Leading sugar producer Mitsui Sugar Co. and trading house Mitsui & Co. will acquire a full stake in a Singapore sugar vendor for about $100 million to cash in on growing demand for sweeteners in Southeast Asia and the Middle East.
Mitsui Sugar and its largest shareholder signed an agreement Friday to buy 70 percent and 30 percent stakes, respectively, in SIS’88 Pte., a refined sugar seller, from E D & F Man Holdings, a British global commodity trader, according to the Japanese firm.
Facing an increasingly tough business environment at home due to the declining birthrate and aging population, the Tokyo-based sugar company is seeking business opportunities in fast-growing overseas markets, especially in Asia, as its sales are currently largely dependent on the domestic market, a Mitsui Sugar spokesman said.
SIS’88, established in 1967 as a state-owned firm, deals in about 200,000 tons of sugar in Southeast Asia and the Middle East, posting about ¥15 billion ($133 million) in sales in 2017.
The Singapore firm also produces powdered drinks for home and industrial use, and the SIS brand is well-known in Singapore and the United Arab Emirates, according to Mitsui Sugar.
Together with Mitsui trading house, Mitsui Sugar will help SIS’88 boost its businesses by providing expertise in quality enhancement and product development while utilizing its sales channels.
The Japanese firm aims to cater to diversifying demand for sweeteners along with improving household income and changing lifestyles in the two regions.
The world’s sugar demand has increased about 2 percent on average per year for the past three decades, with Asia accounting for 47.1 percent of the estimated global total of over 184 million tons in the year to September, according to data from Agriculture & Livestock Industries Corp., a Japanese government-backed industry body.
Mitsui Sugar has two Thai units for production of sugar products while operating representative offices in Bangkok and Shanghai.
Kaset Phol Sugar, one of the local units in Thailand jointly operated with Mitsui & Co. since 1994, embarked on the expansion of high-quality sugar output in June to triple annual capacity to 300,000 tons by October 2019, backed by about ¥37 billion investment from the trading house.