It’s not every day major players serving the same market square off in court. But that’s exactly what’s occurring in federal court in Los Angeles as sugar processors and corn refiners slug it out in a $2 billion case that’s been brewing for years. No matter which side wins, the battle likely will leave a black mark on the overall sweetener industry, which already is under attack on multiple fronts, in addition to the ongoing tension between sugar producers and sugar users over the U.S. sugar program and other issues such as the Trans-Pacific Partnership.

The case is Western Sugar Cooperative, et al. v. Archer Daniels Midland Co., et al. and is being heard in U.S. District Court, Central District of California in Los Angeles. The Judge is Consuelo Marshall. The initial complaint was filed on April 22, 2011.

Plaintiffs are The Sugar Association, Inc.; C & H Sugar Co., Inc.; United States Sugar Corporation; American Sugar Refining, Inc.; The Amalgamated Sugar Company LLC; Imperial Sugar Corporation; Minn-Dak Farmers Cooperative; Western Sugar Cooperative; Michigan Sugar Co.; and the American Sugar Cane League U.S.A., Inc.

Court scale in a courtroom
Caloric sweeteners — both sugar and those derived from corn — have been blamed as a key source of obesity and for contributing to the rise in the occurrence of diabetes, heart disease and other ailments.

Defendants are the Corn Refiners Association, Inc.; Archer-Daniels-Midland Company; Cargil, Incorporated; Corn Product International, Inc. (now Ingredion Incorporated); and Tate & Lyle Ingredients Americas L.L.C.

The litigation between the sugar industry and corn refiners has been brewing for decades, coming to a head after the corn refiners ran an advertising campaign in 2008 saying HFCS was no different than sugar in an attempt to stop the sharp decline in HFCS consumption and stem negative perceptions that had developed in the minds of many consumers. One of those attempts was to rename HFCS “corn sugar,” which the U.S. Food and Drug Administration blocked in 2012.

Several sugar processors filed suit against the corn refiners in 2011 claiming false advertising, among other things, and seeking about $1.5 billion in real and punitive damages and fees. Corn refiners filed a countersuit seeking $530 million and claiming, among other things, misinformation about HFCS from sugar processors.

Caloric sweeteners — both sugar and those derived from corn — have been blamed as a key source of obesity and for contributing to the rise in the occurrence of diabetes, heart disease and other ailments. As a result, sweeteners are clearly in the sights of consumer groups and regulators in the same manner as fat was a few years ago and salt was more recently.

Consumer groups and some politicians have tried and continue to try to tax “sugary” drinks as a way to curb obesity. Mexico implemented a tax on certain sweetened beverages and snacks in 2014. Sweetener consumption there declined last year but has rebounded strongly this year. A major sugar tax effort also is under way in England.

On the regulatory side, the U.S. Food and Drug Administration has proposed adding Daily Reference Value of 10% of total energy intake for added sugars and Per cent Daily Value for added sugars to the Nutrition Facts Panel. At the same time, the 2015 Dietary Guidelines Advisory Committee has proposed that added sugars make up no more than 10% of total caloric intake.

The sweetener industry along with much of the confectionery and beverage industries are contesting much of the regulatory changes and have successfully batted down most of the tax ballot issues with a couple notable exceptions.

The growing anti-sweetener pressure suggests that at some point sweetener consumption will take a hit despite the annual 1% to 1.5% increase in demand related to population growth. Sweetener consumption already has declined from its peak in 1999, which the sweetener industry points out to those who blame the increasing rate of obesity on sugar. Total caloric sweetener consumption (sugar, all corn sweeteners, honey and edible syrups) in 2014 was estimated by the U.S. Department of Agriculture at 131.1 lbs per person, down 14% from its peak of 153.2 lbs in 1999.

In the past half century, per capita sugar consumption peaked at 102.3 lbs in 1972, plunged to 60 lbs in 1986 and rose to 68.4 lbs in 2014, the highest since 1983.

On the corn sweetener side, high-fructose corn syrup first was “counted” in total caloric consumption numbers in 1968 at 0.1 lb per person. HFCS steadily increased its foothold over the next 30 years, peaking at 64.5 lbs per person in 1999, just 1 lb less than sugar (total per capita corn sweetener consumption was 85.3 lbs that year when glucose and dextrose are included). Consumption of HFCS dived 30% to 45.6 lbs per person in 2014, but has leveled out the last couple of years.

It should be noted that exports of HFCS to Mexico have soared from a low of 7,101 tonnes (dry weight) in 2003 to 1,164,265 tonnes in 2012, backing off to 841,482 tonnes in 2014. Exports have been especially strong since 2008 under the North American Free Trade Agreement, as have U.S. imports of Mexican sugar. Total HFCS production has declined only 9% since 2001, despite the much sharper drop in U.S. per capita consumption.

The case between the two groups began with jury selection in federal court in Los Angeles on Nov. 4 and is expected to last at least a month. The general press refers to the case as Big Sugar versus Big Corn. There’s nothing sweet about it.