Sweet Beets

WORLAND — The shockingly wet spring of 2011 allowed sugar beets to get off to a good start in the Big Horn Basin with less early-season irrigation – and it is coinciding with a new market for those beets.

Or rather, there is a market that is now reviving after some 25 years of inaction.

The company that bottles Pepsi’s line of soft drinks in Worland is once again using sugar — from  Big Horn Basin sugar beets — in some of its products.

That’s a big switch from what’s gone on in the last quarter-century, when the Admiral Beverage Corp. regularly sweetened its Pepsi line with high-fructose corn syrup hauled in on rail tankers from the Midwest, even as the factory sat surrounded by fields of sugar beets.

That means Wyoming Sugar Co., the local sugar factory that opened in 1917 and is now owned by beet farmers, can once again help reinforce the local Pepsi bottler’s slogan: “Proudly Made in Wyoming.”

“Wyoming Sugar Company is proud to supply sugar to Admiral Beverage,” said Vic Salzman, vice president and manager. “It is exciting to see our sugar being used close to home.”

The idea is to sell a “nostalgia” line of products, notable for the taste of sugar-beet sugar that was once part of many Pepsi drinks.

In 2009, Admiral Beverage was a player in Pepsi’s experiment that regionally test-marketed “Throwback” versions of Pepsi Cola and Mountain Dew, containing sugar instead of corn syrup.

“Consumers today seek products that have a rich history and deliver an authentic experience,” said Esther-Mireya Tejeda, Pepsi spokeswoman in New York City. “For some, Pepsi Throwback is a trip down memory lane. For others, it is a chance to experience an authentic twist on their favorite brand. Pepsi Throwback originally hit shelves in April 2009 as an eight-week, limited-time offering, and after three, limited-time-only runs, we learned that consumers wanted Pepsi Throwback year-round.”

After the test period for the retro drinks ended, explained Admiral president Kelly Clay, the Worland company wanted to keep it going. “It was so successful for us that we didn’t want to give it up. Now the company has made it a national product and we are tickled to death.”

Clay said his company had persistently lobbied the national brand. “We’ve been pressing for a sugar product for years. I think the big companies are understanding there’s a definite demand for real sugar drink products.”

And it’s not just limited to a few regional markets now, as Pepsi has added the Throwback brand as a permanent part of its beverage portfolio.

“Really, we’ve seen success all over,” said Tejeda. “We are currently activating Pepsi Throwback with a strong digital presence. We also have an awesome radio campaign and in-store point-of-sale that reinforces the brand message at all points of contact. With the help of retailers and local bottlers to get the word out, we are finding traction and developing a loyal consumer base.”

The sweetener wars

By late 1984, the nation’s biggest soft-drink bottlers, Coke and Pepsi, had switched sweetening their lines from sugar to corn syrup. “Coke switched to high-fructose corn syrup for financial reasons,” recalls Clay. “It was cheaper to make. So, to be competitive, everybody switched from sugar. But we resisted. We told the company that if we could stay with sugar, we’d make up the difference in cost. But the big companies own the trademarks, so they call the shots.”

Bighorn Basin beet growers weathered the switch to high-fructose corn syrup because the sprawling sugar commodity market offered other outlets for their crops, from cookies and candy to other products sweetened with natural sugar. Growers adjusted their plantings based on market demands as the soft drink switch to corn syrup took hold over several growing seasons.

It all began when Americans reaching out to vending machines in 1980 received a shock: prices for candy bars and soda pop had suddenly doubled.

Protective sugar-import tariffs allowed producers to charge higher prices on domestic sugar used by bakers, confectioners and soft-drink bottlers, pushing the price of pop and candy up permanently.

The retail cost of a bottle of pop did not drop, even though corn syrup was nearly half as costly as refined beet sugar by the mid-1990s, and 60 percent less than cane sugar. Domestic sugar prices today remain inflated thanks to subsidies.

According to Sen. Richard Lugar (R-Indiana), Americans are paying almost twice as much for sugar than they would be if there were no federal subsidies.

The Herald-Times of Bloomington, Ind., reported that Lugar told a crowd at a popular Indiana candy store in late June that he supports legislation to repeal sugar subsidies, saying they were “concocted by law to favor a very few.”

A 2007 paper issued by the conservative Cato Institute concluded that “sugar policies are a textbook case of economic damage done by big government intervention in the marketplace.”

“High sugar prices also damage U.S. food manufacturers, including makers of candies, chocolate, and breakfast cereals,” the Cato paper stated, citing U.S. Department of Commerce figures. “The sugar-growing industry employs 61,000 people, but 988,000 are employed in food businesses that use sugar and are hurt by current policies.”

Tom Schatz, president of Citizens Against Government Waste, a nonpartisan taxpayer watchdog group, last year called on Congress to end sugar subsidies, especially the Feedstock Flexibility Program that forces the federal government to purchase surplus sugar from large sugar processors and then re-sell it to ethanol plants, at a loss.

“Federal sugar subsidies are not only costly, they are also protectionist,” Schatz said in an April 2010 news release. “Some members of Congress run for cover behind the ‘no net cost’ myth. The truth is: big net cost. By keeping foreign sugar out of our markets, the government is knowingly shifting the cost burdens onto consumers and taxpayers. ”

Wyoming sugar beet growers received $8 million in federal sugar subsidy payments between 2000-04 – the only period out of the past 15 years that state farmers benefitted.

The voting records of Wyoming’s U.S. Senators Mike Enzi (R) and John Barrasso (R), according to the Cato Institute, reflect an “internationalist,” or pro-subsidy pattern.

Enzi in 2001 voted with the majority against phasing out U.S. Sugar subsidies.

But early this year in Brazil, Barrasso shared Sen. John McCain’s (R-Ariz.) perception that high import tariffs on ethanol made from Brazilian sugarcane might well violate World Trade Organization rules, according to a Reuters report of a January trip the senators took to Brazil.

“We agree with the president here that (the U.S. tariff) should not be there,” Barrasso told Reuters.

An early battle in the sweetener wars came in 1981, when a group of 102 Coke bottlers across the U.S. sued the parent company for violating its 1921 assurance that the secret-formula Coke syrup would always be made with sugar.

Coca-Cola, the bottlers charged, had in 1980 switched to the cheaper sweetener — corn syrup — but refused to pass the savings on to bottlers who would not agree to conditions of the new regime. By 1993, only 30 plaintiffs remained in the suit, and a federal appeals court ruled that Coke had indeed breached the contract made in 1921. Despite Coke’s argument that technology may have rendered the old contracts obsolete, the court observed, “While the availability of satisfactory sweeteners might make a ‘sugar only’ contract an oddity today, sugar as a sweetener is not obsolete.”

The initial U.S. District Court ruling in favor of the bottlers called for Coke to pay $20.7 million in compensatory damages. Coke appealed that decision, and though the higher court sided with the plaintiffs, it reduced the damages award to only $1 per plaintiff.

Throwback to the sweet beet

Consumer demand has for centuries spurred competition and creativity in producing sweeteners, and sugar beet cultivation itself is a product of that history.

Two hundred years ago, Napoleon awarded the Cross of the Legion of Honor to French banker and scientist J.P. Benjamin Delessert for devising his charcoal clarification process to make the humble sugar beet, beta vulgaris, into crystallized sugar. Napoleon’s patronage and intense interest came in response to the British naval blockade of West Indies cane sugar shipments to France. The Little Emperor in 1811 ordered 80,000 acres in France planted with sugar beets and set up six specialized sugar beet schools. Cultivation and refining of the sugar beet has pretty much followed the same unique, vertically integrated process ever since.

To participate in growing beets as a dependable cash crop, farmers agree to the sugar refining company’s specifications for seeds, acreage planted, time of harvest and delivery to the mill.

The Worland sugar refining plant was started during World War I by a group of Utah investors. For many years after World War II, Worland-area sugar beet farmers and this local mill had a steady outlet for much of their product: Admiral Beverage, which began operating in Worland in 1947. It was a convenient, symbiotic relationship — a local bottler employing many people, using sugar produced by local farmers and refined in the local factory, also a steady employer. Until corn syrup changed that relationship.

Wyoming Sugar Co. is a grower-owned refiner formed in late 2002, succeeding previous corporate operators Holly Sugar, then Imperial Sugar, which went bankrupt in 2001. Local bankers kicked in $3.5 million to help the grower cooperative acquire the old plant, the second-smallest in the nation, which annually processes local beets grown on about 20,000 acres. Western Sugar’s plant at Lovell — another grower-owned plant — is the smallest U.S. sugar beet refiner. Since the fall of 2006, all the nation’s beet sugar processing plants have been owned by grower cooperatives.

What about that long absence of beet sugar from those locally made soft drinks during the corn syrup era?

“Certainly, it was a large changeover,” said Wyoming Sugar’s board chairman Dick McCamey.

Plant manager Vic Salzman explained that Cargill Sweeteners North America had been marketing the Worland sugar to customers in the Midwest and Western U.S. Now Worland sugar will also go, once again, to the local bottler.

“Admiral Beverage has added to our portfolio of customers,” said Salzman. “We have been able to work adding Admiral Beverage sugar requirements into our current business plan. Wyoming Sugar provides 50-pound bags and 2,000-pound totes of sugar to Admiral Beverage.”

Besides crystallized sugar, the plant produces byproducts of molasses and beet pulp pressed and pelletized into livestock feed.

Salzman declined to provide figures on how much beet sugar the cooperative supplies annually to Admiral Beverage.

But regardless of the raw numbers, seeing beet-sugar soda in Bighorn Basin stores is a big deal for local growers.

“It’s huge for our area. I drink a Pepsi Throwback every day,” said Chris Bolken, who farms beets at Emblem. “I’m glad to see it’s still on the shelf. It gives us another avenue to sell our commodity — to a customer that uses raw, natural sugar, and that’s great.”

“I think it’s awesome. The product is now all locally grown and made,” said Kevin Keller, Worland-area beet farmer and member of the cooperative. “Anytime you see a business that wants to buy your product, it’s good news.”

“The Worland plant makes some of the best sugar in the world,” said Admiral Beverage chief, Kelly Clay. He revealed that his company — North America’s fifth-largest Pepsi bottler — has just revived bottling a 7-Up with sugar, as well as an original-formula “Heritage” Dr. Pepper.

Clay’s persistent promotion of sugar over corn syrup earned him the honor of “Friend of the Sugarbeet Industry” earlier this year at the American Sugarbeet Growers Association convention in Tucson, Ariz. He told the growers he expects such sugar-based drinks to continue catching on. As he told WyoFile: “We’re hoping to keep making Throwback until I’m pushing up daisies.”

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