Sodas Might Contain Real Sugar Again. It Could Shake Up 3 Industries.

A combine harvester cuts sugar cane in Kaplan, La. (Justin Sullivan/Getty Images)

Soft-drink makers’ potential shift from high-fructose corn syrup to real sugar could have deep implications not only for the beverage industry, but also the sugar cane and corn sectors in the U.S.

The switch would likely increase beverage companies’ production costs, dent corn demand, and hurt crop processors. And it would strain domestic sugar production capacity and necessitate more imports.

President Donald Trump said on Wednesday that Coca-Cola had agreed to sweeten its signature soda with cane sugar in the U.S. That is a reversal because it had used high fructose corn syrup, or HFCS, for decades.

“You’ll see. It’s just better!” wrote Trump in a social media post on Wednesday.

Coca-Cola hasn’t explicitly confirmed this change. It said on its website that it “appreciate[s] President Trump’s enthusiasm” and that more details on new innovative offerings “will be shared soon.”

What comes next could represent a major shift for the soda industry, but there is considerable uncertainty. It isn‘t clear how changing the recipe would affect demand. In many other countries, soft drinks are already sweetened with cane sugar.

Some consumers say that they can tell the difference and that Coke tastes better with cane sugar than with corn syrup. But some blind tasting tests have pointed to no perceptible differences in flavor, suggesting perceptions about brands, including regarding health, may influence preferences more than taste alone.

Healthier Alternative?

The Trump administration’s Make America Healthy Again initiative, led by Health Secretary Robert F. Kennedy Jr., has been critical of highly processed food, asking companies to remove synthetic ingredients like artificial dyes from their products.

Kennedy has advocated against the wide use of corn syrup in the American food system, calling it a “poison” that is contributing to the nation’s obesity and diabetes epidemic. Kennedy has proposed banning HFCS or removing it from federal nutrition programs.

However, there is little scientific evidence showing that sugar is any healthier.

HFCS and sugar have nearly identical compositions: Both are about half glucose, half fructose. The Food and Drug Administration hasn’t issued any health advisories suggesting that HFCS is less safe than other sweeteners, such as sucrose or honey.

Other health institutions, such as the Harvard University’s school of public health, also say there is no clear evidence that HFCS is worse than regular sugar, noting both contribute to obesity, diabetes, and heart disease.

Still, there seems to be a growing consumer preference for natural ingredients like sugar over highly processed ones.

PepsiCo CEO Ramon Laguarta, for one, said on Thursday that the company will give consumers products with sugar and natural ingredients if that is what they prefer. Coca-Cola and PepsiCo’s move could push other beverage companies to follow suit as well.

Sugar Shortage

The switch could create a shortage of sugar cane. While the U.S. produced 12 billion gallons of soda in 2024, Coca-Cola’s Classic Coke alone made up a quarter of that.

At 39 grams of sugar per 12-ounce can, the switch would require 1.4 million metric tons of additional sugar annually, equivalent to 20% of America’s total sugar supply, according to Reflexivity, an investment analytics firm.

It isn’t clear why Trump specifically mentioned cane sugar, since more than half of sugar made in the U.S. comes from beets. But assuming all the additional sugar comes from cane, domestic sugar cane growers would need to boost production by 36%, said Reflexivity.

This would not only require more land in places with the right weather, but also expanded capacity for mills to process the cane, not to mention transportation. It could take at least two to three years to meaningfully increase domestic sugar cane production capacity, said Reflexivity.

Soda companies could also import more sugar to meet the demand. The U.S. currently imports about 3 million tons of sugar annually, mostly from countries including Brazil and Mexico. The additional demand would boost imports by about 50%.

Complicating that is the fact that the U.S. has a quota on sugar imports, and tariffs on shipments that exceed it are very high. This could limit how much sugar beverage companies want to buy from abroad. Rising demand would also lift global sugar prices.

Corn Impact

At the same time, a shift away from HFCS would reduce demand for corn, affecting states like Illinois, Indiana, and Iowa. But the damage likely wouldn’t be dramatic.

According to estimates from the Department of Agriculture, only 5% of U.S. corn is used to produce sweeteners like HFCS. The majority of American corn ends up as animal feed, ethanol, or alcohol.

Still, facilities that process corn to make HFCS would likely see a sharp drop in demand. Already, industry groups have voiced concerns.

“Replacing high fructose corn syrup with cane sugar would cost thousands of American food manufacturing jobs, depress farm income, and boost imports of foreign sugar, all with no nutritional benefit,” said John Bode, president and CEO of the Corn Refiners Association, in a Wednesday statement.

Stock in Archer Daniels Midland , a leading processor and trader of agricultural commodities, including corn, dropped more than 5% in after-hours trading on Wednesday. ADM closed 0.9% lower on Thursday.

Rising Cost

Shifting to cane sugar could also bring higher costs for companies including Coca-Cola and PepsiCo.

HFCS replaced sugar as the main soda sweetener in the 1980s because it was less expensive, partially because of federal subsidies to corn growers, as well as quotas and tariffs on sugar imports. U.S. sugar prices are well above global market levels.

According to Reflexivity, HFCS costs about 25 cents a pound, compared with cane sugar’s 45 cents. The switch would add approximately $619 million to Coca-Cola’s annual ingredient costs, an 80% premium over current sweetener expenses, the firm estimates.

That is about 3% of Coca-Cola’s $18.3 billion in cost of goods sold for fiscal 2024, which could put pressure on the company to raise prices or accept smaller profit margins. Coca-Cola didn’t respond to Barron’s inquiry about what the change would mean for its production costs.

The stock gained 1.9% on Thursday.

Write to Evie Liu at evie.liu@barrons.com