Tate & Lyle’s share price plummeted by over six per cent on Monday morning following a rating downgrade by Morgan Stanley for the sugar behemoth.
The broker downgraded the stock to “underweight” from “equal weight”, setting a 500p price target, as reported by City AM.
Morgan Stanley highlighted an increased risk to Tate & Lyle’s mid-term targets after Tyson Foods announced plans to phase out sucralose from its US-branded products, suggesting that more consumer packaged goods could follow suit.
Tyson intends to eliminate the zero-calorie artificial sweetener and sugar substitute by the end of 2025, along with high-fructose corn syrup and titanium dioxide, in a bid to reduce additives.
“We continuously review and assess our product portfolio to ensure the highest quality products that meet the needs of consumers,” stated Donnie King, CEO of Tyson Foods.
He further noted that the decision to remove high-fructose corn syrup “reflects our ongoing commitment to feeding the world like family.”
Meanwhile, Tate & Lyle has been making significant strides in reducing sugar content in their biscuits, substituting it with scientific innovations aimed at making consumer goods ‘healthier.’
For instance, McVitie’s digestive biscuits are now available in a ‘light’ version, which uses Tate’s Sta-Lite polydextrose fibre to decrease the amount of sugar required and increase the fibre content.
In its most recent full-year results, the confectionery giant reported that sucrose experienced “robust demand” in the year to March, with revenue increasing by 16 per cent, while overall group revenue declined by five per cent.
Nick Hampton, Chief Executive of Tate & Lyle, stated that the company has been “executing a major strategic transformation” over the past seven years to reposition Tate & Lyle as a “growth-focused speciality food and beverage solutions business aligned to growing, long-term consumer trends for healthier, tastier and more sustainable food and drink”.
“As an expert in reformulation, taking sugar, calories and fat out of food and adding fibre and protein, we are leaders in helping customers improve the nutritional balance of food,” he added.
