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Friday, April 28, 2023

Sudan conflict threatens supply of key fizzy drinks ingredient - Sky News

The conflict in Sudan has left international consumer goods makers racing to shore up supplies of gum arabic - critical to the food, drinks and cosmetics industry.

The northeastern African country is the world's largest producer of gum arabic, a resin tapped from the acacia tree.

It is a key ingredient in everything from fizzy drinks to candy and cosmetics, and is also used in the pharmaceutical industry.

About 70% of the world's supply of gum arabic, for which there are few substitutes, comes from the acacia trees in the Sahel region that runs through Africa's third-largest country, which is being torn apart by fighting between the army and a paramilitary force.

Twelve exporters, suppliers and distributors contacted by Reuters told the news agency that trade in the gum, which helps bind together food and drink ingredients, has ground to a halt.

Right now it's "impossible" to source additional gum arabic from rural parts of Sudan because of the turmoil and road blockages, said Mohamad Alnoor, who runs Gum Arabic USA.

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Footage shows scale of destruction in Khartoum

The current explosion of violence in Sudan comes after two generals fell out over a recent internationally brokered deal with democracy activists, which was meant to incorporate the paramilitary Rapid Support Forces (RSF) into the military and eventually lead to civilian rule.

In 2019, Islamist autocrat Omar al Bashir was overthrown in a popular uprising. The army and RSF later jointly mounted a 2021 military coup.

But the relationship between the two factions broke down during negotiations to integrate and form a civilian government.

Image: Gum arabic is used in fizzy drinks, where it prevents ingredients from separating

Wary of Sudan's political instability, companies dependent on gum arabic, such as Coca-Cola and Pepsico, have long stockpiled supplies, some keeping between three to six months worth to avoid being caught short, exporters and industry sources told Reuters.

"Depending on how long the conflict continues there may well be ramifications for finished goods on the shelf - branded goods made by household names," said Richard Finnegan, a procurement manager at Kerry Group, a supplier of gum arabic to most major food and drink firms.

He estimates current stockpiles will run out in five to six months.

It is a view echoed by Martijn Bergkamp, a partner at Dutch supplier FOGA Gum, who estimated between supplies would last for three to six months.

Alwaleed Ali, who owns AGP Innovations Co Ltd, a gum arabic exporting business, said his customers are looking for alternative countries to supply the product.

US-based Ingredion Inc, an ingredients supplier in Illinois, told Reuters: "We have proactive measures in place across our business to ensure the continuity of supply for our customers."

Global production of gum arabic is about 120,000 tonnes a year, worth $1.1bn (£883m), according to estimates cited by Kerry Group.

Kerry Group and other suppliers, including Sweden's Gum Sudan, said communicating with contacts on the ground has been difficult.

"Our suppliers are struggling to secure necessities because of the conflict," said Jinesh Doshi, managing director of Vijay Bros, an importer based in Mumbai, India. "Both buyers and sellers are clueless on when things will normalise."

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Reuters said PepsiCo declined to comment on supply chain and commodity issues, while Coca-Cola did not return a request for comment.

"For companies like Pepsi and Coke, they can't exist without having gum arabic in their formulations," said Dani Haddad, of Agrigum, a supplier.

Fawaz Abbaro, the general manager of Savannah Life Company in the Sudanese capital Khartoum, said he had purchase orders and plans to export 60 to 70 tonnes of gum arabic but doubts he'll be able to due to the conflict.

He said: "It's not stable even to get food or drink. It's not going to be stable for business. All trading will be jammed for the time being."

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Sudan conflict threatens supply of key fizzy drinks ingredient - Sky News
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