henneberry, Imperial Sugar’s senior vice president of Commodities Management.

“We’ve grown from basically nothing to now serving 110 customers with Mexican origin sugar in industrial beverage, dairy, baking, confectionary and retail markets – on both sides of the border,” he said.

On the retail side, CSI also launched a new granulated sugar brand, called Golden Sweet.

In total, CSI sold more than 400,000 tons of sugar last year, which was about 8 percent of Mexico’s total production and 15 percent of all exports into the U.S.

In addition, a marketing agreement as been established with the Empresas Machado group, a long-standing sugar family with four mills in Mexico. The Machado Group has capacity of more than 460,000 tons. CSI assumed representation of up to half of their production in the first year of the agreement.