In every industry during the development something changed, we often believed the outcome of the industry changed the world for the better, but there were points along the way which may or may not could have been better. One example of this is the industry of sugar. If you are researching an industry it is often good to research the companies history as well as books that are not positive to the industry. A case in point is the book Sugar written by James Walvin published by Robinson, London, UK in 2017. The title of the book is Sugar – the world corrupted from slavery to obesity.

Most people start their day or sometime during the day have coffee and tea. Many people have sugar with their order and the drink works well. Coffee was a communal activity in coffee shops and tea was more domestic to be drunk at home. Tea came from China and then India and other parts of the world. As the tea imports increased the price fell and more people could afford to drink. In England, another factor was driven by domestic servants. In the 1700’s many people worked as servants (you may have heard of the series Upstairs, Downstairs) and the servants were given allowances for tea and sugar which replaced beer.

Coffee took longer to take hold as the drink of choice but over the years people took coffee breaks, restaurants attracted customers by offering inexpensive coffee and free refills. Grocery stores sometimes sold coffee as loss leaders to lure customers to buy other goods. In addition, in the Second WW II, coffee was a basic constituent of military rations. When the war was over it was part of their routine. (an interesting point is if you are investing in the food industry, part of your homework is known what the military serves as part of their normal routine). Coca Cola was helped by the US military in WWII. Coffee often has a bitter taste and sugar makes it easier to drink.

Sugar had entered people’s lives both at home and at work, and it was part of the routines of work itself. Bread, spread with sweet jam is carried to work, eaten at lunchtime or break. Sugar made working in a factory more tolerable.

Two of the products from growing sugar is molasses and rum. Molasses is found in baked beans and Rum was a ration of the Royal Navy from 1731 to 1970.

On the eve of the Civil War, the US imported 1,830 million pounds of sugar, In 1900 sugar imports were 4,007 million pounds, by 1920 it doubled. The sugar was primarily sugar cane and sugar beets.

In 1887, Henry Havemeyer consolidated 17 of America’s 23 refineries to create the American Sugar Refinery Company which controlled 98% of the industry. It was known as the Sugar Trust. You might know one of the brands as Domino Sugar, Franklin Sugar, Sunny Cane Sugar and Spreckels. In 1970 the name changed from American Sugar to Amstar Corporation. Eventually the British company Tate & Lyle and Flo-Sun owned by the Fanjul Brothers of Florida.

As volumes of sugar increased, the price dropped and entrepreneurs such as Milton Hershey and Frank Mars started business which uses sugar and has thrived into present times.

A new industry developed which was canning food and sugar was used to help with the preservation of food.

Where did the sugar come from after slavery was over? Cuba and Hawaii. Both countries depended on cheap labor. In Hawaii, the people came from Japan, Philippines, and India as indentured labor. In the late 1800’s Citibank was opening branches to serve the Sugar Industry in Cuba and the rising price of sugar. When the price dropped, Citibank kept the Sugar industry operating for 50 years until Castro and wrote off $45 million.

Governments have been involved in the sugar industry for generations because we all like sugar. In 1937 passed the Sugar Act which stayed in place till 1974, it made sugar the most regimented of all American crops. Cuba had 64% of the quota. After Cuba, the industry moved to Florida. The industry is centered around Clewiston, in 1955 there was 36,000 acres turned over to sugar cane, by 1973 the number was 273,000 to produce over 1 million tons by the mid-1960’s. The labor is supplied by migrant workers including migrants from Mexico. Governments have passed laws to help the sugar industry.

Sugar or sugar substitutes are in many of our foods because when they are as a consumer, we buy them more. If you check the ingredients list, salt and sugar are often found. Do we consumer too much sugar, likely but we like it.

Linking to dividend paying stocks, If you can find a product that consumers buy because they like it and have like it for hundreds of years, consumers will have a high threshold before they will not spend money on the product. In the last few years, we have seen price increases particularly in processed food and sales continue. From an investor point of view, those are desirable companies to own a piece of even though some of the outcomes for consumers are less than desirable.

There are more questions than answers, till the next time – to raising questions.